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Beyond Diplomacy: Why U.S.-Cuban Trade Remains Dormant

As ties improve between Cuba and the United States, bilateral trade — perhaps the area of greatest interest to consumers — has yet to emerge from its Cold War torpor.

Port of Havana
Port of Havana

HAVANA The United States and Cuba say they are delighted with the way relations are evolving, a year after presidents Raúl Castro and Barack Obama declared an end to decades of hostility. Both countries have since reopened embassies, agreed to reactivate postal service, signed an environmental protection agreement and begun conversations on issues ranging from human rights to compensation for properties confiscated after the 1959 Cuban revolution.

Obama's Secretary of State and Commerce and Agriculture secretaries, as well as a deputy head of the National Security Agency, have been negotiating technical and less glamorous, though crucial, issues like inspecting products and port regulations. Sporting and cultural activities are growing, while Havana is filling with American tourists. Various music promoters are busy organizing the first big U.S. pop concert in Havana next year.

But trade, hailed as the most promising piece of this new bilateral policy, remains largely dormant. When President Obama broke the news of the diplomatic breakthrough a year ago, on Dec. 17, 2014, he conjured a picture of tourists using credit and debit cards in Cuba, thanks to new links between the banks.

U.S. firms were to export a wide range of goods to Cuba, including telecommunication equipment. But none of this has happened yet.

"There have been important advances in political, diplomatic and bilateral cooperation," says Josefina Vidal, head of North American affairs at the Cuban Foreign Ministry. "But I have to say in the economy and trade, the results are barely visible."

Paloma Vieja, a 50-year-old office worker at a state firm in Old Havana, agrees that the practical results have been disappointing. "You don't see the products in stores," she notes.

Washington blames what it characterizes as Cuban reluctance to allow U.S. exports into the island's private sector, but also sales to the Cuban state telecommunications company. Vidal responds that it's failure of the Obama administration to lift or lighten the trade embargo on Cuba.

Vidal says there are "very few things the U.S. president cannot legally change." Among other measures, she wants Obama to allow Cuba to use U.S. dollars in international transactions and export goods to the United States.

U.S. firms trying to do business on the island say that their ideas and proposals are welcomed in face-to-face meetings, but that months later, nothing advances. American banks are also fearful of entering into conflict with embargo provisions and have been blocking, or overcharging for, legal transactions relating to Cuba. Meanwhile, U.S. businesses say federal regulators respond to their permit applications with ambiguity, or silence.

One year after the long-awaited breakthrough between Washington and Havana, it's clear that reopening trade between neighbors is much more complicated than reopening embassies.

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