Ever since President Donald Trump announced that he wanted a better deal on Cuba for U.S. taxpayers, opponents of Trump’s new approach have been lamented it will hurt American businesses, especially agriculture and others in the food industry. The U.S. Agriculture Coalition of Cuba, for example, issued a press release stating its members were “disappointed” with President Trump’s “decision to undo recent federal initiatives that lay the groundwork for normalizing trade relations with Cuba … we will continue to work with the Administration and Congress to repeal trade restrictions that currently work against the economic interests of both nations.”
The criticism from these lobbying interests is expected, but premature. The June 16 Presidential Memorandum on Cuba policy clearly states that the regulatory specifics will take about 3 months or so to implement; however, this also provides a good fund-raising opportunity for these organizations. Cuba is big business in Washington, D.C., especially for organizations seeking to lift the embargo, or what remains of the embargo. Farmers are an important part of the strategy as they should be.
Not only do U.S. growers help feed America, they can help, and do, feed the world. Yet in Cuba, farmers are being used politically by these organizations in a way that does not make a whole lot of sense. Rather than help growers they are hurting small, medium, and even larger farms by needlessly exposing them to a political battle that the main problem, Cuba, has manipulated for the last few years. That all changed with President Trump’s America First foreign policy agenda, leaving special D.C. interest groups in a real bind.
The USACC, the U.S. Chamber of Commerce, Cuba Engage, CubaNow, as well as other lobbying groups and initiatives created after the December 17, 2014 Obama policy shift claim, among other things, that the Cuba market could represent as much as $1 billion in new revenue for the U.S. agriculture and food industry. If Cuba wanted to buy from the United States, it would. If that is what these lobbying entities would focus on, selling food, Cuba likely would. While these groups play Cuba politics, Cuba buys corn from Brazil and Argentina, rice from Vietnam (despite the fact that Texas has plenty of it to export to Cuba), as well as the European Union, Canada, and many other far away places.
Of course, not all growers in the United States are eager about Cuba opening up, with or without Communism. Something that gets lost in the U.S.-Cuba policy debate is that if you’re a grower from a state that faces potential competition from Cuban exports, such as the State of Florida, you’re not as eager to press for any changes in U.S. law until Cuba gets its economic and trade house in order. Cuba’s socialist economic planners, eager to prop up an economy based on Cuba Communism with Socialist ideas, would like nothing more, for example, than to be able to dump Cuban citrus and vegetables in the U.S. during the winter season. The highly subsidized U.S. sugar industry is also not interested in Cuba dumping cane or beet sugar products on the global market either, at least not yet. But that is a topic for another day. Let’s get back to the more pressing political issues facing American growers and Cuba.
From 2014 to 2016, American growers were promised the land of milk and honey by both Cuba and the Obama administration. Yet the fact is that beltway lobbyists lured farmers to join coalitions that failed to deliver on export opportunities with Cuba. The embargo, or what is left of it, is not to blame. The reason why American growers and food industry professionals were not able to export more to Cuba during the Obama administration is because the Obama administration and special interests were more focused in creating a legacy for Obama. Their goal was not to sell more food. The goal was to lift the sanctions. That was a huge mistake that hurt American companies.
Before I share with you a very important trade statistic, remember the United States still, at least on paper, maintains a comprehensive embargo on Cuba. In my opinion, it is so full of exceptions that it should be called an embargo in name only. This is not because of the food or medicine exports. It is because U.S. policymakers, Republicans and Democrats, Congresses as well as multiple presidents, have failed to enforce the laws on the books that give teeth to a bifurcated policy of support for the people of Cuba while imposing economic sanctions on the government. So while I have been very critical of the Obama administration’s approach to Cuba, Republicans also carry a lot of the blame for the terrible state of U.S-Cuba relations.
