By: Jake Colvin Issue: Global Trade Section: Jewel Of Collaboration For the first time in years, the United States is moving to engage Cuba. In early April, the Obama Administration announced that it would lift restrictions on travel and remittances on Cuban Americans, as well as lift restrictions to allow U.S. companies to provide certain telecommunications services to Cuba. President Obama also appears to be pursuing a diplomatic opening with Cuba.
Congress also tinkered around the edges of U.S.-Cuba policy. Earlier this year, opponents of the embargo inserted provisions into a spending bill which made it easier for American farmers and businesses to travel to Cuba to market and sell agricultural and medical products to Cuba which are permitted under an exception to U.S. sanctions.
These are encouraging first steps for those who believe that trade, travel and diplomacy are better ways to advance America’s interests and support the Cuban people than sanctions and isolation. Yet initial steps have been small and largely symbolic. Bolder changes are necessary.
Despite the recent changes to policy, the United States still places more comprehensive sanctions on Cuba than on any other country in the world, including North Korea and Iran. Cuba is the only country in the world to which the United States restricts its citizens from traveling. The U.S. Government places no restriction on its citizens who wish to participate in highly-controlled, propaganda-filled package tours arranged by the government of North Korea, but outlaws tourist travel to Cuba altogether.
Cuba also remains subject to an antiquated U.S. sanctions regime known as the Trading with the Enemy Act (TWEA). In 2008, the Bush Administration graduated North Korea from the act, leaving Cuba as the only country to which TWEA still applies. U.S. sanctions on Cuba continue to apply outside of the United States to companies incorporated in third countries such as Canada and to Cuban nationals living abroad in places like Spain and Mexico.
As a result, U.S. sanctions have not only failed to achieve their aims in Cuba, but they have also created serious friction with U.S. allies. A number of countries, including Canada and the European Union, have enacted laws known as blocking statutes to prevent foreign companies from complying with U.S. sanctions. An attempt by the Treasury Department to enforce U.S. sanctions on a Sheraton hotel in Mexico City in 2007 led to a minor international incident, prompting a response from the Mexican president’s office, an investigation by the mayor of Mexico City, and a fine and brief closure of the hotel for supposedly unrelated building code violations. Engaging Cuba Through Trade
Congress has opened up one significant hole in the embargo. In 2000, Congress passed a sanctions reform law which exempts exports of food, medicine, medical products, and agricultural products from U.S. sanctions. Today, U.S. farmers can sell grain, meat, fish, and other products to Cuba as well as to other countries subject to U.S. sanctions such as Sudan and Iran.
Cuba is required to pre-pay for U.S.-origin products with cash and under highly structured rules.
There is additional room to engage Cuba under current policy. U.S. law allows the sale of a broad range of goods to Cuba under the exception for agricultural and medical goods. The definition of agricultural products includes fish, beer, soft drinks, cotton, wood, fertilizers and vitamins. Derivatives of agricultural products, such as paper products, wooden picture frames, chewing gum, and building materials, are also eligible.
As interest in Cuba grows, companies are likely to become increasingly aware of these opportunities, which could expand trade further.
The Benefits of a New Cuba Policy
There is no shortage of good reasons for allowing Americans to travel to Cuba. By far the best is that the United States should not be in the business of restricting the right of its citizens to choose where they want to travel. We undermine the cause of freedom abroad when we restrict it here at home.
Americans are extraordinary ambassadors to the world. Restricting travel to Cuba severely limits the positive impact Americans can have abroad through everyday activities and interactions. Travel promotes understanding, respect and shared values, which is good for Cubans and Americans alike. “Travel,” observed Mark Twain, “is fatal to prejudice, bigotry and narrow-mindedness, and many of our people need it sorely on those accounts.”
Travel by American citizens would directly benefit the Cuban people. American travelers would help put more money in the hands of ordinary Cubans who work in the hospitality industry in Cuba. While some tourist dollars would undoubtedly benefit the Castro regime, many more would help ordinary Cuban citizens provide for themselves and their families.
From a business perspective, restoring tourist travel to Cuba would benefit U.S. airlines, cruise ships and tour operators and could create thousands of jobs in the travel industry. Estimates suggest up to a million travelers could visit Cuba annually from the United States once restrictions are removed. Resuming travel to Cuba could potentially boost demand for certain American products like beef, soft drinks, wine and potato chips, which are permitted to be exported to Cuba under the exemption to U.S. sanctions.
Current travel restrictions also place a tremendous burden on the same taxpayer dollars that are allocated to investigate al Qaeda and keep international terrorists and criminals out of the United States. A 2007 U.S. Government report concluded that inspections of travelers arriving from Cuba may strain efforts to keep out terrorists and criminals from entering the country. Eliminating the travel ban would allow the U.S. Government to redeploy its resources to tackle more urgent pursuits.
