Thursday, January 28, 2010


To boost job creation, President Obama announced a National Export Initiative to boost American exports during last night's State of the Union address. He says he won’t settle for second place when it comes to revamping our economy.

That’s good, because preliminary data from last year are showing that the United States, long the world’s greatest exporter, is now in third place behind China and Germany.

The President seems serious, even mentioning the Doha negotiations and trade agreements with South Korea, Colombia, and Panama that are anathema to protectionists in both parties.

He is unlikely to drop the Cuba embargo for obvious reasons, even though that would open an export market that we have blocked unilaterally.

So here’s a more modest idea. Since President Obama made special mention of American farmers, and since farm income was down by one third last year, why not change American policy to expand agricultural exports to Cuba?

To do this, he could take a few steps – and protectionists can relax, since none involve opening the U.S. market to imports from Cuba.

Since 2002, Cuba has spent an average of $373 million per year on American grain, poultry, cattle, products for Cuban grocery stores, even telephone poles and newsprint. This is a big exception to the overall U.S. trade embargo that was enacted in 2000.

But our exports suffer from self-imposed restrictions. Cuba is required to pay cash for our goods, but we don’t allow Cuba to wire its payments directly to U.S. banks – payments have to be sent through third countries. This makes European bankers happy as they collect fees for handling the transactions and changing money from one currency to another. We also require Cuba to pay before the shipment leaves a U.S. port, rather than before goods are turned over in a Cuban port.

And American companies are not permitted to extend credit to Cuba. Given Cuba’s debt troubles and payment record, it is questionable how much private credit would be extended, and it would be wrong to risk U.S. taxpayer dollars in Cuba through loans or export insurance. But why shouldn’t Americans be free to engage in normal export financing, at their own risk?

These are all policies that, to date, President Obama has preserved even though he says he wants to “recast” our relations with Havana.

He has also preserved President Bush’s travel restrictions, with the exception of allowing Cuban Americans to travel to Cuba as they please.

If President Obama were to end travel restrictions, American travelers – religious and civic groups, sports teams, universities, and even tourists – would create a flow of information and ideas between our countries and correct a mistaken foreign policy that pretends to extend American influence while building a wall between our peoples.

An open travel policy would affect agriculture too: the revenues from American travelers will lead to increased purchases of our farm products.

Together, these measures would make the United States a more competitive vendor and Cuba a stronger customer.

Cuba spent $1.8 billion on agricultural imports in 2008 – more than three times the amount it spent in 2000.

About one third of those imports come from America. The U.S. International Trade Commission estimated last June that Cuba would buy one half to two thirds of its agricultural imports from the United States if we drop the cumbersome rules governing transactions with Cuba, end travel restrictions, and allow private credit.

That translates to half-billion dollar boost in American farm exports.

Is that what you’re looking for, Mr. President?

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