How Obama Can Promote US Exports to Cuba

How Obama Can Promote US Exports to Cuba

President Barack Obama must walk a delicate path in his second-term effort to normalize relations with Cuba. He cut a moderate trail in his first term, allowing Cuban-Americans to make unlimited visits to relatives on the island and send loved ones remittances. But the trade barriers are far from being flung open. Despite Fidel Castro’s ailing health and Cuba’s sluggish attempts to reform its market ahead of fiscal peril, the country remains defiant of the U.S. 50 years after the Cuban Missile Crisis.

Although Obama enjoyed strong backing from Cuban-Americans in Florida in the Nov. 6 elections, the formidable exile block in Congress remains, as Foreign Policy’s Jose Cardenas notes. He adds that the Castro brothers have failed to make any changes that would deserve U.S. conciliations on its trade ban. The Cuban government said the U.S. “empire” would continue to try to destroy the Castro Revolution no matter the outcome of the presidential election, according to the Miami Herald.

“That said, to contemplate any serious re-evaluation of relations on the U.S. part as long as the regime systematically represses the Cuban people - to say nothing of the continued unjust incarceration of U.S. development worker Alan Gross -- and relentlessly continues to thwart U.S. interests in international fora is just self-delusion,” Cardenas wrote.

So what can Obama do to prepare for the eventual demise of Cuban leadership but without losing face to the dictatorship? Removing the bureaucracy slowing U.S. exports to Cuba would be a good move. Through the Trade Sanction Reform Act, an easing of the U.S. trade ban against Cuba, American companies can export certain agriculture and medical goods to Cuba. Exports to Cuba have are suffering, however, as China, Brazil, Venezuela and Vietnam companies steal away market share by offering cheaper prices and better credit, according to the Associated Press. The value of U.S. exports to Cuba this year are on track to a little more than half of what was shipped in 2011.

“The pattern that we see is it’s just continuing to either be lower each year, or if it does increase, it’s just not a lot at all,” said John Kavulich, senior policy adviser to the U.S.-Cuba Trade and Economic Council. “No executives should be going to a travel agent and buying a ticket to go down to Havana thinking that there’s going to be a change.”

Aside from some competitors offering lower prices, U.S. shippers are also losing out because they are required to receive cash payment before goods are shipped. The third-party banking system required to handle payments takes a cut, adding to the total cost.

“Since vessels from other countries that dock in Cuban ports must wait six months to go to the United States, the shippers charge high freights,” Alimport vice president Eidel M. Mussi Velazquez told the AP.

Granted, there are security issues to keep in mind, though, it’s worth making the embargo rules simpler. Although trade with Cuba is unlikely to do much to meet Obama’s goal to double exports by 2015, keeping market access in the event of the lifting of a free trade ban is a smart move for the long run. Imagine how embarrassing it would be if U.S. exporters can't gain a lock on a market a mere 90 miles away once the dictatorship falls.

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