Cuba Trade Briefs for SMEs


With the restoration of diplomatic relations between the United States and Cuba in 20015, businesses are looking at both the opportunities and challenges in the Cuban market. However, opportunities already exist due to specific legislation going as far back as 2000.

Select U.S. products have been competitive in the Cuban market throughout the 21st century. For example, wheat, corn and rice accounted for a large portion of U.S. food exports to Cuba. Food exports to Cuba reached a peak in 2008 before dropping drastically over the next seven years. Our analysis of trade statistics shows that the top five competitive exports to Cuba are meat, animal feed, soybeans, corn and chemical fertilizers.

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At the same time, new opportunities have opened up for other products and services. More specifically, agricultural equipment and services-based industries, such as financial services, stand to gain from recent U.S.-Cuba policy reforms.

U.S. exporters to Cuba enjoy particular competitive advantages. Their competitive strength lies in their geographical proximity to the Cuba, lower transportation costs, reduced delivery time and small volume capacity.

Although U.S. exports can be cost competitive due to the reasons highlighted above, other factors present a challenge to their ability to compete. For example, both U.S. and Cuban policies increase the transaction costs for U.S. exporters, which, in turn, increases the price of their products in the Cuban market.

GRIIT’s Cuba Trade Brief highlights the specific opportunities that allow U.S. exporters access to the Cuban market. This brief goes further to assess the risks for SMEs in the Cuban market and offers simple, realistic recommendations for business owners looking to take advantage of the current and future opportunities in the Cuban market.

To check out the first of GRIIT’s trade brief series, click here.

What questions do you have about taking advantage of the Cuban market currently and/or when the trade embargo is lifted?

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The Effect of China’s Currency Devaluation on U.S.-China Trade


Yasmin Aljarki

100 yuan

After a central bank devaluation last week, China’s yuan fell to a four year low. This has sparked fears of a currency war brimming, as other countries also feel the pressure to devalue their currencies. Financial markets have been on edge since the devaluation, bringing China’s economic strength into question.

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Financial experts have seen the move to devaluation as a benefit to China, allowing potential export growth given its recent slump in exports this past year. Yet, others argue that despite the stimulation to China’s declining export industry, a much bigger devaluation would be needed to have a meaningful effect on China’s large economy. Furthermore, a weaker yuan would lead to a rise in the cost of imports, which could result in the fall of stocks and further harm the economy. Therefore, the collateral effect of the devaluation seems to outweigh any substantial benefit it would have to China’s exporters.

China’s central bank, the People’s Bank of China, has reassured markets that the devaluation will not be a recurring trend. Yet, the impact of the devaluation on the United States is apparent. A weaker yuan means a stronger dollar, which in turn would hurt U.S. manufacturers exporting to China, as American goods become more expensive.

Therefore, the impact on trade is apparent. The close link between the yuan and the dollar has a significant effect on trade between these two countries. Importers and exporters should continue to monitor the yuan, although it is unexpected that a devaluation as significant as this one is to occur again systematically.

Yasmin Aljarki is a part of the project support team at the Global Research Institute of International Trade. She has earned her Bachelor of Law at University College London and a Master of Law at the University of Southern California. Yasmin is now transitioning to the world of business and international trade, whilst earning a postgraduate certificate in International Trade & Commerce at UCLA. To learn more about Ms. Aljarki, please click here.

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Top 5 Trade Policies to Follow in 2015: An Update

In January, I highlighted five key U.S. trade policies to watch this year. A little more than half way through the year, there have been a number of significant advancements. In other policies mentioned, progress has been slow. These trade policies are important in determining U.S. competitiveness around the globe. Check out how the United States has progressed with particular trade policies.

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1. African Growth and Opportunities Act (AGOA)

AGOA was signed in 2000 by President Bill Clinton to promote trade between the United States and eligible Sub-Saharan African countries. (For details about what AGOA means for U.S. and Sub-Saharan African businesses, check out my earlier posts.) U.S. Congress reauthorized AGOA on June 25th, ahead of its September 30th expiration date.  President Obama signed this unilateral trade deal into law on June 29th. African exporters from eligible countries can continue to enjoy duty-free access to the U.S. market.

2. Dominican Republic-Central American Free Trade Agreement (DR-CAFTA)

DR-CAFTA  took effect in the United States, El Salvador, Guatemala, Honduras, and Nicaragua in 2006; the Dominican Republic, 2007; and Costa Rica, 2009. This year, all duties placed on manufactured goods traded between the seven countries will be completely eliminated, provided that they satisfy certain rules. (See earlier posts on DR-CAFTA rules that producers must follow to enjoy duty-free treatment.)

