With less than a year left in office, U.S. President Barack Obama is moving quickly to build a new era of U.S.-Cuba relations. On March 15, the White House released a fourth round of regulatory changes easing travel and financial transactions with the island, just a week before the president lands in Havana on March 21. The first U.S. president to visit since 1928, Obama will bring a delegation including some 30 business executives and as many as 20 congressional members. Representatives Kathy Castor (D-FL) and Tom Emmer (R-MN)—who last year introduced legislation to lift the embargo—will accompany the president, as will U.S. Secretary of Agriculture Tom Vilsack.
Vilsack’s engagement could spell good news for U.S. agricultural exporters eager to trade with the island, which imports 80 percent of its food. While some U.S. states already trade with Cuba, substantial hurdles remain so long as the embargo that then-President John F. Kennedy implemented is in place.
The 1962 U.S. embargo on Cuba includes sanctions on all trade with the island, with the exception of some medicines and nonsubsidized food exports, like canned goods. As such, U.S.-Cuba trade was virtually nonexistent up until the 2000s, and the U.S. Congress made it more difficult to lift the embargo until Cuba democratized with the 1996 Helms-Burton Act. But in 2000, President Bill Clinton also signed the Trade Sanctions Reform and Export Enhancement Act, making it easier to export agricultural commodities, though requiring Cubans to pay cash in advance of shipments. Since then, the United States has sent Cuba more than $5 billion worth of agricultural exports, making it Cuba’s largest supplier up until 2011.
In recent years, however, U.S. exports have lost ground to foreign competitors, especially to the European Union, Brazil, and, increasingly, China and Vietnam. One principal reason: U.S. law prohibits banks and businesses from offering Cubans credit. Instead, Cuba must go through a third party—a foreign bank—to access credit for U.S. goods. In 2015, U.S. exports to Cuba totaled $180.3 million, the lowest since 2002.
So far, the various sets of regulatory changes released since the onset of U.S.-Cuba rapprochement have done little to encourage U.S. farmers. But if the embargo were lifted, the U.S. Department of Agriculture estimates that U.S. agricultural exports to Cuba could be as much as $1.1 billion per year. Speaking before a U.S. House Foreign Affairs subcommittee, Congressman Ted Poe (R-TX) put the number at $4.3 billion, adding that it would create some 6,000 jobs in the United States.
U.S. states with farm products like dairy, wheat, corn, rice, and poultry—Cuba’s top imports, in order—stand to benefit the most from new trade relations. Southern states in particular have the geographical advantage, and in fact, all Gulf Coast states already trade with Cuba. Texas, which exported just $62,000 worth of goods to the island in 2015, is 900 miles from Havana. Meanwhile Vietnam, one of Cuba’s largest rice suppliers, is almost 10,000 miles away.