Impact of Cuban Trade Embargo

The Impact of the Cuban tack ban By Natalie Bell 2/25/09 pic worldwide Business Law BLAW 4320 pic Cuba, the largest island nation in the Caribbean just ninety miles rancid the coast of Florida, experienced m any(prenominal) difficult struggles through its extensive history. It was the destruction major Spanish colony to gain indep dismissence, following a long struggle that was begun in 1868. It was in 1898 when the U. S. intervened during the Spanish-the Statesn War that it fin all toldy oerthrew Spanish rule. The treaty of Paris established Cuban independence, which was granted in 1902 after a three-year transition pointedness.The unite States and Cuba concluded a Treaty of Relations in 1934, which, among a nonher(prenominal) things, continued the 1903 agreements that leased the Guantanamo Bay naval base to the join States (CIA World Factbook). In the time before 1959, the United States had maintained well-knit ties with Cuba. Many Ameri back tooths had legion(predicat e) various argument coronations there, and the re popular was a extra institutionalize for tourists from around the world. Since the perish of the U. S. -supported dictatorship of Fulgencio Batista in 1959, it was Fidel Castro who has mainly lead Cuba throughout the age.It was in Febuary 19, 2008 when Fidel Castro finally ceded power to his br a nonher(prenominal)wise Raul Castro. Since the majority of Cubans were natural after the 1959 revolution, most of the Cuban the great unwashed bedevil known no other attraction. chair Fidel Castro outlasted no fewer than nine American presidents since he took power in 1959 (CastroProfile). Relations between the United States and Cuba deteriorated rapidly as Fidel Castro and the Cuban regime moved toward the acceptance of the one-party communist system. Cuba seized the assets of American citizens and U. S. irms including farms, factories, hotels, bank accounts, and real estate without compensation. It was finally on April 16, 1961 when Fidel Castro decl ard Cuba a socialist state. Cubas Communist revolution, with Soviet support, was brought to other countries throughout Latin America and Africa during the 1960s, 1970s, and 1980s. Castro maintained close dealings with the Soviet Union and doed jointly with the goals of Soviet communism by funding and provoking violent rebellious activities, as well as using military intervention in other countries, until the fall of the U.S. S. R. in 1991 (Castro Profile). In response, the United States obligate an censor on Cuba in October 1960, and, broke diplomatic relations on January 3, 1961. This began the all over forty-year period of tension between the U. S. and Cuba, beginning with chair Kennedys failed Bay of Pigs incursion in 1963 and the Cuban Missile Crises (CIA World Factbook). Since 1961, Cuba portrayed many difficulties as the result of the U. S. censor and the censor had a great effect on two nations.It was in 1963 that the United States passed th e Cuban Assets Control Regulations, down the stairs the berth of the Trading with the Enemy Act. The Act was enacted in 1917 to restrict patronage with countries that atomic number 18 hostile to the United States. The legality of nature gives the President the power to oversee or restrict any or all divvy up between the U. S. and its enemies in times of war. The purpose of the law was to isolate Cuba scotchally and politically. It banned all trade and financial transactions between Cuba and the U. S. , and froze all U. S. held assets of the Cuban organisation and of individual(a) Cuban citizens. It in addition prohibited most all hold up to Cuba by researchers, student groups, journalists, athletes, and those travelling to see straightaway family members (Schaffer 268). after the fall of the Soviet Union in the early 1990s, the U. S. Congress wanted to atmospheric pressure Cuba for democratic limiting. First in 1992, the U. S. Congress approved the Cuban state Act, restricting Americans from clavering the island, banning family remittances, and prohibiting un uniform subsidiaries of U. S. ompanies from doing business with Cuba. Following a few years later, on March 12, 1996, President Bill Clinton gestural the Cuban Liberty and Democratic Solidarity Act, alike called the Helms-Burton Act. After this law was signed, it progress toughened the Cuban sanctions. It imposed penalties on unusual companies doing business in Cuba, it permitted U. S. citizens to file lawsuits against foreign investors who made use of the American-owned stead that was seized after 1959 by the Cuban politics, and it denied an entry visa into the U. S. to such foreign investors.It was a real polemic because this holdd many Mexican, Canadian, and European businessmen who did business in Cuba (268). The passage of the Helm-Burton Act caused a worldwide protest, primarily in Mexico, Canada, and the European Union, who argued that the Helm-Burton Act violated trans subject law. A protest was filed with the World clientele Organization by the European Union, but was suspend when the Clinton Administration calm that the law for visa restrictions under Title III of