Commentary: Exiling the embargo

The U.S. embargo on most trade with Cuba, put in place following the Cuban missile crisis in 1962,no longer has even a whisper of a chance of bringing the regime to its knees, economically speaking, as was imagined by the U.S. political leadership 50 years ago.

That’s evident from even a cursory review of foreign trade with the island nation, as a McClatchy Newspapers report detailed. Just in the last five years, there is now evident an“abundance of foreign goods and investment in Cuba,” according to the report.

“While U.S. companies are blocked from doing business in Cuba, that hasn't stopped their international competitors from Canada, Mexico, Brazil and even China from setting up shop,” the story noted. “It’s striking when visiting the island just how much the rest of world now trades with, invests in and sends tourists to Cuba.”

Examples include not only hordes of Europeans, Canadians and Brazilians vacationing on the tropical island, but such foreign powers as:

• China’s Greatwall Drilling Co., which is searching for oil in cooperation with the Cuban state oil company Cupet.
• Greatwall’s parent company, China National Development Corp., which is expanding a Cuban oil refinery jointly owned with Venezuela’s state oil company, PDVSA.
• Canada, which is engaged in a joint venture with Cuba’s state energy sector and Sherritt International Corp.in oil and natural gas exploration
• Spanish oil company Repsol YPF, which is drilling in the deep waters offshore, about 30 miles northwest of Havana; along with Indian and Norwegian oil companies

Growth potential denied

Up until 2004, U.S. farm exports represented about 36% of food aid to Cuba, according to USDA’s Foreign Agricultural Service. The bulk of that trade involved exports of corn, soybeans and poultry products. But then the Bush administration tried to further pressure the Cuban government by requiring more cash upfront for imported food.

By2008, the United States was supplying less than 30% of Cuba’s food and agricultural imports, according to FAS data. Meanwhile, declining production in Cuba’s non-sugar agricultural sectors mean that ag imports will be even more important for feeding Cuba’s population near term.

As FAS reports painstakingly document, the United States offers Cuba numerous advantages in purchasing food and agricultural commodities:

• Quality is generally high
• Pricing—especially for raw commodities—tends to be very competitive
• Geographic proximity results in faster transit times and lower shipping costs, important for perishable food and ag products
• Shorter lead times for orders reduces pressure on Cuba’s domestic storage capacity

Yet according to the U.S.-Cuba Trade and Economic Council, U.S. exports to Cuba fell to $347 million in 2011, less than one-half of the value of our exports there just four years ago.

As a result—or more accurately, as a consequence—Brazilian farmers, whose government subsidizes export credits, snagged a big piece of the market.

But there’s little hope the United States will lift the trade embargo anytime soon. The issue is expected to come up again over the weekend when President Barack Obama travels to Columbia to meet with other leaders in the hemisphere. But Obama's hands are tied: In 19996, Congress passed the Helms-Burton Act, which requires that the embargo can only be lifted when Cuba has a democratic government.

That hasn’t been the case in over a century.

Given the political leverage of the Cuban-American community in Florida, a key battleground state in presidential politics, the embargo remains intact. Although there is overwhelming evidence that the Cuban government continues to exercise near-dictatorial control over the population, the trade embargo is no longer constraining the Cuban economy, much less loosening the grip of the regime.

Some former U.S. diplomatic officials contend that lifting the embargo might be a more effective way to encourage change, according to the McClatchy story. They note that since the embargo was imposed, the Vietnam War ended, the Soviet Union collapsed, East and West Germany reunited and China rose to become the world’s second-largest economy. The United States now trades with all those countries—former enemies.

For the sake of U.S. agricultural exports, for the benefit of the overall U.S. balance of trade and for the likely positive impact a resumption of trade, travel and tourism would have on the repressive Cuban government, it’s high time to end the embargo.

It’s never worked as it was intended, and it’s not going to start having an impact—other than a negative one for our country—any time in the future.

The opinions expressed in this commentary are solely those of Dan Murphy, a veteran food-industry journalist and commentator.

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