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 The United States is the only country in the world which maintains this outdated cold war stance against Cuba.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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Thawing of US-Cuba Relations: What to Expect Next?

On December 17, 2014, President Obama announced significant changes to U.S. foreign relations with Cuba. As noted in another ILG post by

Margaret Spicer, these changes reflect a new policy at the level of the U.S. Executive (the President). The sanctions imposed by U.S. Congress remain fully in place. In Washington DC’s politically-charged environment, US-Cubans and Republicans in Congress have been vocal about their opposition to any change in US-Cuban policy. Republicans assume control of both the House and the Senate in January, 2015.

So, what are the announced changes and what can we expect to happen next?

US-Cuba diplomatic relations re-established: High-level talks will begin in January, 2015 with the goal of re-establishing full diplomatic relations. President Obama announced plans to re-open a U.S. Embassy in Havana within a few months. Led by US-Cuban-American Senator Marco Rubio, opponents have threatened to block the required Senate confirmation of anyone nominated by President Obama as U.S. Ambassador to Cuba. US Congress also holds the purse strings and will need to fund the new Embassy. We will need to observe how much support these opponents will receive from other leading Republicans in the US Congress. Senator Bob Corker, incoming Chair of the Senate Foreign Relations Committee, has said only that he will be “examining the implications” of the policy change in the new Congress. Senator Orrin Hatch, presumptive new Chair of the Senate Finance Committee has issued a pro forma statement of opposition to the announcement. Representative Paul Ryan, incoming Chair of the House Ways & Means Committee (in charge of budgetary and trade issues in the House of Representatives) had, until 2007, voted to lift the embargo against Cuba. Senator Rand Paul (Rep.-KY) has been openly critical of Senator Rubio’s position. And Republican Senator Jeff Flake who flew to Havana to cement the prisoner exchange accompanying the deal, has been a vocal supporter of lifting the embargo. Flake and Paul both sit on the Senate Foreign Relations Committee. They, and others, will be heavily lobbied by US commercial interests lining up to take advantage of the announced policy and begin trade with Cuba.

In the event of a prolonged battle over funds and the nomination process, it is speculated that President Obama can take the interim step of scaling up the existing US Interests Section in Havana. Similarly, the Cuban Interests Section in Washington, D.C. will presumably be scaled up into an Embassy, headed by an Ambassador.

Increased travel and remittances to and small imports from Cuba: Travel to Cuba will still be restricted under the embargo. However, twelve categories of travelers currently authorized to travel to Cuba will no longer need to apply for permission (specific license) to do so: Continue reading