Changes to Cuba Policy Not Guaranteed to Ease Imports into US
The Commerce and Treasury departments are set to unveil regulatory changes to liberalize trade with Cuba in the coming weeks, possibly as early as late January, but it’s unclear whether the Obama administration will make changes to commercial policies for Cuban exports to the U.S. market, said industry representatives and Cuba experts at a National Foreign Trade Council (NFTC) event on Jan. 13.
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Obama largely exempted mention of imports in the Cuba executive order he issued in December (see 1412170032). Licensed travelers will, however, be allowed to import $400 in goods from Cuba, only $100 of which combined can be tobacco products and alcohol, the fact sheet that accompanied the executive action said (here). The order paves the way for Commerce and Treasury to slash barriers to U.S. exports to the country. Exports of building materials for private residential construction and agricultural equipment for non-corporate farmers will be authorized in the regulatory changes, said the fact sheet. U.S. agricultural producers, trade advocates and lawmakers praised the move as a way to open the Cuban market for U.S. shipments (see 1501090018).
The new regulations may contain changes to the U.S. requirements for cash in advance before agricultural exports to Cuba, said NFTC vice president of global trade issues. The most critical regulatory changes will likely come through easing banking transactions though, he said.
U.S. traders and investors aren’t preparing to immediately flood the Cuban market, however, said observers. Cuban resistance to a huge investment wave, the poor state of the Cuban economy, continued U.S. bans on some trade, poor labor conditions and other factors will likely ensure U.S. trade and investment takes a measured approach to the new market, they said. “Anybody that thinks that because our piece is fast-tracking and it’s going to be ready in two or three weeks, anyone who think we’re about to do business with Cuba is going to be disappointed,” said Sarah Stephens, executive director of the Center for Democracy in the Americas, at the event.
But the executive order ushers in a new era for bilateral relations and even Mexico has pledged to assist with the transition (here). Should the Obama administration cut barriers for Cuban exports to the U.S. though, the most competitive products for the U.S. market are likely to be cigars, rum and biotechnology, said those at the event. “Cuba has invested seriously in its biotech industry and there are various medical vaccines and other things that they I’m sure would be very interested in getting into the U.S. market,” said Stephens.
Meanwhile, CubaNow Executive Director Ric Herrero said repeal of the Helms-Burton law, which codifies Cuban sanctions (here), will make the most substantial legislative change to U.S. Cuba policy. “What sort of authority Congress will want to retain for itself, that remains to be seen,” said Herrero. “There could be targeted sanctions that could be put forward on the table.”