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The Obama administration is loosening the U.S. trade embargo on Cuba with a new round of regulations allowing American companies to sell to Cuba on credit and export a potentially wide range of products to the Cuban government for the first time, officials said Tuesday.
The changes are President Barack Obama’s third attempt to spur U.S.-Cuba commerce despite an embargo that still prohibits most forms of trade with the island.
U.S. travel to Cuba has exploded since Obama and Cuban President Raul Castro declared detente in 2014. But U.S. hopes of building wider trade between American businesses and Cuba’s private sector have been largely frustrated by Congressional reluctance to end the embargo itself and by the island’s labyrinthine restrictions on imports, exports and private business.
Obama says he hopes to visit Cuba before he leaves office but a trip would depend on the progress being made in relations between the two countries. Tuesday’s move appears designed to jumpstart commerce between the two countries and remove some of Cuba’s biggest excuses for not opening its economy to trade with the U.S.
“Just as the United States is doing its part to remove impediments that have been holding Cubans back, we urge the Cuban government to make it easier for its citizens to start businesses, engage in trade, and access information online,” National Security Council spokesman Ned Price said.
Among a host of other measures, the new regulations allow U.S. firms to offer Cuban buyers credit on sales of non-agricultural goods, addressing a longstanding Cuban complaint about a ban on credit.
The vast majority of Obama’s new regulations have been aimed at spurring U.S. trade with Cuban entrepreneurs instead of with the state-run firms that dominate the economy. The Cuban government says that U.S. focus on private business is partly responsible for the island not opening its economy in response to the U.S. loosening of the embargo.
The U.S. Commerce Department said Tuesday that it would now allow U.S. exports to Cuban government agencies in cases where it believed the Cuban people stood to benefit. It cited agriculture, historic preservation, education, food processing and public health and infrastructure as government-controlled sectors that it would not allow to receive goods from the U.S. on a case-by-case basis, potentially opening up a huge new field of commerce between U.S. business and the Cuban government.
“You would expect that this would open up a lot of areas where there should be enhanced trade,” said James Williams, head of the anti-embargo U.S. group Engage Cuba. He said that while Obama’s initial exceptions to the embargo were criticized for not reflecting a deep understanding of Cuba, the new regulations were much more attuned to the peculiarities of Cuba’s state-controlled economy.
Cuban officials issued no immediate comment on the changes and state media made only brief mention of them in the first hours after the U.S. announcement.
Anti-Castro figures in the U.S. have long argued against Obama’s opening with Cuba, saying it empowers the state rather than the Cuban people and Tuesday’s announcement gave them ammunition.
“These regulations are more proof that the Obama Administration’s intent has never been to empower the Cuban people but rather to empower the Cuban government’s monopolies and state-run enterprises,” said Republican presidential candidate Marco Rubio, a Cuban-American U.S. senator from Florida.
The new measures expand the different instances in which Americans can travel to Cuba without a specific permit, including filming movies and television programs, conducting market research and commercial marketing and organizing professional meetings and sports events.
While the embargo prohibits pure tourism, Obama’s changes have largely turned the ban into a toothless honor system requiring travelers to self-report the purported legal reason for their travel to their airline or travel agent and then not engage in tourism on the island.
The new changes make the tourism ban even harder to enforce by expanding the number of credible reasons that an American could be in Cuba. The new measures also contain a number of technical changes designed to allow regularly scheduled flights between the U.S. and Cuba, a potentially massive change agreed upon by the two countries late last year.
Travelers now must go through third countries or take inconvenient and expensive charter flights. Regularly scheduled flights could bring hundreds of thousands more American travelers to Cuba every year.