Easing embargo on Cuba a world gain
Feb. 17, 2015
As delighted as the grain industry may be with the action of President Obama in moving to ease trade restrictions on Cuba, it continues to be important to appreciate why the embargo was imposed in the first place. That was done because the Communist regime of Fidel Castro, among its first actions at the start of the 1960s, seized property in Cuba owned by U.S. citizens and companies. That property included flour mills as well as a range of industrial, agricultural and financial businesses that had operated for years based on trade and tourist travel between the United States and its island neighbor. The latter stood at that time as the largest Caribbean importer of food and one of the largest in the Western Hemisphere. The embargo came as Washington’s response to Cuba’s property takeovers, which are currently estimated to have a value of $7 billion.
Recalling what happened nearly 60 years ago is powerfully countered by realizing that the trade embargo itself has done quite literally nothing to prompt a change in Cuba policies. Instead, Raul Castro, the current leader of the country, in taking a few steps to release prisoners in response to President Obama’s overtures, has shown no willingness to enter into arbitration about seized property. The diplomatic opening has prompted speculation about the possibilities of future talks by people and companies who have formal claims but it also is generally agreed that such talks are going to be long in evolving.
Based on recent annual imports of wheat, primarily from Canada and the European Union, of more than 525,000 tonnes, Cuba’s mills have yearly milling capacity of between 8.5 million and 9 million hundredweights of flour. With a population of 11.2 million, and assuming flour output equals the supply total, per capita consumption is considerably lower than the U.S. average, reflecting primarily the regime’s emphasis on restraining imports and forcing the population to rely for food on what can be produced on a Caribbean island with weather and soil not suited to grain.
That is especially the case for rice, the grain that competed with wheat-based foods for the favor of Cuban consumers and tourists in the pre-Castro era. It was the president of the USA Rice Federation, Betsy Ward, who best described the embargo when she said: “The embargo was not on Cuba, as they could source rice and other products from around the world, but rather on the rice growers in the U.S., whose own government cut them out of one of the world’s top markets just 90 miles from our shores.”
While the embargo’s shutdown requires action by Congress, which is doubtful with Republican majorities in both houses, the administration took action to change banking and cash payment requirements for food to ease selling grains. Food has been exempted from the trade embargo for some time but complicated payment rules had shut off dealings. Estimates are being made that the U.S. share of the market for both wheat and rice could reach as high as 90%, which is the average share for most Caribbean nations with open access to U.S. supplies.
Except for spokesmen representing the viewpoint of anti-Castro Cuban exiles in Florida, support is widespread for this surprising action undertaken by the administration. Restoring diplomatic relations as well as steps toward trade liberalization are parts of the deal undertaken by Washington, and these are seen as steps that importantly eliminate the excuses the Castros have used to justify their oppression. With the U.S. trade threat lifted, it will no longer be possible for Cuba to press for the sympathy of some of its fellow Latin nations that join it in anti-American initiatives. Even more important than these economic and diplomatic gains is how this stands as another positive step for liberalizing, yes freeing, international trade. This is a genuine benefit for the world where grain once more earns the central role.