Mirror-Image Protectionism


Shortly after taking power in Cuba, Raul Castro mobilized his country’s military. “We could not rule out the risk of somebody going crazy, or even crazier, within the U.S. government,” he said. His supposed fear is that while his dictatorial brother Fidel Castro recuperates from intestinal surgery, President Bush will order an invasion of the island nation.

Now that’s truly crazy: Although plenty of Americans would love to see a permanent end to Cuban totalitarianism, nobody in Washington or anywhere else is talking about a shock-and-awe operation 90 miles south of Key West. The very idea of it is preposterous.

Yet the Castro brothers would be right to worry about a different kind of American offensive: rather than a military one of tanks and troops, an economic one of goods and services.

Last week, I made a case on national-security grounds for lifting the U.S. trade embargo against Cuba: Free trade fosters economic liberty, which in turn gives rise to political freedom and democracy.

This week, I’d like to make a strictly economic case, because I believe we’re letting an incredible opportunity slip away from us.

Based on personal observations when I was in Cuba a few years ago – a few facts and impressions have been etched in my mind.

More than 11 million people live in Cuba–about the same number that live in Ohio, which is our country’s seventh-largest state. Granted, they’re a lot poorer than the typical resident of Cincinnati or Cleveland, but they’re also part of an export market that is virtually untouched by American capitalism.

With the exception of Canada and Mexico–the two countries whose borders physically touch our own–plus the Bahamas, no nation is geographically closer to the United States than Cuba. In a world without politics, our economies would be deeply integrated.

The fact that they’re hardly linked at all, costs us money every day. Farmers feel the pinch to the tune of more than $1 billion annually, according to a study by the Washington-based Cuba Policy Foundation. “If the embargo were lifted, the average American farmer would feel a difference in his or her life within two to three years,” says C. Parr Rosson, a co-author of the report and a professor of agricultural economics at Texas A&M University.

The embargo’s overall effect on the U.S. is an economic loss of more than $3.5 billion per year. This is of course the mirror image of protectionism: Instead of refusing to let goods and services come into our country, we refuse to let them go out.

The Cubans themselves would love to trade with Americans. The embargo currently allows some food sales, worth around $400 million, according to the U.S.-Cuba Trade and Economic Council.

Yet the Cubans would like to do more. They already trade extensively among themselves in dollars, which they acquire largely through remittances sent by relatives in Florida and all around the United States. “We have more trust in dollars,” said a man who runs a small café out of his Havana home, in the Los Angeles Times earlier this year.

There are no official estimates of how many greenbacks Cuban Americans send to their ancestral homeland, but most experts think that it’s north of $1 billion each year. These funds go a long way toward propping up a crumbling socialist economy that limits the income of most people to about $15 per month. (My waiter in my hotel in Cuba was a lawyer who made about $50 per month, but about $50 per night in tips. He and his family wanted to live better, he said.)

If the United States were allowed to trade with Cuba, a lot of this cash would come right back here in the form of trade dollars. What’s more, a Cuban government that loosens its command-and-control grip on the island’s economy has the potential to unleash a torrent of foreign investment and domestic entrepreneurship. The ensuing boom would give Cubans ever more purchasing power–including the power to buy more and more from the United States.

But instead we’re stuck with a Cold War-era policy that has not even come close to achieving its most basic objectives and which remains in place because of special-interest pressures. It’s time to rethink this misconceived embargo, and to stop denying ourselves the opportunity of trading with a country that is a natural customer.

Dean Kleckner is an Iowa farmer. Mr. Kleckner chairs Truth About Trade and Technology (www.truthabouttrade.org) and is past president of the American Farm Bureau.

Dean Kleckner

Dean Kleckner

Deceased (1932-2015)

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