Latin America

Obama takes ‘a sledgehammer’ to Cuba embargo

Cuban Foreign Minister Bruno Rodriguez holds up the government's annual report on what Cuba loses due to the U.S. embargo, as he gives a news conference in Havana, Cuba, Wednesday, Sept. 16, 2015. Bruno reiterated that the continuation, or ceasing, of the U.S. embargo depends on the U.S., not Cuba, but that talks between the two countries to normalize relations are on the right track.
Cuban Foreign Minister Bruno Rodriguez holds up the government's annual report on what Cuba loses due to the U.S. embargo, as he gives a news conference in Havana, Cuba, Wednesday, Sept. 16, 2015. Bruno reiterated that the continuation, or ceasing, of the U.S. embargo depends on the U.S., not Cuba, but that talks between the two countries to normalize relations are on the right track. AP

What’s commonly known as the trade embargo on Cuba is still on the books, as it has been for some five decades.

But for companies from around the United States – whether a package-delivery firm from Tennessee, rice producers from Arkansas, a heavy-equipment maker from Illinois, or a software developer from Washington state – the barriers to trade with the untapped market 90 miles from Florida are getting lower and lower.

The Obama administration on Friday announced it was moving to further change U.S.-Cuba trade rules, ushering in what experts called a major development that would significantly open the door to expanded business on the island.

It’s a continuation of the actions President Barack Obama and his administration have taken since December, when he announced a major thaw in the decades-long freeze with Cuba. But for American companies and the trade experts who work with them, the announced moves are a big boost in their hopes to – someday – have full and free trade with Cuba.

“There remains much of the embargo to be dismantled,” said John S. Kavulich, president of the U.S.-Cuba Trade and Economic Council, who estimated that maybe 40 percent of the embargo has been disrupted by the president’s regulatory actions.

Obama did not merely chip away at the embargo, Kavulich added. “He used a sledgehammer,” he said.

Kavulich considers the changes announced Friday to be “the most comprehensive trade and investment changes to the United States relationship with the Republic of Cuba in decades.”

The rules will be formally published and take effect Monday. Treasury Secretary Jacob J. Lew said they underscore “the administration’s commitment to promote constructive change for the Cuban people.”

“A stronger, more open U.S.-Cuba relationship has the potential to create economic opportunities for both Americans and Cubans alike,” he added in a statement. “By further easing these sanctions, the United States is helping to support the Cuban people in their effort to achieve the political and economic freedom necessary to build a democratic, prosperous and stable Cuba.”

I don’t know if there will be any great changes overnight. . . . But it should help the business side of trade and lower transaction costs.

David Salmonsen, American Farm Bureau Federation

The rules were greeted warmly by many business interests, who see greater leeway to boost sales and travel to Cuba. But they were instantly lambasted by some lawmakers, particularly those in South Florida who both represent and come from the Cuban-American community.

Rep. Ileana Ros-Lehtinen, a Republican from Miami who also sits on the House Foreign Affairs Committee, said in a statement that the rule changes announced Friday “naively fuel expectations of a non-existent new Cuba.”

“These new regulations are another desperate attempt to ignore the iron grip that the Castro regime maintains on the island’s economy and will only serve to benefit the coffers of the regime,” she added. “By repeating the lie that Cuba has a private sector, the administration is using U.S. regulations to advance the regime’s political agenda in the United States.”

Added Sen. Marco Rubio, a Republican from West Miami who sits on the Senate Foreign Relations Committee and is also a 2016 presidential candidate: “President Obama’s eagerness to please the Castro regime knows no bounds, as he keeps offering one-sided concessions that will strengthen the brutal dictatorship at the expense of the Cuban people. . . . Not only do these measures harm the cause of a free Cuba, they also raise serious questions about the legality of the Obama administration’s regulations.”

There are still major steps that can be taken to further open trade with Cuba, and Congress so far has shown little inclination it is going to act on the issue anytime soon.

That said, the opposition to Obama’s Cuba opening hasn’t been able to stop the president. While experts on both sides of the issue say the embargo as now on the books is politically safe in the short term, there are administrative actions the president can – and has – taken to further his goals.

Among the most significant of Friday’s changes, as announced by the Treasury and Commerce departments, are those involving personal travel, personal remittances and business activity.

Creative lawyering by administration officials is advancing the myth of a ‘private sector’ in Cuba, but there is no such thing.

Jason I. Poblete, trade lawyer and former Republican congressional staffer

On travel: Earlier changes had permitted official government business and some educational and other activities. Now, a close relative also will be allowed to visit or accompany authorized travelers for additional educational activities, journalistic activity, professional research, religious activities and humanitarian projects.

Under the rules, a “close relative” is defined as someone related to a person by blood, marriage or adoption – and “who is no more than three generations removed from that person or a common ancestor with that person.”

On remittances to Cubans: Current rules said they could be no more than $2,000 per quarter. That limit will be removed entirely.

Easing restrictions on business activity by U.S. firms is among the most significant changes.

“The rules in January were important – they established the precedent,” said Robert L. Muse, a Washington-based lawyer and expert on Cuba trade. “But it was more of a beachhead, and it was a bit murky. Now they are engaging the business community in a way that’s going to be interesting and important to them. It begins to give them some real commercial traction.”

Muse said that companies engaged in exporting authorized items to Cuba will be able to establish, maintain and operate physical premises in Cuba.

“Maintaining a presence is brand new – that’s the big further step they have taken here,” Muse said. “The intention is to bring American businesses to the island.”

An example, he said, would be an agricultural company allowed to export to Cuba that would now be able to establish a sales office on the island.

That said, whatever the intent of U.S. rulemakers – and the hopes of U.S. companies –actually getting businesses open on the ground in Cuba will require the assent of the Cuban government.

“That is beyond our control, in terms of determining what the government of Cuba is going to allow to happen,” a senior administration official said in a conference call Friday morning, speaking on the condition of anonymity as a matter of policy. “But we . . . have done what we can to lower all barriers to allow U.S. companies to go down there and really figure out how to get this done with the government of Cuba.”

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