Will the U.S. Open Up Trade with Cuba? (2024)

“Cuba is a country of just over 11 million people, and they are very large consumers of rice,” Roberts says. “They eat approximately 80 kilos per person per year — it’s a basic staple of their diet, as it is in a lot of countries around the world. Their annual consumption is 900,000 tons to a million tons, and they have to import because they only produce about half of what they need.

“Cuba has never neglected to pay under cash terms,” Roberts says. “But credit is a large part of international trade and financing. For Cuba to not be allowed credit — they take it as an insult.”

In January 2017, Arkansas U.S. Representative Rick Crawford introduced H.R. 525, the Cuba Agricultural Exports Act, which would repeal restrictions on export financing and give producers access to U.S. Department of Agriculture marketing programs that could help them compete in Cuba’s markets. It would also allow limited U.S. investment in Cuban agribusinesses, as long as U.S. regulators certify the entities are privately owned and not controlled by the Cuban government or its agents. At this writing, the bill is being jointly considered by the U.S. House committees for Foreign Affairs, Financial Services and Agriculture.

Port of Mariel

Dr. Luis A. Ribera, associate professor and director of the Center for North American Studies with Texas A&M’s Department of Agricultural Economics, says Cuba’s newly opened Port of Mariel, only 903 miles from the Port of Houston, should make the island particularly appealing to Texas exporters.

Before Mariel’s new container facility opened, Cuba’s ports could receive only relatively small cargo vessels.

“It’s definitely a game changer,” says Ribera. “It’s a state-of-the-art port and can handle the big ships that can carry 12,500 TEUs. The port is equipped with four cranes with a capacity of 824,000 TEUs annually.” (A 20-foot equivalent unit, or TEU, represents a shipping container 20 feet long and eight feet tall; it’s a standard measure of cargo capacity.)

The Port of Mariel is trying to establish itself as the “hub of the Americas,” as part of the Mariel Special Economic Development Zone, a 180-square-mile area destined for business development in areas such as agricultural processing, manufacturing and oil imports.

Warming Trend

While relations between the U.S. and Cuba have been slow to improve, signs of a thaw are unmistakable.

For the first time in more than 50 years, U.S. airlines are flying regularly scheduled passenger flights to Havana. On Nov. 28, 2016, Texas-based American Airlines Flight 17 became the first regularly scheduled U.S. commercial flight to land in Havana, leaving Miami and arriving to a water-cannon salute. Since then, seven other U.S. airlines — Alaska Airlines, Delta, Frontier, JetBlue, Spirit, Southwest and United — have begun service to Cuba.

In June 2016, Starwood Hotels & Resorts announced an agreement with the Cuban government to open Four Points Havana, the first American hotel allowed to operate there since the revolution. Under the agreement, the Cuban government owns the hotel, while Starwood manages the property’s renovation and day-to-day operations. The agreement received the approval of the U.S. Treasury Department, allowing Starwood to finance property improvements through U.S. financial institutions.

Airbnb, an online community marketplace for home sharing, launched in Cuba after travel restrictions were loosened in 2015. Cuba quickly became the fastest-growing market the online giant has ever launched, despite issues such as a pervasive lack of internet access in Cuba — private citizens cannot access the internet without government authorization — and the inability of Cuban hosts to receive payments directly from an American company. (Instead, Cubans employ work-arounds involving “hosting partners,” essentially middlemen.)

But Rosson says Cuban internet use is on the rise and predicts it will have major implications for Cuba’s future.

“Internet penetration in Cuba five years ago was about 5 percent,” says Rosson. “By last year it had gone up to 35 percent, and is projected to increase again in the next couple of years. And that represents a groundswell of change in terms of information, communications, access to information that people can factor into their business and daily decisions. Those kinds of changes are subtle, but they’re very important.”

Cuba will never be one of America’s largest trading partners, but the potential benefits are real and significant. The Peterson Institute for International Economics estimates that U.S. exports to Cuba could reach $4.3 billion per year if the embargo is lifted. A 2015 study by the Center for North American Studies found that Texas agricultural exports to Cuba could rise to $18.8 million annually if the embargo were lifted, resulting in total economic gains of nearly $43 million annually.

Further expansion of this trade, however, will depend upon relations between the U.S. government and the island’s mercurial leadership. FN

For more information on U.S.-Cuba relations, visit the U.S.-Cuba Trade and Economic Council, Inc.