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Senators proposing bill to end U.S. trade embargo with Cuba

 

 

By STAN MADDUX

Indiana Correspondent

 

WASHINGTON D.C. — Agriculture in the United States is thought to benefit if President Barack Obama’s call to ease trade restrictions in Cuba develops in a total lifting of the half-century embargo.

However, some experts on the situation believe select farmers from southern states with products high in demand from Cuba will benefit the most, while the overall impact on the agriculture industry in the United States is likely is to be minimal either way.

"Probably the best we can say for now is that Cuba has the ‘potential’ to offer growing opportunities for U.S. ag exports, but the immediate impact is likely to be somewhere between nonexistent and small," said Chris Hurt, professor of agricultural economics at Purdue University.

Long-range, the impact of lifting the embargo and all of the restrictions on imported farm goods and even tourism that come with it would be greater, but still not huge.

On the other hand, Cuba growing its economy to produce more wealth and consumption would be the biggest difference-maker in easing or a total lifting of the embargo restrictions.

"Their economy has to grow if they are going to better their diets and import more of a variety of products from the U.S. That’s what really has to happen over time," said Dave Salmonsen, senior director of Congressional relations for Washington, D.C.-based American Farm Bureau.

U.S. Sen. Amy Klobuchar (D-Minn.), with a bipartisan group of lawmakers, have introduced a bill called The Freedom to Export to Cuba Act.

It would strike down the embargo that contains laws prohibiting U.S. businesses from trading with or operating in Cuba.

Supporters of this argue the embargo has not succeeded in securing the country’s interests in Cuba and by lifting it, benefits will be produced in both countries by opening up a potential market of 11 million people just 90 miles from the United States. Salmonsen said trading would be much easier if the embargo was lifted because just loosening current restrictions doesn’t remove the barriers that now exist to exchanging currency from buying and selling products.

Ending the embargo would make direct financing between the countries possible. Just easing restrictions would mean still having to pay with cash and going through a third-country bank to obtain financing – something that can limit the volume of trading and increase shipping costs, putting U.S. farmers at a disadvantage with other countries in trying to sell their goods to Cuba, he said.

Another potential benefit from lifting the embargo would be making Cuba more accessible to tourists, further driving up demand for agriculture products from this country.

Producers of rice in the South and other food popular among Cubans would probably benefit the most from higher demand and shipping costs being less than from more distant states, Salmonsen said.

To put the potential impact in perspective, Hurt pointed to the size of the economy in Cuba being $120 billion, or 36 percent smaller than the economy just in Indiana.

On a more complex scale, he said if the embargo is lifted and Cuba backs down from its communist control, the United States might provide economic assistance to develop Cuba and private investment could rapidly flow in as well, growing opportunities for U.S. farmers even more.

But, much political change would have to occur for communist rule to be eliminated, he acknowledged.

"Most of the agricultural producers in the U.S. are anxious to normalize trade relations with Cuba, not because of the current size of their market, but because of the potential for the size of their incomes to grow in the future," said Hurt.

He cautioned that lifting the embargo may result in trade restrictions being lifted only gradually, which would stunt any immediate benefit for the U.S. agriculture industry.

"Remember, that Cuba has largely been immune from needing to compete in a global economy since the 1950s. This means they probably do not have the knowledge, machinery-technology and skills to compete," he stated. "This makes the Cuban economy very vulnerable to importation of cheaper goods and services and is a reason the Cuban government will not want to immediately move to ‘free’ trade, as it could cause a surge in their unemployment."

He feels it might be best for Cuba if the embargo is lifted to start by focusing on tourism. He explained its desirable climate and geographic location is unique to the country and would likely bring more money and jobs to Cuba’s people.

2/25/2015