U.S.

Cuban Trade
Governmental Influence on Trade A Case Study of International Business Management

Presented By:Shubhank Gupta Trimester VI GHS - IMR

Capital Havana Official languages Spanish Government Socialist Republic, Single-party communist state President Fidel Castro Independence Spain October 10, 1868 Republic May 20, 1902 from United States Cuban Revolution January 1, 1959 Population 2008 11,423,952 (73rd) GDP (PPP) 2008 Total$144.6 billion Per capita$12,700 (70th) GDP (nominal)2008 Total $55.18 billion Per capita$4,830 HDI (2008) 0.855 (high) (48th) Currency Cuban peso (CUP)

Cuban Economic History

Before 1959 the U.S. was Cubas main trading partner.

Florida was Cubas largest U.S. State trade partner. 40 percent of all cargo being routed through Miamis customs district was transported to Cuba. 85 percent of Cubas exports transported to the united states. were

Gross Domestic Product

Billion $
50 45 40 35 30 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005

Foreign Trade Growth (1995-2005)

12000 10000

Million $

8000 6000 4000 2000 0

19 95

19 96

19 97

19 98

19 99

20 00

20 01

20 02

20 03

20 04

20 05

Top ten Import products by Cuba in

2001
Top Ten Import Products by Cuba in 2001 (Million U.S. Dollar)
$61 $63 $68 Rice $72 $663 $99 Milk and cream, concentrated or sweetened Meat & edible offal of poultry meat Cars (incl. station wagon) $119 Automatic data processing machines;optical reader, etc Dried vegetables, shelled $139 Wheat or meslin flour
Source: International Trade Center (ITC) Website, www.intracen.org/menus/countries.htm

Petroleum oils, not crude Crude petroleum oils Wheat and meslin

$54

Top ten Export products by Cuba in 2001

Top Ten Export Products by Cuba in 2001 (Million U.S. Dollar)
$50 $77 $543 $33 $26 $25 $22 $34

Cane or beet sugar and chemically pure sucrose, in solid form Nickel matte,nickel oxide sinters Cigars, cheroots, cigarillos & cigarettes Crustaceans Fruit & vegetable juices, unfermented Cements, portland, aluminous, slag, supersulfate Human & animal blood; antisera, vaccines, toxins, micro-organism cultures Semi-finished products of iron or nonalloy steel Petroleum oils, not crude Tobacco unmanufactured; tobacco refuse

$241

Source: International Trade Center (ITC) Website, www.intracen.org/menus/countries.htm $462

Main Cuban Exports and Imports

EXPORTS
NICKEL TOBACCO

IMPORTS
OIL & LUBRICANTS FOOD

SUGAR & By-Prod.

FISHERIES CEMENT RUM COFFEE OTHERS

MACHINERY /EQUIP.
METALS & MANUF. CHEMICALS VEH. /TRANSPORT. PHARM. & MED.DEV OTHERS

US strong with

Airplanes Tractors Agriculture

Office supplies Food Computers

Changes of U.S. Export to Cuba

$300 $250 $200 $150 $100 $50 $0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Source: USA Trade Online, U.S. Census Bureau, 2003

(millions dollars) Allows for U.S. Food and medical exports to Cuba under certain conditions. In its first two year of implementation, the U.S. Exports to Cuba rose by a factor of almost 40.

$260.8

$145.6

$1.2 $2.5 $4.6 $5.6 $5.5 $9.5 $3.5 $4.5 $6.9 $7.1

2003 U.S. EXPORT to Cuba by category

$90 $80 $70 $60 $50 $40 $30 $20 $10 $0
$85.1

96% of 2003 U.S.exports to Cuba are food related. Compared to 2002 exports, those of 2003 rose by 79%.
$7.2 $3.3
Misc.

$51.5 $36.7 $38.3 $38.8

Export

Wheat

Soybeans

Oilseeds, Food Meats, poultry, Other oils etc. Agircultural

Industrial

Source: USA Trade Online, U.S. Census Bureau, 2003

Impact of free trade with Cuba in the U.S. Economy

Cuba is the largest and most economically viable market in the Caribbean and the closest one to the U.S.; Over 11 million inhabitants, plus an expanding tourist industry.
Its wealth of underutilized natural and human resources makes it an ideal economic trading partner for the U.S.

