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.
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?