ITC report: Cuba needs reform for trade to grow
WASHINGTON, April 20, 2016 - An end to the
embargo on Cuba would offer major rewards to U.S. agricultural exporters, but
Cuba still needs to make substantial reforms to remove barriers that could
hamper trade, according to a 437-page report by the U.S. International Trade
Commission.
The Obama administration has been chipping
away at U.S. policies that hamper trade with the island nation, but it will be
up to Congress to address the biggest barriers, such as a prohibition on
providing U.S. financing to Cuban importers.
Cuba bought an average of $313 million
worth of agricultural commodities from the U.S. from 2010 to 2103, but if the
U.S. lifted the financing and other restrictions, that could more than double
to $797 million, the ITC predicted. And if the U.S. and Cuba both removed trade
barriers, that yearly average could rise even further to $886 million.
“Cuban nontariff measures and other factors
may limit U.S. exports to and investment in Cuba if U.S. restrictions are
lifted,” the ITC said about the report that was requested by the Senate
Judiciary Committee. “These measures and factors include Cuban government
control of trade and distribution, legal limits on foreign investment and
property ownership, Cuba’s dual currency and exchange rate systems, and
politically motivated decision-making regarding trade and investment.”
Cuba has ushered in several economic
reforms in the past five years, relaxing restrictions on land ownership, travel
and private business, but the government still maintains a tight grip on most
international trade and the distribution and storage of commodities
domestically, according to the ITC report. And selling to Cuba isn’t like doing
business with most foreign importers because the government controls nearly all
aspects on that side of the deal.
Still, the U.S. restrictions are the
primary obstacles to boosting agricultural exports to Cuba, the ITC explained. “Cuba
is highly dependent on imports to feed its population, and for certain agricultural
commodities, U.S. exports to Cuba could see significant gains from the removal
of U.S. restrictions, particularly those related to credit financing,” the ITC
stressed.
Rice is a prime example. Right now the U.S.
isn’t shipping any rice to Cuba. That’s mainly because U.S. banks are not
allowed to finance sales to the communist nation, whereas countries like
Vietnam are offering cheap credit terms. The U.S. is a lot closer – Cuba is
just 90 miles from the coast of Florida, while Vietnam is roughly 9,000 miles –
so the U.S. has the definite edge when it comes to transportation. But if the
Cubans want to buy it they have to pay cash up front.
If Congress were to repeal the export
finance restriction on Cuba, Vietnam would still be a major competitor, but
U.S. rice would once again begin shipping, the ITC report authors said.
“The U.S. rice industry … expects that
within two years of lifting the restrictions the United States could supply up
to 30 percent of Cuba’s rice imports, valued at up to $60 million annually,”
the report says. In addition, U.S. exports of wheat to Cuba are expected to
soar to more than $150 million per year if U.S. banks could finance sales of
the grain. The last time the U.S. exported any wheat to Cuba was in 2011,
according to USDA data, and the total for the year was just $1.7 million.
#30
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