Additionally, Nicaragua no longer enjoys a special benefit known as Tariff Preference Levels (TPLs), in which apparel made of certain cotton and man-made fiber and assembled in Nicaragua could enter the U.S. market duty-free regardless of where the fabrics were produced. These TPLS were designed to help Nicaragua, since its textile industry is extremely small. All other DR-CAFTA countries can only use fabric that originates in one or more of the DR-CAFTA countries.

Even with the expiration of the TPLs, a June 3rd report shows that the Nicaraguan textile industry has not been negatively impacted in terms of attracting foreign companies and foreign direct investment. For example, Dean Garcia, president of the Nicaraguan Association of Textile and Apparel Industry (ANITEC), said, “All of the Korean textile companies that have a presence in Nicaragua, also have a presence in Haiti, but since we lost the TPL, none have left the country, rather Haitians have come here to train.” (For other posts about DR-CAFTA, see “U.S. labor complaint against Guatemala.”)

3. National Export Initiative (NEI)

President Obama announced the NEI in January 2010. The goal of the NEI was to double U.S. exports by January 1, 2015. According to numbers provided by the U.S. Bureau of Economic Analysis, U.S. exports of goods and services to the world reached $1.6 trillion by the end of 2009. By the start of 2015, the export figure increased to $2.3 trillion, which is a 44 percent increase. Five years into the NEI, the United States has increased its exports but has fallen short of the original goal.

4. Trans-Pacific Partnership Agreement (TPP)

The TPP will be a large trade deal that the United States has signed with multiple countries throughout the Asia-Pacific region. (See earlier posts describing the TPP in detail.) However, negotiations still continue after missing a number of deadlines.

Trade ministers met again on July 28th to discuss the TPP, with today being the last day of meetings, in Maui, Hawaii. Dairy exports and intellectual property rights on medicine remain among the sensitive issues during these talks.

5. Trans-Atlantic Trade and Investment Partnership Agreement (T-TIP)

The T-TIP is another agreement that is still being negotiated. Similar to the TPP, this potential trade deal between the United States and the European Union continues to face an uphill battle on both sides. (For a detailed description of T-TIP, click here.)

The 10th round of negotiations took place this month in Brussels, Belgium from July 13-17, 2015. A key issue that was discussed during this round of negotiations was investor state dispute settlement (ISDS). As defined by Director of the National Economic Council and Assistant to the President for Economic Policy Jeffrey Zients:

The purpose of investment provisions in our trade agreements is to provide American individuals and businesses who do business abroad with the same protections we provide to domestic and foreign investors alike in the United States.

ISDS is an arbitration procedure – similar to procedures used every day by businesses, governments, and private citizens across the globe – that allows for an impartial, law-based approach to resolve conflicts and has been important to encouraging development, rule of law, and good governance around the world. (For more on the ISDS debate, see “What Investor State Dispute Settlement in Canada-EU FTA Could Mean for US-EU T-TIP Deal.”) 

In sum, progress has been made in terms of promoting trade with Sub-Saharan Africa. The United States has increased its exports but has fallen short of the goal of the National Export Initiative. Nicaragua’s textile industry appears to continue to flourish despite the expiration of the special program offered by the United States, according to public reports. Lastly, the trade negotiations with the Asia-Pacific region and the European Union continue moving forward, although a number of contentious issues have hampered the completion of negotiations.

 Outline of key dates related to the policies above:

December 31, 2014 – Expiration of trade preference levels (TPLs) for Nicaragua

January 1, 2015 – Anticipation of U.S. export doubling under the National Export Initiative

June 25, 2015 – AGOA reauthorized by U.S. Congress

June 29, 2015 – President Obama signs AGOA into law

July 13-17, 2015 – T-TIP talks (10th round) in Brussels, Belgium

July 28-31, 2015 – TPP trade ministers meet in Maui, Hawaii

December 31, 2015 – End of tariffs on manufactured goods traded between the United States, Central America (Guatemala, Honduras, El Salvador, Nicaragua, Costa Rica) and the Dominican Republic as a part of DR-CAFTA.


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What Investor State Dispute Settlement in Canada-EU FTA Could Mean for US-EU T-TIP Deal


Shaun Sarwar

Free trade agreements increase opportunities in the global market for a number of countries. The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union provides increased access for both parties in each other’s markets. Although the agreement was signed in 2013 and is expected to go into effect in 2018, one issue has made it more difficult for ratification in the EU–investor state dispute settlement (ISDS).

