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Whose Embargo Is It, Anyway?

| By Dwayne Andreas | From The Cuba Issue, May/Jun 99

From a business perspective, the restrictions and prohibitions regarding commerce with Cuba are neither cost-effective nor time-effective. According to the New York City-based U.S.-Cuba Trade and Economic Council, in 1998 Cuba imported approximately $650 million in bulk-food commodities (cooking oil, chicken, pork, powdered milk, soy, rice, beans, wheat, etc.) for distribution to its 11 million citizens. Millions of dollars more were spent importing food products to feed the 1.4 million tourists who visited the country last year, and even more will go to feed the 1.7 million tourists expected to visit this year. In the 1980s and early 1990s, Cuba was importing approximately $1 billion annually in bulk-food commodities.

From where do the majority of these food products originate? France, Argentina, Mexico, Spain, China, the Netherlands, New Zealand and Canada (the single largest trading partner of the United States).

This year, farmers in the United States are watching as domestic and international bulk-food commodity prices continue to decrease. In large measure, these price decreases are a result of a) ironically, increasing efficiencies that continue to permit farmers in the United States to be the most productive in the world and b) the inability of traditional export markets to maintain existing purchasing levels due to their own domestic economic difficulties. Logic would dictate what to do to help the farmers: create new export markets. Logic would dictate what not to do to help the farmers: support taxpayer bailouts in lieu of creating new export markets. Unfortunately, the definitions of logic in the private sector and in the public sector are far too often at odds.

In 1998, the value of U.S. agricultural exports was approximately $51.7 billion. Today, Cuba could almost immediately become a substantial export market for U.S. farmers. For every new $1 billion in exports, the U.S. Department of Commerce reports that approximately 20,000 jobs are created. Cuba could reasonably sustain and then expand to such a level of imports--thus creating new jobs in the United States.

There are those who advocate maintaining the status quo as the most cost-effective means by which to achieve U.S. policy goals in Cuba. There are those who advocate increased pressure, and others who advocate lessening pressure. All three positions have merit.

Amazing, however, is the number of politicians, pundits and others who hold fast to views about Cuba without ever having visited the country. Watching "The Newshour with Jim Lehrer," reading The Wall Street Journal or listening to National Public Radio must not be

substitutes for seeing for yourself. President Ronald Reagan, upon arriving in Moscow in 1988, said that seeing the Soviet Union once was more important to him than hearing about it 1,000 times.

To those who espouse the view that permitting U.S. businesses to conduct transactions within Cuba will undermine, rather than promote, U.S. policy goals, they are simply wrong. Can anyone rationally argue that U.S. companies exporting to Cuba, importing from Cuba, providing services within Cuba or investing in Cuba would "look the other way" when finding a problem? A prosperous Cuba means a more prosperous United States.

To those who want to see an increase in the standard of living of the Cuban people, the solution is this: permit U.S. companies to create employment opportunities. Cuban government-operated companies and companies from other countries, including those already operating within Cuba, will have no choice but to maintain parity with, or exceed, new wage levels established by U.S. companies or risk losing quality employees. We will be the rule, not the exception.

By not interacting today with Cuba, the United States is sacrificing an ability to influence treaties, laws and regulations that affect commercial transactions within that nation. Assisting the National Assembly of Cuba are representatives from the governments and universities of Canada, the United Kingdom, Spain, France, Italy and Mexico, among others. It is in their interest to establish commercial environments that will provide a competitive advantage to companies within their countries, perhaps to the detriment of U.S. businesses.

The U.S. policy of encouraging donations while restricting the sale of health-care products and prohibiting the sale of food products, for example, is self-defeating. How does giving something for free to a government encourage that government to make commercial and economic changes? Donations can promote the maintenance of existing commercial, economic and political structures in Cuba because the government is not required to make any uncomfortable financial allocation decisions. Without U.S. restrictions on sales to Cuba, the Cuban government would be required to provide greater value to its citizens--or create new, and transparent, excuses for its hardships.

More than 150 U.S. health-care companies continue to await permission from the U.S. Department of the Treasury to participate in the U.S. Medical/Health-care Exposition to be held in Havana. (The event is being organized by PWN Exhibicon International LLC of Westport, Connecticut.) If the U.S. government wants to undermine the Cuban government's position that sales of health-care products are being restricted, what more visible opportunity than a trade show in Cuba?

This January, President Clinton initiated the first potentially substantive, and positive, changes in U.S. policy toward Cuba since the initiatives of President Jimmy Carter 20 years ago. The United States now has an opportunity for constructive reengagement with the people of Cuba--if the new policy is interpreted expansively regarding "people-to-people" contact and commerce.

Unfortunately, preventing any substantive and positive change in U.S. policy towards Cuba has become a thriving business. Some individuals want to maintain the status quo so as to maintain their relevance. Thankfully, when the United States and Cuba have normalized relations, no longer will these individuals and their organizations have disproportionate influence over the public sector, no longer will their views be supported by U.S. taxpayer-financed grants, and no longer will their public-sector contributions prevent U.S. companies from accessing 11 million customers and a potential of $3 billion to $6 billion in annual bilateral commercial activity.

Democrats, Republicans, conserva-tives and liberals often espouse the use of "weapons" such as free markets and capital to promote the ideals of democracy. Surely, the most visible and cost-effective vehicle from which to launch such an "attack" is the U.S. business community.

If the United States wants to demonstrate the value of our Stars and Stripes to the people of Cuba, we must permit them to see the flag, to touch the flag and, most important, to speak with those who are represented by the flag. The flag is our people, our spirit, our values, our culture and, yes, our products and services.

If a U.S. company had maintained the same policy for almost 40 years, and president after president had not achieved the goals of that policy, either the policy would be changed or new management would be hired. President Clinton has confirmed that the policy toward Cuba has not achieved its stated commercial, economic or political goals. He has less than two years remaining on his term in office. Logic requires a substantive, and positive, change in that policy.

Dwayne O. Andreas is chairman emeritus of Archer Daniels Midland Co., one of the world's largest processors of oilseeds, corn and wheat. Annual revenues exceed $16 billion.


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