U.S. Exports of Agricultural, Manufactured Goods to Cuba Could Increase if U.S. Trade Restrictions Were Lifted, but Significant Cuban Barriers to Foreign Trade and Investment Would Remain

April 18, 2016
News Release 16-040
Inv. No. 332-552
Contact: Peg O'Laughlin, 202-205-1819
U.S. Exports of Agricultural, Manufactured Goods to Cuba Could Increase if U.S. Trade Restrictions Were Lifted, but Significant Cuban Barriers to Foreign Trade and Investment Would Remain

U.S. restrictions on trade with and travel to Cuba have largely prevented U.S. suppliers and investors from accessing the Cuban market, and new or expanded U.S. exports in several goods and services sectors could occur if U.S. restrictions are lifted, according to the U.S. International Trade Commission (USITC) report, Overview of Cuban Imports of Goods and Services and Effects of U.S. Restrictions.

However, even if U.S. restrictions are lifted, Cuban nontariff measures, institutional and infrastructural factors, and other barriers, including those associated with a non-market, state-controlled economy, still exist and may affect the ability of foreign partners to trade with or invest in the country, according to the report.

The USITC, an independent, nonpartisan, factfinding federal agency, prepared the report at the request of the U.S. Senate Committee on Finance.

As requested, the USITC report provides information on trends in Cuban imports of goods and services from 2005 to the present; a discussion of the effects of U.S. restrictions on trade with and travel to Cuba on U.S. exports; and a qualitative assessment of Cuban nontariff measures, institutional and infrastructural problems, and other barriers that may inhibit or otherwise affect the ability of firms to conduct business in and with Cuba. It also presents a qualitative and quantitative sectoral analysis of potential U.S. exports of goods and services to Cuba in the event that U.S. restrictions are lifted and Cuban import barriers are reduced. Highlights follow.

  • Total Cuban imports of goods reached $9.3 billion in 2014, while imports of services totaled $2.5 billion. Before initial U.S. restrictions were implemented in 1960, Cuba was a major U.S. trading partner, ranking as the seventh-largest U.S. export market. In 2014, however, it ranked as the 125th-largest U.S. market, with U.S. exports to Cuba totaling just $299 million.

Cuban imports from the United States reached a high of $712 million in 2008; however, in 2015, Cuban imports from the United States totaled just $180 million, down 40 percent from 2014.  Cuban imports from the United States are comprised largely of agricultural goods.  The global recession, restrictions on credit, and the Cuban government’s decision to reduce U.S. food purchases are considered major factors in the 2009-14 drop in U.S. agricultural exports to Cuba. [Read More]

  • U.S. restrictions on trade with and travel to Cuba have reportedly shut U.S. suppliers out of a market in which they could be competitive on price, quality, and proximity. These restrictions often raise the cost of doing business enough to make U.S. exports uncompetitive in the Cuban market. Most often cited as problematic is the U.S. requirement that Cuba pay for most U.S. goods in cash or via third-country banks. [Read More]
  • Cuban nontariff measures and other factors may limit U.S. exports to and investment in Cuba if U.S. restrictions are lifted. These measures and factors include Cuban government control of trade and distribution, legal limits on foreign investment and property ownership, Cuba’s dual currency and exchange rate systems, and politically motivated decision making regarding trade and investment. Other factors -- such as customs duties and procedures, and the sanitary and phytosanitary measures applied to agricultural imports -- do not appear to significantly impact trade. [Read More]
  • Cuba is highly dependent on imports to feed its population, and for certain agricultural commodities, U.S. exports to Cuba could see significant gains from the removal of U.S. restrictions, particularly those related to credit financing. U.S. producers can offer a wide variety of high-quality goods, competitive prices, smaller shipments, lower transportation costs, and faster delivery times. [Read More
  • For manufactured goods, exports would likely increase somewhat after the removal of U.S. restrictions, with prospects for larger increases in the longer term, subject to changes in Cuban policy and economic growth. Cuba relies heavily on imports for many of the manufactured goods it once produced, and the United States can supply a variety of products and ship most items at a lower cost than competitors.  [Read More
  • Cuba is a net exporter of services, owing to its strong tourism and medical services sectors. If U.S. restrictions are removed, U.S. exports of services to Cuba would not likely grow substantially in the near term. However, in the medium to long terms, there is greater potential for U.S. exports of certain services, as well as of goods to support the provision of these services.  [Read More
  • The Commission's quantitative analysis for segments of the economy for which data were available suggests that if U.S. restrictions on U.S. exports to Cuba were lifted, and Cuba were to respond like a market-based economy, U.S. exports to Cuba of selected agricultural and manufactured products could increase in the medium term by about $1.4 billion from a base year (2010-13 average) of $400.8 million to approximately $1.8 billion. If U.S. restrictions were removed and Cuban import barriers were reduced to the level of the calculated average for developing countries, the quantitative analysis suggests that U.S. exports of selected agricultural and manufactured goods could increase by an additional $442 million, to a total of about $2.2 billion.  [Read More]

Overview of Cuban Imports of Goods and Services and Effects of U.S. Restrictions (Investigation No. 332-552, USITC Publication 4597, March 2016) is available on the USITC's Internet site at http://www.usitc.gov/publications/332/pub4597.pdf.

USITC general factfinding investigations cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance. The resulting reports convey the USITC’s objective findings and independent analyses on the subject investigated. The USITC makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requester. General factfinding reports are subsequently released to the public, unless they are classified by the requester for national security reasons.

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