U.S.-CUBA TRADE UNDER TRUMP VS. BIDEN

Co-Authored by Sharath Patil

U.S.-Cuba Trade under Trump

Since the early 1960s, the U.S. maintained a policy of economic sanctions towards Cuba. The U.S. policy sought to isolate the Cuban government. In 2014, the Obama administration significantly changed U.S. trade and economic policies towards Cuba by restoring diplomatic relations, rescinding Cuba’s designation as a state sponsor of terror, and permitting increased trade between the two countries. This period was known as the Cuban Thaw.

However, under President Trump’s administration, the Obama administration’s efforts to normalize relations have been rolled back. In November 2017, the Trump administration restricted financial transactions with entities controlled by the Cuban government. Furthermore, many new entities have been added to the Cuba restricted list under the Trump administration. As of 2019, the Trump administration has more or less abandoned engagement with the Cuban government, and has opted instead to increase sanctions based on Cuba’s human rights violations and its support of the Venezuelan government under Nicolas Maduro.

Significant U.S. sanctions towards Cuba under the Trump administration include:

• Restrictions on transactions with the Cuban military. The U.S. State Department issued a “Cuba restricted list” in 2017 which it has continued to update. The U.S. Treasury Department forbids financial transactions with these entities. There are exceptions, however, for agricultural and medical commodities, direct telecommunications or internet access, and other specific carve-outs.
• Restrictions on remittances. In September 2019, the U.S. Treasury Department limited family remittances. Previously, these remittances are now restricted to $1,000 per quarter per Cuban national. The U.S. Treasury Department also prohibited donative remittances (e. remittances to non-family members).
• Efforts to stop Venezuelan oil exports to Cuba. Since 2019, the U.S. Treasury Department has imposed sanctions on Cuba’s state-run oil trading company, Cubametales, and has also imposed sanctions on shipping companies that transported Venezuelan oil to Cuba.
• Prohibitions of U-Turn transactions. The U.S. Treasury Department restricted the Cuban regime’s access to the U.S. financial system by eliminating authorization for what are commonly known as “U-turn” transactions (e. funds transfers that originate and terminate outside the U.S. where neither the originator nor beneficiary is a person subject to U.S. jurisdiction).
• Restricted Access to Leased Commercial Aircraft. In October 2019, the S. Commerce Department restricted Cuba’s access to leased commercial aircraft.
• Imposed export restrictions. The U.S. Commerce Department imposed licensing requirements for U.S. exports of telecommunications infrastructure to the Cuban government and for the export of certain donated items to organizations controlled by the Cuban government.

U.S.-Cuba Trade under Biden

It is widely expected that President-Elect Biden will bring the U.S. closer to normalized relations with Cuba, reversing many of the sanctions and regulations imposed by the Trump administration. However, Biden’s eagerness to undo Trump-era Cuba sanctions may be tempered by a complicating factor: the Maduro government. The Cuban government has aligned itself closely with the government of Nicolas Maduro in Venezuela. In fact, Cuban intelligence officers have helped prop up Maduro, allowing his regime to consolidate its grip on power in defiance of demands for free and fair elections. This has been one of the reasons the U.S. Treasury Department has imposed recent sanctions on Cuba. The Biden transition team has indicated that the incoming administration is preparing for potential negotiations with Maduro’s regime. Biden is expected to sanctions relief to Venezuela in exchange for that country holding free and fair elections. It’s possible that as a result of these negotiations, U.S. sanctions on Cuba may be rolled back. Cuban President Miguel Diaz-Canel has also indicated that he is ready to talk to Joe Biden. In a recent address to the Cuban parliament, Diaz-Canel said: “We are willing to discuss any issue, what we are not willing to negotiate and what we will not give in on is the revolution, socialism and our sovereignty.” Biden said in October that the U.S. needed a new Cuba policy, though his team has been firm in condemning efforts by Havana to silence dissidents. With a packed domestic agenda, it’s unclear how quickly Biden will move on implementing his Cuba policy.

U.S.-Cuba Trade Flows

U.S.-Cuban trade flows have been volatile under the Obama and Trump administrations as a result of quickly changing trade and sanctions laws. U.S. exports to Cuba, which were relatively strong under Obama, have waned during the Trump administration (see chart below).

Source: U.S. Census Bureau

Adjusted for Inflation to Base Month November 2020

Due to its proximity and strong cultural ties, Florida is a relatively large exporter to and importer from Cuba (although the trade volumes are minuscule compared to Florida’s top trading partners). The following are the top goods Floridians exported to Cuba in 2019 (the most recent annual data available):

Top Florida Exports to Cuba (2019)

Source: U.S. Census Bureau

Adjusted for Inflation to Base Month November 2020

Meanwhile, U.S. imports from Cuba have been virtually non-existent during much of the Obama administration and the first two years of the Trump administration (see chart below). However, in 2018 and 2019, U.S. imports from Cuba suddenly surged. These imports are almost consist of works of art, collectors’ pieces, and antiques (HS code 97). It’s possible that this surge in art imports is explained by the Trump administration opening the door to restitution claims on art seized by the Cuban government. Furthermore, in 2019, Florida imports from Cuba were minimal and comprised only three categories: (1) artwork, (2) wood products, and (3) a negligible quantity of leather goods (see table below).

Source: U.S. Census Bureau

Adjusted for Inflation to Base Month November 2020

Top Florida Imports from Cuba (2019)

Source: U.S. Census Bureau

Adjusted for Inflation to Base Month November 2020

Contact Us

Diaz Trade law has extensive experience on U.S.-Cuba trade and sanctions matters. If your company is looking to do business with Cuba, Diaz Trade Law can assist you with analyzing the complex legal framework to ensure you comply with the vast U.S. federal government requirements. Diaz Trade Law provides expert analysis of all aspects of U.S. law including the U.S. Treasury Departments, Office of Foreign Assets Control (OFAC) Cuban Assets Control Regulations, and the U.S. Department of Commerce’s, Bureau of Industry and Security (BIS) Export Administration Regulations. Please contact us at info@diaztradelaw.com or 305–456–3830 for more information.

Originally published on Customs and International Trade Law Blog.