U.S. exports to Cuba

The post I made yesterday started me thinking about trade from the U.S. to Cuba. Exports of agricultural products are made from the U.S. to Cuba. It's not illegal to sell food to Cuba, it's just illegal to finance the sale.

I know a couple of guys who make trips there regularly. It's legal. They get special permits because they are dealing with agriculture shipments.

Back in 2007, the ITC (U.S. International Trade Commission) issued a report estimating what would be the impact of allowing U.S. citizens to travel to Cuba, and allowing export financing on agricultural shipments to Cuba.

U.S. AGRICULTURE SALES TO CUBA WOULD GROW SIGNIFICANTLY IF U.S. TRADE AND TRAVEL RESTRICTIONS WERE LIFTED, SAYS ITC

# In 2000-01, U.S. agricultural exports to Cuba were negligible; however, they grew rapidly, and by 2004, the United States was Cuba's largest supplier. Although the value of U.S. exports has fallen slightly since then, the United States still supplies more agricultural products to Cuba than does any other country, accounting for approximately 30 percent of Cuban imports in 2006.

# U.S. regulations, such as those that require the Cuban government to pay for U.S. agriculture products in cash or through letters of credit drawn on third-country banks, raise the cost of U.S. goods for Cubans and likely limit U.S. sales. Other factors that increase costs are port delays; high transport charges owing to limited shipping routes; foreign exchange transactions, exacerbated by the need for third-country financing; and the uncertainty surrounding visas for Cuban officials to inspect U.S. agriculture production facilities.

# About 171,000 U.S. citizens visited Cuba in 2005. According to Commission estimates, in the absence of U.S. travel restrictions, between 550,000 and one million U.S. citizens would visit Cuba annually. This increase in U.S. travel would likely increase demand in Cuba for more and better quality food for tourists as well as for Cuban citizens who work in tourism and related services.

# Eliminating restrictions on trade, particularly those related to export financing, would likely have a larger impact on U.S. agricultural sales than lifting the travel restrictions on U.S. citizens. This is because most food imported from the United States consists of bulk commodities that are sold to Cubans rather than foods that are sold to tourists. With the elimination of all such restrictions, U.S. exports to Cuba could almost double from their 2006 level. The largest absolute gains would be for fresh fruits and vegetables, including potatoes; milk powder; processed foods; and certain meats (poultry, beef, and pork).

I can't say I really agree with them regarding the change in Cuba if more tourists were going there. There are lots of tourists from Canada who go to Cuba. The problem is, Cuba has not relaxed their restrictions. Cubans were running illegal restaurants out of their homes to gain foreign currency, but I believe there was a crack-down on that.

The Cuban government (in my opinion) doesn't want the country to be overrun with foreigners and westernized, but that may change since apparently their economy is in the worse shape since the "special period".

.. the past year had been one of the most difficult since the so-called "special period" began - the term used for the economic crisis caused by the 1991 collapse of the Soviet Union, which heavily subsidised Cuba.