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Two economically large EU members, France and Germany, are holding back approval for CETA unless the ISDS is altered. ISDS allows foreign investors to sue countries in which they conduct business if they can prove that free trade agreement (FTA) rules are not being adhered to. Foreign trade officials from France and Germany worry that ISDS gives large multinational corporations excessive power, which they may use to “attack states…over their public policy choices.” If the proposed changes are enacted, states will have an increased ability to handle ambiguous situations as they arise.

The creation of an international court expressly in place to handle matters pertaining to free trade deals has also been proposed. The primary argument used in favor of implementing an “International Investment Court,” as opposed to relying on the WTO dispute settlement mechanism, is that it would employ permanent judges instead of arbitrators. Proponents claim this to be “a recognised prerequisite for judicial independence.”

The final outcome of CETA and the proposed changes to ISDS will be monitored closely by U.S. foreign trade officials and multinational firms. What happens with CETA will influence the Transatlantic Trade and Investment Partnership (TTIP) agreement that is being negotiated between the United States and the European Union. In terms of TTIP, some EU members are concerned that powerful American corporations will have too much legal power under current ISDS provisions. Before TTIP is finalized, changes to ISDS embedded in the agreement are almost a given. Since CETA is ahead of TTIP, it will set a precedent which could very well provide a framework for TTIP.

The current plan is for the agreement to come into effect in 2018. So, there is time to sort out the ISDS issue. There is still optimism on both sides that CETA will be ratified this year. It is clear that both Canada and the EU stand to benefit from CETA. What happens with CETA will be a good proxy for TTIP. Many parties will be watching to see if Canada and the EU are able to find a mutually agreed upon solution to the question of ISDS.


Shaun Sarwar completed a Bachelor of Arts from the University of Alberta, majoring in economics and minoring in English. He is currently in the UCLA Extension International Trade and Commerce program and an intern with the Global Research Institute of International Trade (GRIIT). 


For earlier posts on CETA, please click on the following links below:

Canada-EU Comprehensive Economic and Trade Agreement: A Summary –



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What U.S. Policy Toward Cuba Means for U.S. Businesses

Following last week’s announcement that the United States will re-open its embassy in Havana, Cuba later this month, I have received calls and e-mail messages from small and large business owners as to what opportunities exist for them in Cuba.

Here is a brief synopsis of what type of trade is allowed and figures for U.S. exports to Cuba in the first part of 2015.

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The United States anticipates the re-opening of its embassy in Havana on July 20th. Although the United States and Cuba are taking key steps to normalize relations, it is important to remember that restrictions are currently still in place and must be followed.

President Obama’s December 2014 announcement to normalize relations with Cuba loosened restrictions in the following manner:

  • “Remittance levels will be raised from $500 to $2,000 per quarter for general donative remittances to Cuban nationals (except to certain officials of the government or the Communist party); and donative remittances for humanitarian projects, support for the Cuban people, and support for the development of private businesses in Cuba will no longer require a specific licenses. Remittance forwarders will no longer require a specific license.”
  • “The expansion will seek to empower the nascent Cuban private sector.  Items that will be authorized for export include certain building materials for private residential construction, goods for use by private sector Cuban entrepreneurs, and agricultural equipment for small farmers.  This change will make it easier for Cuban citizens to have access to certain lower-priced goods to improve their living standards and gain greater economic independence from the state.”
  • “Licensed U.S. travelers to Cuba will be authorized to import $400 worth of goods from Cuba, of which no more than $100 can consist of tobacco products and alcohol combined.”
  • “U.S. institutions will be permitted to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions.”
  • “The regulatory definition of the statutory term “cash in advance” will be revised to specify that it means “cash before transfer of title”; this will provide more efficient financing of authorized trade with Cuba.”
  • “U.S. credit and debit cards will be permitted for use by travelers to Cuba.” (See original post with this information)

A number of large companies are taking advantage of these looser restrictions such as Netflix, Airbnb and MasterCard. Airline and cruise companies, such as JetBlue and Carnival Corp., have announced offering travel services from the United States to Cuba.

From January to May 2015, the United States exported US$112.5 million worth of goods, according to data collected from the U.S. Census Bureau. This is a decrease from the value of US$178.5 million worth of goods from the U.S. to Cuba during the same period a year earlier. Meanwhile, U.S. service providers are expanding to the Cuban market.

To learn more about what type of business is allowed and still prohibited, visit the Office of Foreign Assets Control’s website at:

 Are you interested in a trade mission to Cuba? Click here.

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