The Obama Administration has said that trade with Cuba could reach up to $6 billion under its new policies, but U.S. companies in fact exported barely $380 million worth of goods to the island since the beginning of the thaw in bilateral relations two years ago.
Commerce Secretary Penny Pritzker said early last year that her department had issued 490 licenses to companies trying to do business with Cuba valued at $4.3 billion. More recently, White House spokesman Josh Earnest said that since late 2014 “more than $6 billion in trade has been initiated between Cuba and the United States since then, which obviously has an important economic benefit here in the United States.”
Experts said the administration is exaggerating, and that those numbers must be put in better context.
“While there may be licenses which total that value … in no way do the value of those licenses equate to actual economic activity” with Cuba, said John Kavulich, president of the U.S.-Cuba Trade and Economic Council, which has monitored bilateral trade since its founding in 1994.
Kavulich said the George W. Bush administration, trying to ease the bureaucracy, allowed companies to seek licenses for commerce with Cuba with declared amounts that are “aspirational” rather than real.
A U.S. company wanting to export goods to Cuba can then base its license application on its negotiations with the Cuban government, rather than the real value of a purchase. The new procedure voided the need to seek a new license if the final amount of the deal changed, Kavulich added.
Kavulich, who keeps detailed tallies of U.S. exports to Cuba, estimated that from December of 2014 to October of 2016 the total of U.S. agricultural and medical exports to the island barely reached $370.6 million. In fact, he added, all U.S. exports to Cuba since 2001 do not reach the $6 billion figure used by Earnest.
U.S. Census data showed the exports to Cuba over the past two full years totaled $380 million.
One Commerce Department official confirmed that the numbers used by Pritzker and Earnest reflect the paper value of the licenses issued and other operations allowed under the new Obama policies, and do not necessarily reflect real exports.
“Sometimes the companies obtain the licenses when they are still working on the details. The final agreement may be for a different amount, or the deal can die along the way,” the official added.
Cuba, whose economy grew by a meager 0.9 percent in all of 2016 and actually shrank during the last part of the year — going into recession for the first time since 1993 — also simply does not have the money to pay for the level of imports claimed by the Obama administration.
U.S. exports to Cuba — principally food items such as chicken, soya and corn — indeed fell since Obama began easing sanctions on Cuba.
“When the Obama Administration pulls out these numbers without explaining the background, the perception is a). that there is a huge amount of activity between the U.S. and Cuba; b). that Cuba is spending of all this money with U.S. companies and c)…When the numbers do not equate with reality, the perception is that Cuba has refused to engage… and it puts them in the position of they saying no to all this stuff, when they are not,” said Kavulich.
“They are doing it because they want to exaggerate and demonstrate how much progress and success there is,” he added. “But lying to make a marketing point is not a good strategy, especially for a government.”