More Good News on Trade: Cracks in US Embargoes

What are two things that Cuba and Iran have in common? First, a US trade embargo which has been in place for decades. Second, emerging cracks in these embargoes that promise new, if limited, trade opportunities.

Iran Embargo

Concerns about Iran’s nuclear ambitions had resulted in multilateral sanctions against Iran, imposed by the United Nations, the European Union, and the United States. It is these sanctions that are credited with bringing Iran to finally conclude a deal.

The just-concluded nuclear pact with Iran indicates that the rest of the world should soon be lifting their embargoes against doing trade with Iran. Not so with the United States. US sanctions against Iran, unfortunately, go beyond these security concerns. They also have to do with regime change – the hope that pressure on the Iranian economy will lead to political change.

So, while the rest of the world can expect to begin resuming normal business activities with Iran, US sanctions imposed by the US Congress will remain in place. US trade with Iran will be limited to imports from Iran of food and carpets and the export to Iran of replacement parts for civilian airplanes. In the words of this Washington Post reporter,

. . . for US firms, the agreement means pistachios, airplane parts and carpets.

Persian Rug at the Louvre  (Courtesy of Wikipedia)

Persian Rug at the Louvre (Courtesy of Wikipedia)

Cuban Embargo

Unlike the Iran sanctions, the US embargo against Cuba has been unilateral in nature. The United States is the only country in the world which maintains this outdated cold war stance against Cuba. On October 29, 2014, the UN General Assembly voted for the consecutive 22nd year in support of a resolution urging an end to the US blockade of Cuba.

Like the Iran sanctions, the US embargo against Cuba is driven by a desire for regime change. Nevertheless, with the congressionally-imposed embargo still in place, Executive action has carved out limited opportunities for US-Cuba trade and travel. A limited list of commercial goods and services – primarily those of independent craft producers can also now be imported from Cuba into the United States. In fact, it’s easier to produce the list of items, including alcohol and tobacco products, which cannot be imported for commercial use from Cuba. However, if you fall within the category of persons allowed to travel to Cuba, you can bring back your own, limited, supply of Cuban cigars and rum.

The Future

Should the US Congress fail to ratify the Iran deal, the United States will, as it does in its relations with Cuba, again be isolated on this issue. Diplomatic ties are key to fostering and smoothing commercial relationships. These are just being re-established with Cuba, and remain broken with Iran. Still, we can hope that more cracks will continue to appear in these sanctions barriers to trade until they are entirely whittled away.

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