the Helm-Burton Act would not be en obligate against citizens in third world countries.The Act calls for the trade sanctions between the U. S. and Cuba to end as soon as Cuba agrees to have a democratically elected government, abide by gay rights conventions, opens its prisons to international inspection, returns Cuban citizenship to Cuban exiles living in the U. S. , and makes progress in returning expropriated property to its rightful owners (268). Today, there ar many laws, rules, and regulations that derived from the U. S. sanctions against Cuba. Presently, most commercial imports from Cuba atomic number 18 illegal by law but remain listed under the Trade Sanctions Re hammer and Export Enhancement Act of 2000 (TSRA). under(a) the Act, the sale of true items, including medic ine and medical supplies, and agricultural commodities have been approved for export by specific regulations. match to the Act, The part of the exchequer is responsible in takings licenses that atomic number 18 used to export these goods on a case-by-case scenario and authorizing Cuban travel-related transactions that are only relating to marketing, sales negotiation, accompanied deli really, and servicing of exports and re-exports that too must appear in line with the licensing policy of the plane section of commercialism (U. S.Treasury Department). The only sectors in which U. S. citizens may sell and service products to Cuba include agricultural commodities, medicine, and medical devices. The Treasury Department volition is also be able to consider requests for specific licenses for humanitarian travel, educational ex diversifys (that are at least 10 weeks in length), and religious activities by individuals or groups that are associated with a religious organization. H owever, any U. S. citizen or corporation that is subject to U. S. law and engages in any travel-related transaction in Cuba violates the regulations.The Act specifically states that, The Cuban Assets Control Regulations affects all U. S. citizens and fixed residents wherever they are located, all people and organizations physically in the United States, and all branches and subsidiaries of U. S. organizations throughout the world (U. S. Treasury Department). If the regulations are not followed, then it may result in both civil penalties and criminal prosecution upon return to the United States (U. S. Treasury Department). Today, traveling to Cuba also has many rules and laws that make traveling to the Cuba very complex.In 2004, President Bushs Commission for Assistance to a Free Cuba located a further reduction on the restrictions on family visits to Cuba. Visits by Cuban Americans to family in Cuba are permitted only once every 3 years instead of once every year. No humanitarian exceptions are given(p) if there is any of a family illness or crisis red ink on in Cuba. Visits are restricted to two weeks and strictly limited to immediate family as defined by the U. S. Department of Treasurys authorization of Foreign Assets Control (OFAC), which eliminates the right to visit cousins, aunts, uncles, nephews, nieces, or more(prenominal) nonadjacent relatives (LAWG).Only if a traveler receives a license, then a well-grounded passport will be required for entry into Cuba. The Cuban government requires that travelers obtain their visas before they arrive to the country. If there are undertakes to enter or exit Cuba illegally, or there is in any kind of service in military serviceing Cuban nationals or others escape Cuba then penalty is served by stiff jail terms. Entering Cuban territory, territorial amniotic fluid or airspace, which include being within 12 miles of the Cuban coast, without any prior permission from the Cuban government may result in arre st or other enforcement actions by Cuban authorities.According to the U. S. Department of State, most immigration violators are subject to prison terms that present from four years for illegal entry or exit to as many as 30 years for certain cases of assisting Cuban migrants to attempt to leave Cuba illegally (U. S. Department of State). Family remittances or money sent to Cuba also have specific rules and regulations that must be followed by the people residing under U. S. law. According to the U. S. Department of State, U. S. ersons aged 18 or older may send money to members of the remitters immediate family in Cuba of up to $ccc per home in any consecutive three-month period, regardless of the number of members of the remitters immediate family residing in that household. The law also states that no member of the household can be a prohibited official of the Government of Cuba or a prohibited member of the Cuban Communist Party (U. S. Department of State). Other laws that are also a part of the on going U. S. embargo with the Cuban government involves the use of money in Cuba that U.S. travelers are limited to spend during their stay in Cuba. U. S. people traveling to Cuba to visit their family or traveling for other purposes can spend no more than $50 per day on non-transportation-related expense in Cuba, and up to an spare $50 per trip to pay for transportation-related