NCPA - National Center for Policy Analysis

Economic Case For Ending Cuban Sanctions

July 5, 2000

As soon as next week, the House and the Senate may lift trade sanctions against Cuba which prevent direct shipment of food and medicines to Castro's communist state. A bill sponsored by Rep. George Nethercutt (R-Wash.) would punch holes into the 38-year-old Cuban embargo. It would also open food and medicine shipments to North Korea, Libya, Iran and Sudan.

Political considerations aside, what economic benefits would accrue to the U.S. from such a move?

  • The American Farm Bureau estimates that total demand for agricultural exports to those countries may amount to $7 billion annually.
  • At present, U.S. companies and individuals can distribute food and medicine to Cuban entities -- but they must go through third-party countries to do so.
  • Since some of those markets are already being served by other countries, the Department of Agriculture estimates that existing sanctions deny U.S. farmers only $1.9 billion a year in potential exports.
  • Yet a study by the Stern Group found that U.S. farmers and pharmaceutical makers could earn $444 million a year if the sanctions were lifted -- with 6,000 U.S. jobs being created.

Under the Nethercutt measure, cash-strapped Cuba would have to pay cash for food and medical purchases. No financing of the purchases could come from U.S. institutions.

Source: Joseph Guinto, "Will End to Sanctions Against Cuba Be Boon for American Businesses?" Investor's Business Daily, July 5, 2000.

 

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