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 Cuba’s main

trading partner.

 Florida was Cuba’s largest U.S. State trade

partner.

 40 percent of all cargo being routed

through Miami’s customs district was
transported to Cuba.

 85 percent of Cuba’s exports were

transported to the united states.
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

8000
Million $

6000

4000

2000

0
95

96

97

98

99

00

01

02

03

04

05
19

19

19

19

19

20

20

20

20

20

20
Top ten Import products by Cuba in
2001
Top Ten Import Products by Cuba in 2001 Petroleum oils, not crude
(Million U.S. Dollar)
$54 Crude petroleum oils
$61
$63
Wheat and meslin
$68
Rice
$72

$663 Milk and cream, concentrated

or sweetened
$99 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

 Top ten Export products by Cuba in
2001
Top Ten Export Products by Cuba in 2001 Cane or beet sugar and chemically pure
(Million U.S. Dollar) sucrose, in solid form
Nickel matte,nickel oxide sinters
$26 $25 $22
$33
$34 Cigars, cheroots, cigarillos & cigarettes
$50

$77 Crustaceans
$543
Fruit & vegetable juices, unfermented

Cements, portland, aluminous, slag,

supersulfate
$241
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

$462
Source: International Trade Center (ITC) Website, www.intracen.org/menus/countries.htm
Main Cuban Exports and Imports
EXPORTS IMPORTS
NICKEL OIL & LUBRICANTS

TOBACCO FOOD

SUGAR & By-Prod. MACHINERY /EQUIP.

FISHERIES METALS & MANUF.

CEMENT CHEMICALS

RUM VEH. /TRANSPORT.

COFFEE PHARM. & MED.DEV

OTHERS OTHERS
 US strong with…

 Airplanes
 Office supplies

 Tractors
 Food

 Agriculture
 Computers
 Changes of U.S. Export to Cuba
(millions dollars)
$300
$260.8
 Allows for U.S. Food and
$250 medical exports to Cuba under
certain conditions.
$200
 In its first two year of
implementation, the U.S. $145.6
$150 Exports to Cuba rose by a factor
of almost 40.
$100

$50
$1.2 $2.5 $4.6 $5.6 $5.5 $9.5 $3.5 $4.5 $6.9 $7.1
$0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Source: USA Trade Online, U.S. Census Bureau, 2003
 2003 U.S. EXPORT to Cuba by category

$90 $85.1
$80  96% of 2003
U.S.exports to
$70 Cuba are food
related.
$60 $51.5
Export

$50  Compared to
$38.3 $38.8
$40 $36.7 2002 exports,
those of 2003
$30 rose by 79%.
$20
$7.2
$10 $3.3
$0
Wheat Soybeans Oilseeds, Food Meats, poultry, Other Industrial Misc.
oils etc. Agircultural
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.
•Quota’s
•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 Sector provides attractive business
Opportunities
2. Increasing trade leads to Increasing communication
services
3. Lifting the travel ban and the restrictions on Cuban-
Americans visiting the Island will have an impact on both,
the U.S. (particularly Florida) and Cuba
4. Airlines and shipping companies will benefit from two
ways trade
5. Increased business in ports and airports
6. Potential opportunities in software and banking Services
7. Successful development of Cuban biotechnology.
8. Business related to Environmental Protection would be of
interest for both sides.
 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 1950’s.
 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 CASTRO
 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.
 Castro would want to save and
improve Cuba’s 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
Castro’s 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
Cuba’s 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 Florida´s...
 …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..!!!!