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February 16, 2001
News Release 01-025
Inv. No. 332-413

The U.S. International Trade Commission today released its report The Economic Impact of U.S. Sanctions with Respect to Cuba.

The ITC, an independent, nonpartisan, factfinding federal agency, prepared the report for the Committee on Ways and Means, U.S. House of Representatives. As requested, the report provides an overview of U.S. sanctions with respect to Cuba; describes the Cuban economy, Cuban trade and investment policies, and trade and investment trends; analyzes the historical impact of U.S. sanctions on both the U.S. and Cuban economies; and evaluates the current impact on U.S.-Cuban bilateral trade, investment, employment, and consumers.

The report analyzes in detail the impact of U.S. sanctions with respect to Cuba for 34 U.S. and Cuban economic sectors. Service sectors analyzed are: air transportation, maritime transportation, banking and insurance, construction, telecommunications, and travel and tourism. Agricultural sectors analyzed are: meat and dairy, wheat, rice, feedgrain, animal feed, fats and oils, dry beans, cotton, winter vegetables, tropical fruit, citrus fruit, sugar, distilled spirits, cigars, and seafood. Intermediate and manufactured goods analyzed are: fertilizer and pesticides, pharmaceuticals, textiles and apparel, steel, nickel and cobalt, machinery and transportation equipment, power generation machinery and equipment, electronics goods, medical goods, cement, plastics, tires, and sporting goods. Report highlights follow.

• U.S. economic sanctions with respect to Cuba had a minimal overall historical impact on the U.S. economy. The United States quickly found alternate suppliers and alternate markets to replace trade with Cuba. Overall, Cuba emerged as a small global market relative to other Latin American countries, and foregone U.S. trade opportunities were minimal.
• The ITC estimates that U.S. exports to Cuba in the absence of sanctions, based on average 1996-98 trade data, would have been approximately $658 million to $1 billion annually, or about 17 percent to 27 percent of Cuba's total imports from the world. Estimated U.S. imports from Cuba in the absence of sanctions, based on average 1996-98 trade data and excluding sugar (U.S. sugar imports are government-regulated), would have been approximately $69 million to $146 million annually, amounting to about 7 percent to 15 percent of total Cuban exports to the world.
• U.S. economic sanctions with respect to Cuba generally had a minimal overall historical impact on the Cuban economy. Cuba adjusted quickly to U.S. economic sanctions through political and economic alliance with the Soviet bloc countries, largely offsetting any adverse effects of U.S. sanctions. The loss of Soviet economic assistance after 1990 caused a severe downturn in the Cuban economy, bringing to the forefront longstanding inefficiencies in the Cuban economy. The loss of Soviet assistance eventually forced Cuba to introduce economic reforms to attract foreign investment and selective economic liberalization to stimulate domestic production. Currently, sanctions force Cuba to source some products that could be supplied by the United States from distant trading partners at higher transportation costs.
• Despite the close geographic proximity that would appear to make the United States and Cuba natural trading partners, bilateral economic relations in the absence of sanctions could be limited by Cuba's remaining restrictions on investment and economic activity; a foreign exchange shortage that limits Cuba's ability to import; and production constraints that limit Cuba's export potential.
• While the overall impact on the U.S. economy of U.S. sanctions with respect to Cuba was small, the report indicates that some U.S. industries may be likely to benefit from removal of these sanctions. Industries, such as rice and wheat, may benefit as a result of increased exports to Cuba. The report also indicates that some U.S. industries, such as citrus and winter vegetables, may face some increased competition from imports from Cuba.

The Economic Impact of U.S. Sanctions with Respect to Cuba (Inv. No. 332-413, USITC Publication No. 3398, February 2001) will be posted in the Reports and Publications section of the ITC's Internet site at www.usitc.gov. A printed copy may be requested by calling 202-205-1809 or by writing the Office of the Secretary, U.S. International Trade Commission, 500 E Street, SW, Washington, DC 20436. Requests may be faxed to 202-205-2104.

ITC general factfinding investigations, such as this one, cover matters related to tariffs or trade and are generally conducted at the request of the U.S. Trade Representative, the Senate Committee on Finance, or the House Committee on Ways and Means. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the ITC submits its findings and analyses to the requester. General factfinding investigation reports are subsequently released to the public, unless they are classified by the requester for national security reasons.

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