Barriers to International Trade

Several devices used to control international trade. Quotas Tariffs Embargoes

Cuban Embargo
US can not trade with Cuba Can not travel to Cuba Places sanctions on those countries that do trade with Cuba For the purpose of showing disapproval for their government (communist nation)

Some Key Points

1.

The Energy Opportunities

Sector

provides

attractive

business

2.

Increasing trade leads to Increasing communication services Lifting the travel ban and the restrictions on CubanAmericans visiting the Island will have an impact on both, the U.S. (particularly Florida) and Cuba Airlines and shipping companies will benefit from two ways trade Increased business in ports and airports Potential opportunities in software and banking Services Successful development of Cuban biotechnology. Business related to Environmental Protection would be of interest for both sides.

3.

4.

5. 6. 7. 8.

Question 1

Should the U.S. Seek to tighten the economic grip on Cuba ? if so , why ?

Since the rest of the world is trading with Cuba, the U.S. embargo does not stand anywhere in the row . It does not impact the trade of Cuba with other countries.

The complete scenario looks like a Cold War

However, the U.S. is being consistent with its policy on human rights, and who knows it just might work. Specifically, only US, Israel and Uzbekistan are rejecting the voice of the United Nations General Assembly to seize this type of trade treatment. More cases appear every year in the news regarding the US embargo consequences on the lives of millions of Cubans. Food, medicine and other important supplies are withheld from the citizens of this island due to its political history and recent communist upheaval that led Fidel Castro in power

Question 2

Should the U.S. Normalize business relations with Cuba ? if so , should the U.S. Stipulate any conditions?

In my opinion Yes, Normal relations may lead to greater democracy. No, Cuba will not necessarily trade with U.S. like the 1950s. U.S. cant stipulate any conditions. There is no guarantee that trade will bring about human rights or regain lost property. The U.S. should end the trade and business embargo with Cuba and move quickly to allow tourism between our two countries. Most important, we should restore full diplomatic relations with Havana. Only then will we have the leverage to press the new Cuban leadership to restore human rights, establish a free market-based economy, and move to democracy.

Question 3

Assume you are Fidel Castro. What kind of trade relationship with the U.S. Would be in your best interest ?What type would you be willing to accept?

Fidel Alejandro Castro Ruz (born August 13, 1926) is a Cuban revolutionary leader who was prime minister of Cuba from December 1959 to December 1976 and then president, premier until his resignation from the office in February 2008. Castro came to power as a result of the Cuban revolution that overthrew Fulgencio Batista, and shortly thereafter became Prime Minister of Cuba. In 1965 he became First Secretary of the Communist Party of Cuba and led the transformation of Cuba into a one-party socialist republic. In 1976 he became President of the Council of State as well as of the Council of Ministers.

FIDEL CASTRO

Castro would want to save and improve Cubas economy with direct aid from U.S. government . Simultaneously, he would want to prevent any influence that might cause social or political change. If Castro allows this then further growth is possible because after, when in 2000 the export to U.S was opened then Cuba became 25th largest agricultural market for U.S with sales exceeding $400 million in U.S.

Question 4

How does the structure and relationships of the American political system influence the existence and specification of the trade embargo?

Structurally, Congress and the President listen to lobbyists and campaign donors who oppose Castros regime. America also has a long standing adversarial relationship with Communist countries which makes policy changes unlikely.

A real potential exists for significant trade in goods and services between Cuba and the U.S.

The elimination of the blockade and restoration of bilateral trade between both countries would benefit not only Cuba, but also the U.S. business community

Cubas natural resources and skilled labor, as well as its geographical proximity to the U.S. add up to opportunities for American business

Arguments have been raised portraying Cuba as a threat for U.S. businesses, particularly, for Floridas...

Florida is called to be the most benefitted area in the U.S. in terms of trade and investments with Cuba

Current Trade Relations

Under the Trade Sanctions Reform and Enhancement Act of 2000, exports from the United States to Cuba in the industries of food and medical products is permitted with the proper licensing and permissions from the U.S. Department of Commerce and the United States Department of the Treasury. The U.S. embargo on Cuba will remain in place despite Fidel Castro's announcement that he's resigning as Cuba's leader.

Thank you..!!!!