expenses in Cuba. However, professionals such as journalists, photographers, or any other kind of licensed travelers may spend extra money for their professions that are selectly related to what they need in lay to fulfill their work (U. S. Department of State).It is also elicit to know that U. S. citizens and permanent resident extraneouss are not allowed from using their credit tease, personal checks, or travelers checks that are drawn from U. S. banks in Cuba. U. S. credit card companies do not accept any kind of vouchers from Cuba, and, at the same time, Cuban shops, hotels an d other places of business do not accept any types of U. S. credit cards (U. S. Department of State). Today, the U. S. Cuban embargo has become one of the most controversial issues upon many countries throughout the world.There have been many advocating for a change of the current policies towards Cuba for some time now. The sanction has continuously been condemned and voted against by almost all nations throughout the world. For the 16th consecutive year, the U. N. General Assembly recommended that the U. S. ended the embargo. In 2006, a total of 183 member nations of the U. N called on the U. S. to end the sanctions with Cuba (Sierra). In 2007, the 192-member General Assembly passed the measure by 184 votes to four, with one abstention (U. S. Urged).According to Remy Herrera, The normative content of this embargo and its rules, which the U. S. intends to inflict on the international community with its unilateral sanctions is a violation of the spirit and letter of the United Natio ns Charter and of the Organization of American States, and of the very fundamentals of international law (Herrera). This excessive extension of the territorial jurisdiction of the U. S. , Herrera adds, Is contrary to the principle of national sovereignty and to that of non-intervention in the internal choices of a foreign state, s know in the jurisprudence of the outside(a) Court of Justice (Herrera). According to Richard Schaffer, dismantle the Vatican protested Helms-Burton, claiming that it increased economical suffering of the Cuban People. Many trade groups have also argued against the law because they believed that economic engagement actually would promote granting immunity in totalitarian countries. The U. S. firms that are hoping to engage in the business activities in Cuba also seek an ending to the U. S. trade sanctions (Schaffer 269). According to U. S.Congresswoman Nancy Pelosi, many feel that the lifting of the travel restrictions to Cuba, family remittances, and trade exchange are necessary and are some of the most important issues in the policy changing surgical operation that the U. S. needs to undergo in outrank to have better relations with Cuba (Pelosi). Ironically, surveys of the American public opinion show that the vast majority of Americans favour ending sanctions as well, and recognizing the government of Cuba (Schaffer 269). According to a recent diadem from USA Today that took place between February 21- 24, 2008, 61% of 2,021 adults nationwide promote re-establishing U.S. diplomatic relations with Cuba, 29% opposed, and 10% of the people were unsure (PollingReport). all over Forty-five years of communism have left the island nation an economic ruin and the U. S. embargo had many diverse effectuate on Cuba. According to a BusinessWeek phrase by Geri Smith, The Cuban government has always referred to the embargo as a obstruct, a word that has a more smutty tone than embargo (Smith). Cuba went through many difficulties a s the result of the U. S. embargo since 1961 and suffered much more since the collapse of the Soviet Union in 1991.The country faced a severe economic downturn, which really caused the Cubans living standards to importantly fall. The disappearance of Soviet aid following the collapse of the USSR forced the government to introduce tight rationing of energy, food, and consumer goods, as well as the insularity of the former Soviet annual subsidies that were worth $4 one thousand million to $6 billion (Country Profile Cuba). Since then, it has taken action with limited reforms in order to increase enterprise efficiency and improve some of their economic fusss which include their serious shortages of food and goods.Due to the economic problems and domestic inefficiencies that Cuba faced during the 1990s, President Castro allowed a few go towards a more market-oriented system. In 1993, the U. S. dollar was accepted by Cuba and allowed to circulate throughout the nation. Because of th eir lack of basic necessities and few consumer goods, Cubas prudence persisted with the help of Canadian, European and Latin American inveimmediate memoryents. fundamentally for Cuba, the nation also developed closer relations with chinaware and Venezuela.China invested in Cubas nickel industry and provided Cuba support in the form of trade credit, technology, and investment capital while Venezuela provided supply to cheap give the axe (Smith). Since late 2000, Venezuela has been supplying about 100,000 barrels per day of petroleum products. Cuba has been gainful for this oil with the services of Cuban personnel in Venezuela, including 20,000 medical professionals (CIA WorldFactbook). After market factors improved, in 2004 the U. S. dollar transactions in Cuba were banned and a 10% tax was imposed on the dollar-peso conversions. According to the CIA World Factbook, Cuban exports total $3. 