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U.S. farmers and the Cuban embargo
Trade barriers are generally designed to protect some sector of the economy from foreign competition. But the embargo, the harshest type of trade barrier, may be enacted for political purposes to hurt a country economically and thus undermine the political leaders in charge. Such was the case with the Cuban embargo which has been in place since the 1960s. In recent years, there has been increased opposition to the embargo and some of the people opposed to the embargo may surprise you.
Why would grain farmers from the Midwest and dairy farmers from New England be among the most vocal opponents of
the current Cuban embargo by the United States? This embargo, which has been in effect since the 1960s, was designed to isolate Cuba and force President Fidel Castro from power. Some trade between the United States and Cuba has occurred in recent years but the embargo is still in place. Today many farmers and other groups in the U.S. strongly support eliminating the embargo. In this lesson, you will learn what trade barriers are, why they are enacted, and why this particular trade barrier has become so controversial.
In order to understand the Cuban embargo, you must first understand trade barrriers. Trade barriers include (in addition to embargos) tariffs, quotas and voluntary export restraints. Embargos prohibit any kind of trade with another country. Tariffs are taxes that raise the price of a good when it is brought into another country. Quotas place limits on how much of a good can be brought into a country. Voluntary export restraints also limit the quantity of a good brought into a country but are initiated by the country producing the good, not the country receiving the good. To test your understanding of trade barriers, see if you can match the following hypothetical situations with the appropriate trade barrier. To familiarize yourself with these terms, complete this drag and drop activity.
Trade barriers are designed to protect some industries but, in fact they may hurt other industries or even consumers. Economists have found that sanctions don't often reach their political objectives and they come with high costs. A good example is the steel tariff imposed by the Bush administration, on foreign-made steel. President Bush imposed the tariffs, ranging from 8 percent to 30 percent, on some kinds of foreign steel in March 2002, in order to help the U.S. steel industry compete with foreign steel producers. Many U.S. manufacturing companies that use steel, including manufacturers of auto parts and appliances, say that the steel tariffs have raised costs for manufacturers and caused thousands of manufacturing losses. Also, people who buy cars or appliances may have to pay higher prices because of the steel tariffs. The U.S. International Trade Commission recently concluded that the tariffs have caused a $30 million net loss to the U.S. economy. In addition, the European Union is considering retaliatory tariffs against the U.S.
Review the following article entitled "What's Wrong With Trade Sanctions " that supports the argument of trade barriers not being in the best interest for a country at times.
Now that you understand what trade barriers are, let's examine the Cuban embargo in detail. The following is a brief time line of the embargo:
1960 - The Eisenhower administration imposed a partial embargo, excluding food and medicine.
1963 - The Kennedy administration prohibited travel to Cuba and made financial and commercial transactions with Cuba illegal for U.S. citizens
1977 - President Carter dropped the ban on travel to Cuba and on U.S. citizens spending dollars in Cuba
1981 - President Reagan reestablished the travel ban and prohibited U.S. citizens from spending money in Cuba.
2003 - Congress eased restrictions on travel to Cuba.
What political or historical events do you think influenced the actions taken in the above timeline?
Read a news article from Minnesota public radio entitled "America's Beef With Cuba
" and answer the following questions.
- What percentage of Cuba's agricultural products came from the U.S. in 2002?
- How much, in dollars, have U.S. farmers and agribusiness made from the trade with Cuba since 2001?
- Why did the Bush administration restrict travel to Cuba and cancel an upcoming trade fair with Cuba?
Students then read an article about Cuba’s Development and Trade with U.S. Midwestern States .
Based on the readings above, why do you think that many farmers and the Indiana Farm Bureau are trying to get the Cuban
Embargo repealed? Why do you think some politicians, such as Indiana Senator Evan Bayh, support repealing the embargo?
How does an embargo, such as the Cuban embargo, differ from other trade barriers, such as quotas or tariffs? Do you think the Cuban embargo has been successful? Why or why not? If the Cuban embargo is completely eliminated, what do you think the result will be-- for the United States and for Cuba? What group or groups do you think will be the biggest beneficiaries if the embargo is repealed? What group or groups do you think will lose the most if the embargo is repealed.
Hypothesize about what will happen to the prices of agricultural products in Cuba and the United States. Be sure to include reasons why.
Read the Farm Bureau briefing. Did you realize that Cuba is potentially an important trading partner for the United States? Does the article confirm your position on the the Cuban embargo?
Read some of the public opinion polls and news from the Cuban Policy Foundation
. According to the foundation, American public opinion now supports lifting the embargo. Why do you think this shift has occured? What do you think the U.S. government should do with regard to the embargo?