Finally, changing course on U.S. Cuba policy would boost America’s image in the world, particularly in Latin America. Leaders of Argentina, Brazil and other nations have made clear to President Obama that a new U.S. approach to Cuba is a priority for the hemisphere. Removing travel restrictions is an easy way to send a positive signal internationally.
The Changing Politics of Cuba Policy
For the first time, politics should also encourage sweeping changes to Cuba policy. Shifting demographics among the broader Hispanic population in Florida help make a new approach to Cuba politically feasible. Florida is younger, more diverse, and more progressive than it was just a few years ago, as an influx of immigrants from Central and South America have changed the voter profile. Statewide, non-Cuban Hispanics – who tend to disagree with U.S. policy towards Cuba – now out number Cuban Americans. In November, Obama received 57 percent of the Hispanic vote in Florida.
At the same time, more Cuban Americans voted for President Obama in November – 47 percent according to one poll – than for Clinton in 1996, even though Obama advocated for direct negotiations with the Castro regime.
In the wake of the election, support for dramatic changes to U.S. Cuba policy from Cuban Americans has skyrocketed. Sixty-seven percent of Cuban Americans support removing all restrictions on the ability of U.S. citizens to travel to Cuba according to an April poll by Bendixen and Associates. An equal percentage holds favorable or somewhat favorable views of President Obama -- notwithstanding his support for diplomatic overtures and new approaches to Cuba. An earlier poll by Florida International University and Brookings found that 55 percent of Cuban Americans favor an end to the entire embargo.
President Obama has managed to influence polling numbers by demonstrating political leadership. Additional leadership is likely to continue to drive poll numbers in favorable directions.
Bolder Actions are Needed
While small changes to policy are welcome, large shifts are long overdue.
The Obama Administration and Congress should rip off the band-aid that the United States has applied to Cuba all at once rather than tugging around the edges of policy or in response to gestures from Castro’s government.
As former Assistant Secretary of State for Western Hemisphere Affairs and current advisor to President Obama, Jeffrey Davidow suggested to me last year, “Whether we do it for Cuba or the other rogues of the world, we need more contact and we need to be doing more without demanding some sort of political return.”
The President and Congress can take bold action. For one, President Obama should work with Congress to end all restrictions on the ability of U.S. citizens to travel to Cuba.
Ironically, the piece of legislation that was designed to loosen the trade embargo restricts the ability of the President to end the ban on travel by U.S. citizens to Cuba. The 2000 law which exempts exports of agricultural and medical products from U.S. sanctions includes a provision, which was championed by pro-embargo members of Congress, which prohibits the executive branch from licensing “travel to, from, or within Cuba for tourist activities.” As a result, the President must work with Congress, which could either restore his authority to resume travel or lift the ban outright. Legislators in the House and Senate have introduced bills to restore travel to Cuba, including H.R. 874 and S. 428, the Freedom to Travel to Cuba Act.
In addition, the Obama Administration can use its licensing authority to begin dismantling the Cuba embargo. President Obama retains wide discretion to make significant changes to U.S. Cuba policy, despite legislation by Congress, which wrote regulations governing the Cuba embargo into law. As a Clinton Administration official noted, Congress “codified a process by which there was an embargo to which exceptions could be granted on a case-by-case basis by the president.”
President Obama has already announced that he will use this authority to exempt certain U.S. telecommunication services from sanctions. He could – and should – use this authority to exempt more American products like tractors and construction equipment from the embargo, to establish regular banking relationships so that travelers can use their Visa and American Express cards, and to permit private financing for exports to Cuba.
President Obama has also moved to engage diplomatically with the Cuban government and make clear that everything is on the table. Encouraging regular diplomatic contact between U.S. and Cuban counterparts on common interests like migration and counternarcotics is one way to help to develop relationships and lay the groundwork for discussions of other issues. President Obama should also test recent statements from Cuban President Castro, who indicated a willingness “to discuss everything -- human rights, freedom of press, political prisoners, everything.” If Cuba is willing to make clear reforms on the issues that Castro identified, the United States ought to be prepared to discuss property claims, trademark issues, Cuba’s inclusion on the State Departments list of countries that sponsor terrorism and the entire embargo. Ultimately, normalizing U.S.-Cuba relations will require diplomatic negotiations.
President Obama has rightly suggested that, “a relationship that effectively has been frozen for 50 years is not going to thaw overnight.” At the same time, the United States can start chipping away large chunks of ice.
Jake Colvin is Vice President for Global Trade Issues with the National Foreign Trade Council (www.nftc.org), a business association in Washington, DC. He is also a fellow with the New Ideas Fund, for which he has written a policy paper on “The Case for a New Cuba Policy.”