31 billion and their major exports include Sugar, nickel, tobacco, fish, medical products, citrus, and java partners. The countries that Cuba mainly exports to include the Netherlands (21. 8%), Canada (21. 6%), China (18. 7%), Spain (5. 9%) (CIA WorldFactbook). On the other hand, Cuban imports have totaled $10. 86 billion and consist mainly of petroleum, food, machinery and equipment, and chemicals. The countries that Cuba mainly imports from include Venezuela (26. 6%), China (15. 6%), Spain (9. 8%), Germany (6. 4%), Canada (5. 6%), Italy (4. 4%,) the U. S. (4. 3%), and Brazil (4. %) (CIA WorldFactobook) Today, Cuba has two currencies in circulation, which include the Cuban peso (CUP) and the exchangeable peso (CUC). The Cuban peso (CUP) is specifically for the Cubans, while the convertible peso (CUC) is strictly for tourists and foreign businessmen. According to a BBC News article by Michael Voss, The average Cuban salary of 400 pesos a month is worth about $16, all the same almost everything available in the shops has to be paid for in the convertible pesos (CUCs) (V oss). Why has the economy moved to convertible pesos when workers are paid in the national currency? declared one of the students in the article. You need to work for two days just to buy a toothbrush (Voss). The problem with the dual currency is one of the biggest challenges that negatively influences the Cuban economy. Cuba faces many hardships because of the economic problems throughout the country. Many of the effects have caused an increase in prostitution, corruption, down(p) marketeering and desperate efforts to escape in search of a better heart (Country Profile Cuba). Many Cubans had enough with the hardships and risk their lives to escape from the country. Thousands have tried to escape through the sea in a waterborne exodus to Florida, but many have drowned. Castro Profile) According to the BBC News article, Castro Profile of the bulky Survivor, Even his own daughter Alina Fernandez prefers a life of exile as a dissident in Miami to rule under her despotic experien ce (Castro Profile). According to the CIA World Fact Book, illicit migration to the U. S. , using homemade rafts, alien smugglers, or air flights, is still a continuing problem. The U. S. Coast fight seized 2,864 people trying to cross the Straits of Florida in the year 2006 (CIA WorldFactbook). Cuba has also been fraudulent with the UNs top human rights forum, over specific rights abuses.The UN has insisted that Cuba allows for freedom of pattern and to release imprisoned protesters who have protested against the government (Country Profile Cuba). The U. S. has caused Cuba many economic damages because of the U. S. embargo. According to U. S. congresswoman Nancy Pelosi, The over-45-year US economic, commercial and financial blockade of Cuba has translated into over 89 billion dollar losses for the U. S. (Pelosi). According to the article, The make of the U. S. Embargo Against Cuba, the direct economic losses for Cuba by the U. S. embargo would top 70 billion dollars.The damage s were estimated by calculating amounts of Cubas likely earnings and unnecessary losses since the institution of the U. S. embargo in 1961. The embargo negatively stirred all of the sectors in Cuba, which also directly imposed on the major driving forces of the Cuban economy, which included tourism, foreign direct investments (FDI) and currency transfers (Herrera). Cuba became very limited in having access to technologies and various re solutions because of the obstacles that were forced by the Unites States. According to a Business Week article, Trade and investment open up economies to new ideas.Cell phones, the Internet, and other high-tech communication technologies are detrimental to closed-minded bureaucracies (Farrel). Since December, 2001, when food and agricultural products were allowed to be exported to Cuba, over $2 billion dollars worth of goods were earned by U. S. firms and shippers (LAWG). According to the article, The hold up Industrys Push to Unlock Cuba, loosen ing the restrictions could boost the U. S. economy in the long term by as much as $1. 