President Barack Obama has just made a significant announcement pertaining to normalizing relations with Cuba. His comments come on the heels of the release of U.S. contractor Alan Gross, who spent five years in prison in Cuba, and the three remaining Cuban prisoners held in the United States who were a part of the group of prisoners labeled the Cuban Five. All prisoners were held on espionage charges in the countries in which they were imprisoned.
Here is a brief synopsis of the announcement and analysis of what these changes will mean for U.S.-Cuban trade.
“It has had little effect….These 50 years have shown isolation has not worked,” President Obama said in today’s address. Here are some of the points that I noted as they pertain to the exchange of goods and services between the United States and Cuba:
- Re-establish diplomatic relations, which will include setting up a U.S. embassy in Havana, Cuba
- Lift restrictions on travel, commerce and the flow of information
The second point entails the following:
- “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.”
The U.S.-Cuba embargo remains and a ban on travel to the Caribbean island for tourism purposes is still in place. Nevertheless, this administration is taking steps to ease the tensions between the United States and Cuba and facilitate trade in additional goods and services that may be beneficial to both sides.
I was fortunate enough to benefit from earlier reforms and travel to Cuba in the summer of 2012 to study its political and economic reforms. Please see my earlier analyses of U.S.-Cuba policy and U.S.-Cuba trade (click here). Today’s announcement further advances the earlier policy reforms that allow for trade between the United States and Cuba even with the U.S. embargo against Cuba.
What are your thoughts on President Obama’s speech?
If anyone has an analysis of Cuban President Raul Castro’s speech, which was made at the same time as that of President Obama, please contact me at email@example.com.
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