As the United States has done with many other economic sanctions programs, including programs in place against Iran, Sudan, and North Korea, food and medicine have been exempt from most export restrictions. It is a balanced approach designed, experts say, to minimize the impact of economic sanctions on the general population of the target country. For persons subject to U.S. law, especially American companies, this means is that it takes a little more regulatory compliance to export to high risk markets such as Cuba. In 2000, for example, Congress passed a law, with the support of hard-line Cuban-American members of Congress, to make it easier for food, medicine, and medical supplies to he exported to sanction nations such as Cuba. The Trade Sanctions Reform Act of 2000, signed into law by President Bill Clinton, fell to President George W. Bush to enforce.
A lot of these special interests groups clamoring for changes U.S. policy always leave out key details about the Bush-era and Cuba. Despite his strong anti-Communist Cuba credentials, President Bush and his team were able to create the conditions to sell a record amount of food and medicine to Cuba. They even managed to create the first U.S.-Cuba anti-cancer collaboration project with a company in California and the Cuban government. During the time President Bush was in office, non-remittance trade with Cuba reached $2.7 billion. In contrast, President Obama’s overture to the Communist Cuban government, according to U.S. Department of Commerce data, yielded roughly the exact same amount of trade with Cuba as during the Bush administration: $2.8 billion!
When President Trump said in Miami, and in other places, that American taxpayers got a bad deal with Cuba during the Obama years, this is, partly, what Trump is talking about. Remember that during Obama administration, Communist Cuba received many goodies from the United States that it has long craved but that the Bush administration, allegedly, even refused to discuss. Obama gave them something they really wanted, more than anything else, diplomatic recognition. Why? Because, as much as they will never ever admit this, it accords the Communists legitimacy that they can, in turn, parlay into private loans and foreign investments to salvage a failing state. In addition Cuba, an ally of Iran that harbors scores of terrorists from U.S. law, was also removed, prematurely, from the U.S. state sponsors of terrorism list. Before handing out all of these chits, and a lot more, why didn’t the Obama administration help American taxpayers ink more trade deals, such as food exports?
Cuba is a command and control economy. They use generally accepted accounting principles devised in places such as Communist China. In other words, they cook the books and use trade to advance an ideological agenda. Trade for these countries has nothing to do with free markets and everything to do with advancing what they want politically to keep building their socialist paradises. Cuba could care less about American growers. What they crave more is stealing what they can from the United States on the latest growing trends and then kick Americans out, again, as they did in 1959.
Indeed, Cuban short game is also to use U.S. food politics as a political weapon to secure sanctions easing concessions from Uncle Sam. I think U.S. agriculture, as was the travel sector, was used by special interests in Washington, D.C. to help advance Obama’s reckless policy of engagement with rogue regimes without conditions. While not all of the groups I mentioned earlier are of this ilk, there are some people in Washington, D.C. who support Cuba, some of them act as foreign agents of the regime, and are more focused on removing all sanctions without conditions than, first, making sure U.S. interests are dealt with upfront.
There is a saying in Cuba that cautions not to get ahead of yourself or, as we say it in the United States, putting the cart before the horse (pusieron la carreta antes de la mula). That is exactly what the Obama administration did. They put Cuba’s interests ahead of American interests, including using American growers to exploit emotional and political debates in the United States. During the Bush administration, as will be the case more so during the Trump administration, Cuba was reminded that access to the U.S. market is a privilege, not a right. After all Cuba received from President Obama you would think they’d buy more food from the United States. Why should they? Obama shifted that idea and practiced diplomatic welfare that put American growers, and other businesses last, and Cuba first.
If history is a guide, agriculture sales to Cuba will fare much better under Trump than Obama, and even better to other regions of Latin America including Mexico, especially if a deal can be struck on NAFTA. The President’s critics should keep their powder dry until the new regulations are issued in about 90 days. Rather than create political problems, Cuba should make a few gestures and buy, among other things, more food from American growers. This makes good political sense and, more importantly, economic sense. Finally, growers and other companies that are members of these different trade groups in Washington, D.C. should ask for an accounting of what these groups plan to do now that there is a new outlook on Cuba, and indeed all Latin America. These special interest groups invested millions of dollars to lobby Congress from 2014-2016 and U.S. food and travel sector has very little return on investment to show for it.