6 billion annually and create as many as 23,000 new jobs (Unlock Cuba). In this way, Cuba has the potential for economic growth if the U. S. nds or notwithstanding loosens their trade sanctions. This can also further ease the hardships and economic issues of beggary in Cuba. Relations between the United States and Cuba are hoping to improve in the next, especially because Fidel Castro retired his control over Cuba. Many hope that Cuba will be open for business and that there may be signs of new beginnings of change on the economic front under Raul Castro (Smith). Some, however, are more wondering(a) of the idea. According to a recent poll from USA Today that took place between February 21- 24 of 2008, only 37% of 2,021 people tangle that the note for people in Cuba would arse around better.A majority of 51% felt that the situation for people in Cuba would stay the same, 6% felt that it would get worse, and 6% felt they were unsure (PollingReport). Fortunately, Raul Castro has introduced a series of reforms since taking over as president from his brother Fidel in February and has already taken steps on improving certain services for the Cuban public. The new leader started focusing on some of the most-mentioned problems, such as spotty public transportation and the low wages paid by the government to private farmers (Smith).According to the article, Cuban Leaders Plan More Reforms, these reforms have also included the removal of some restrictions on the purchase of electrical goods such as mobile phones, microwave ovens and DVD players. According to the article, Cubans have been inform to take out 7,400 new mobile phone contracts in the 10 days since the restrictions were eased. The country has also lifted a ban on its people staying in hotels previously reserved for foreigners (Cuban Leaders). It will be interesting to see if more market-oriented steps will take place with the Raul Castros new regime. Another major issue that will be life-and-death for many U.S. businesses as soon as the embargo ends in the future is the growing interest in the tourism sector of Cuba. According to an article by Sucharita Mulpuru, Americans represent only a small part of the or so 1. 2 million visitors who come to Cuba every year, mainly from Canada, Spain, France, Germany, and Britain (Mulpuru). Tourism continues to inhale high hopes among many investors. In the article, Enzo Alberto, the Canadian-Italian CEO of ICC, a major investor in the islands Internet infrastructure states, I believe that Cuba could be to America like Hong Kong is to Asia, (Mulpuru).Many countries pour nearly $2 billion into the economy, outstripping revenues from sugar and other core crops such as tobacco (Mulpuru). According to the article, A fastball Climate for Trade with Cuba, the industry argues that the island nation is a potential source of needed revenues that would be able to boost both the travel business and the U. S. economy while opening to tourism and foreign investment in Cuba. As a result, this will also boost the economy as well as the currency reserves of Cuba. Unfortunately, all of this potential to help both economies and many people in both nations will not end until the U. S. rade embargo ends and the Cuban government loosens its stranglehold on the economy. It will be interesting to see how the U. S. embargo will be affected by the policies of the future elected president of the U. S. Of the three leading presidential candidates, only Democratic contender Senator Barack Obama has stated that he would be ordain to sit down and talk with Raul Castros government, as long as human rights are on the agenda. On the other hand, Senator Hillary Clinton stated said she would not do so until Cuba started to implement economic and political reforms, while Senator tail McCain has kept President George W.Bushs policy and states that talks are off unti l Cuba begins a transition to a free and open troupe and releases all political prisoners (Smith). According to the Associated Press, the presidential candidates are expected to lightly discuss the question of lifting the embargo during their campaign. According to their article, Five-decade U. S. Trade Embargo with Cuba evaluate to Outlast Fidel Castro, there is a great deal of sensitivity on the issue, especially in states with high populations of Cuban immigrants such as Florida (Associated Press). The entrepreneurs of the U. S. ave seen their foreign competitors take advantage of opportunities in Cuba. U. S. businesspersons can only hope that the trade and travel restrictions will be lifted eventually, so that they can smasher the potential markets in Cuba especially in the tourism and agricultural sectors. This is very unlikely to happen soon because of the ongoing disputes between many in regards to the Cuban embargo. The impact of the Cuban embargo caused many diverse eff ects for both nations, but with new policies and politicians that are developing for the future, this story can be the end of an old era. Works Cited ACN Cuban News Agency. 2007, whitethorn 2). Nancy Pelosi Says U. S. Blockade of Cuba Should be Lifted. Retrieved April 24, 2008, from http//www. cubanews. ain. cu/2008/0425nancypelosi. htm Alomso, Cynthia C. The Travel Industrys Push to Unlock Cuba. BusinessWeek. 27 August 2003 Associated Press. Five-decade U. S. Trade Embargo with Cuba Expected to Outlast Fidel Castro. 20 February 2008. Retrieved on April 24, 2008 from http//www1. whdh. com/news/articles/national/BO73631 BBC News. (2008, February 19). Castro Profile of the Great Survivor. Retrieved April 24, 2008 from http//news. bbc. co. k/2/hi/americas/244974. stm BBC News. (2008, April 12). Cuban Leaders Plan More Reforms. Retrieved April 24, 2008, from http//news. bbc. co. uk/2/hi/americas/7343883. stm BBC News. 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