NCPA - National Center for Policy Analysis

Benefits of Ending the Cuban Embargo

January 14, 2003

Opponents of ending the U.S. embargo on Cuba are concerned that increased trade would strengthen the regime of Fidel Castro. But observers point out that increased trade has fostered democratic development in other countries, including other Communist regimes.

China, for example, has become the United States' fourth largest trading partner. As the Center for Trade Policy points out:

  • In 1978 international trade was 10 percent of China's gross domestic product (GDP), but by the late 1990s trade comprised 36 percent of its GDP.
  • Due to China's reforms, 100 million people no longer live below the poverty line, and both rural and city dwellers have better access to health care and education.

Trade has also encouraged China to develop enforceable contracts and property rights, which can act as anchors for the process of democratization.

Like China, Mexico has also benefited greatly from embracing trade. According to Angel Villalobos, a high-ranking Mexican trade official:

  • Since the 1994 North American Free Trade Agreement (NAFTA), foreign direct investment (FDI) in Mexico has grown to over $115 billion.
  • Employment in FDI firms has grown more than twice as fast as the economy as a whole, and these firms offer salaries 48 percent higher than average.
  • Between 1993 and 1999, Mexico rose from twenty-sixth to eighth among the world's exporting countries and became the United States' second-largest trading partner.

Increased democratization was evinced in Mexico by the election of President Vicente Fox in 2000, which ended seven decades of single party rule.

Increased trade would also be in America's economic interest. Cuba already imports about $1 billion in goods from U.S. allies. A recent Texas A&M study commissioned by the Cuba Policy Foundation shows that U.S. farmers lose $1.24 billion each year due to the embargo. (See Figure I.)

Source: Amy Maness, "Should We Trade With Cuba?" Brief Analysis No. 427, January 14, 2003, National Center for Policy Analysis.

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