Despite the Obama administration’s easing of some restrictions on travel and commerce with Cuba, don’t expect Starbucks to soon dot every Havana street corner or Marriott to start building a beachfront hotel.
The U.S. trade embargo imposed in the 1960s, and subsequent further restrictions on commerce with Cuba, remain in effect and can be lifted only by Congress. For the time being, companies from Canada, Brazil, Spain, Mexico and elsewhere can breathe easy. They won’t be facing well-financed U.S. competitors, either in trade or investment on the island.
Most trade with, and investment in, Cuba remains off limits. That’s because the openings announced Friday restrict commercial activities to individual Cubans without ties to government and private companies. And Cuba remains an almost entirely state-run economy.
The relaxed rules “push the ball forward,” said Paul Johnson, president of Chicago Foods International and vice chairman of the U.S. Agriculture Coalition for Cuba, which hopes to roll back the embargo. “But it’s going to take an act of Congress to do anything truly impactful. There’s a lot that can’t be done yet.”
For example, while Caterpillar or its suppliers may find it easier to send tractors or replacement parts to Cuba, U.S. cattlemen and poultry producers still can’t supply Cuban-owned hotel chains and resorts that are chock full of rich European vacationers.
“For U.S. agriculture products to be competitive with Brazil or Argentina, it’s going to take Congress to act, no question,” said Johnson, pointing to three laws that limit this week’s opening: the 1992 Cuba Democracy Act, the 1996 Helms Burton Law and the 2000 Trade Sanctions Reform and Export Enhancement Act.
It’s not to suggest that President Barack Obama’s Dec. 17 announcement and subsequent easing of travel and trade restrictions is unimportant.
“The regulations will dramatically expand the ability for Americans to visit Cuba and will begin to permit American businesses to explore the Cuban market,” said Jack Colvin, vice president of global trade for the National Foreign Trade Council, a lobby for multinational corporations. “The regulations are even more forward leaning than the president’s announcement suggested.”
But U.S. laws continue to limit how much access U.S. companies might get to the nascent Cuban marketplace, and the ability of ordinary Americans to visit Cuba’s pristine beaches. Supporters of the long-standing trade embargo vow to keep it that way.
“There’s not going to be a McDonald’s or Starbucks or Hilton hotels. People aren’t going to be developing condos or office buildings,” insisted Mauricio Claver-Carone, a director with the U.S.-Cuba Democracy Political Action Committee, which lobbies Congress to keep the embargo in place. “Investment is just not going to happen, and that’s just huge.”
What little Cuba does export is unlikely to reach U.S. shores anytime soon, he added.
“From rum and cigars to sugar and nickel, none of that will happen,” Claver-Carone said confidently.
How fast that changes depends more on the Cuban government than it does on the U.S. Congress. Lawmakers are reluctant to scrap the trade embargo without signs that Cuban leader Raúl Castro is willing to cede political space to opponents and reduce the state’s role in the economy.
With the new rules published Friday, the Obama administration has largely exhausted what it can do in the face of existing law. A senior administration official, briefing Thursday under a White House-imposed condition of anonymity, said, “We haven’t left things purposely behind that the president asked us to implement.”
Obama’s actions are as much about preparing for a post-Castro Cuba as they are about trade and commerce. The rule of Raúl Castro, 83, is winding down and his charismatic brother Fidel, 88, is ill and infirm. Fidel Castro has vanished from the political stage, but his brother, who long led the military, leaves behind a power structure that might survive him.
Under Raúl Castro, the military became deeply involved in the limited commerce that exists on the socialist island, and it might play a pivotal role in further opening up the country or closing it off.
For now, the hopes of U.S. companies remain hampered by the embargo. When and how it’s lifted is in the hands of the Cuban government. If U.S. goods could actually get into the hands of individual Cubans, and if entrepreneurship were allowed to flourish, the embargo might be eased or even lifted.
“The pace will largely be determined by Cuba,” predicted Johnson.