Beyond Trade & Travel: Normalizing US-Cuba Relations

While much attention has been focused on the changes to ease travel and trade between the United States and Cuba, President Obama’s Policy Directive on US-Cuba Normalization lays out a broader vision for normalization of relations and mutual cooperation between the two neighbors. Issued October 14, 2016 (along with other regulatory changes discussed here) the Directive also lays out six priority objectives for normalization and actions to implement them.obama-castro-handshake

Among other things, the vision laid out by President Obama’s Policy Directive includes – travel to Cuba for U.S. persons that is safe and secure from natural and man-made hazards and regional cooperation with Cuba towards these goals, and a strengthened U.S. position in international systems by removing an irritant from its relationships with allies and partners and gaining support for a rules-based order.

The six U.S. medium-term objectives for US-Cuban policy are to:

  1. Continue high-level and technical engagement;
  2. Continue to encourage people-to-people linkages;
  3. Seek to expand opportunities for U.S. companies to engage with Cuba;
  4. Support further economic reforms by the Cuban government;
  5. Expand dialogue with Cuba in international fora; and
  6. Seek greater Cuban government respect for human rights while recognizing that the United States must leave the future of Cuba up to the Cuban people.

To facilitate the effective implementation of this Policy Directive, U.S. departments and agencies will have the following roles and responsibilities:

National Security Council (NSC) staff will provide ongoing policy coordination and oversight of the implementation of overall Cuba strategy and of the Directive.

The Department of State will continue to be responsible for formulating U.S. policy toward and coordinating relations with Cuba. This includes supporting the operations of Embassy Havana and ensuring it has adequate resources and staffing, issuing visas, refugee processing, promoting educational and cultural exchanges, coordinating democracy programs, and political and economic reporting.

The U.S. Mission to the United Nations (USUN) will coordinate with the State Department to oversee multilateral issues involving Cuba at the United Nations.

The Department of the Treasury is responsible for implementation of the economic embargo restrictions and licensing policies.

 The Department of Commerce will continue to support the development of the Cuban private sector, entrepreneurship, commercial law development, and intellectual property rights as well as environmental protection and storm prediction.

The Department of Defense (DOD) will continue to take steps to expand the defense relationship with Cuba where it will advance U.S. interests, with an initial focus on humanitarian assistance, disaster relief, and counternarcotics in the Caribbean.

The Department of Homeland Security (DHS) will, together with the Department of Justice, engage with the Cuban government to combat terrorism and transnational organized crime.

The Department of Justice (DOJ) will, together with DHS, engage with the Cuban government to combat terrorism and transnational organized crime.

The Small Business Administration (SBA) will support exchanges with the Cuban government in areas of mutual interest, particularly on formalization of small businesses and to spur the growth of new enterprises.

The Office of the United States Trade Representative will provide trade policy coordination in international fora and prepare for negotiations to normalize and expand US-Cuba trade.

The Department of Agriculture (USDA) will work to increase U.S. food and agricultural exports to Cuba.

The Department of Health and Human Services (HHS), in accordance with the June 2016 Memorandum of Understanding between HHS and the Cuban Ministry of Public Health, will collaborate with Cuban counterparts in the areas of public health, research, and biomedical sciences, including collaboration to confront the Zika virus, dengue, chikungunya, and other arboviruses.

The United States Agency for International Development (USAID) will coordinate the U.S. response to natural and man-made environmental disasters.

The Department of Transportation (DOT) will continue to develop air and surface transportation links between the United States and Cuba and provide required regulatory and safety oversight of transportation providers and systems.

The Office of the Director of National Intelligence (DNI) will support efforts to normalize relations with Cuba and seek opportunities for engagement with Cuban counterparts on areas of common interest and information exchange on mutual threats.

The Department of the Interior (DOI) will continue to cooperate with Cuba on marine protected areas and to engage Cuban counterparts to finalize arrangements on wildlife conservation, terrestrial national protected areas, and seismic records.

In issuing the Directive, President Obama stated:

This new directive consolidates and builds upon the changes we’ve already made, promotes transparency by being clear about our policy and intentions, and encourages further engagement between our countries and our people.

This clarity and transparency is important given the long and complicated history of US-Cuba relations that dates back to the 1880s. The Directive is also aimed at ensuring the recent changes in US-Cuba policy outlive the Obama Administration. We can hope that the next Directive will implement the lifting of the outdated and ineffectual embargo, the low point in this history.

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Trade Happenings

Since the start of 2015, there have been several interesting developments on the trade front. Here are some highlights:

Flag of Cuba

US-Cuba Relations:  Previous posts on ILG have discussed the improved tenor of US-Cuba relations, including some limited opportunities to trade with Cuba and lifting of designation of Cuba as a state-sponsor of terrorism. These developments have been followed by news of plans to re-establish direct phone links, increased flights and launch of a ferry service between Florida and Cuba, and the arrival of Airbnb and of Netflix in Cuba. Nevertheless, the laws imposing the U.S. embargo against Cuba remain in place and are being enforced. This includes the repressive Helms-Burton Act which extends the U.S. embargo to non-U.S. actors. As a result, non-U.S. persons may still be penalized for taking actions in Cuba that some U.S. persons are now able to do. And, because of the embargo, while it will be possible to import goods and services from independent entrepreneurs in Cuba, goods will still be subject to higher tariffs than those placed on the goods of most U.S. trade partners. Legislation to normalize trade with Cuba has been introduced in the U.S. House and Senate (HR 403, HR 274, HR 735, S 491). However, Congress is now focused on issues more essential to the Obama Administration trade agenda.

US Trade Agenda:  Legislation to provide Trade Promotion Authority (TPA) to President Obama has been introduced in Congress. TPA gives the U.S. President a mandate from the U.S. Congress to negotiate trade agreements that meet specified criteria. Also known as “fast-track”, TPA has been a key tool of U.S. trade policy since 1974 but lapsed in 2007. As we discussed in an earlier post, the Republican-led Congress provides President Obama with his best hope of getting TPA enacted in time to successfully conclude ongoing trade negotiations that face strong opposition within his own party. With the introduction of TPA legislation, a furious battle has begun to sway U.S. legislators to vote for or against. As always, it will be a close fight.

Courtesy of Wikipedia

Courtesy of Wikipedia

Trade Preferences, in the form of the Generalized System of Preferences (GSP), is another key tool in U.S. trade policy. GSP allows over 5,000 products from about 127 developing countries to enter the U.S. market duty-free. The program helps exports from developing countries to be competitive in the U.S. market. U.S. importers rely on the program to access lower-priced consumer goods and manufacturing inputs. The program has been lapsed since August 1, 2013, disrupting many small traders who rely on its benefits. Some members of Congress have been reluctant to renew GSP legislation without taking steps to exclude countries like Brazil and India which, they believe, are not compliant enough on issues of importance to the U.S. However, legislation to extend GSP for a short period has been introduced into Congress.

So too, has legislation to extend the Trade Adjustment Assistance (TAA) which provides federal funding to retrain workers who have lost their jobs as a result of a foreign trade. TAA is current but scheduled to lapse this year, unless extended. TAA is favored by many Democrats. According to reports, there are efforts to bundle these, and other, trade issues into one piece of legislation that will have something for everyone. Early results show the risk of this strategy, including the possible demise of all these issues.