Cuba tightens bra limits, but serious threat to trade comes from US sanctions

Cuba tightens bra limits, but serious threat to trade comes from US
sanctions
AUTHOR: Emily Morris
Research Associate, Institute of the Americas, UCL at University College
London
DISCLOSURE STATEMENT
Emily Morris does not work for, consult to, own shares in or receive
funding from any company or organisation that would benefit from this
article, and has no relevant affiliations.
Provides funding as a Founding Partner of The Conversation.
ucl.ac.uk

Cuba has imposed new limits on the amount of goods that travellers can
bring into the country. The new measures will be unpopular with many
involved in the trade from suppliers to customers, and at first sight
they appear futile and counter-productive.

The informal trade in consumer goods and domestic equipment involves
huge bundles and packages being brought to the island by visiting
Cuban-Americans. The strong growth of these imports in recent years has
been the result of reforms in both the US and Cuba.

In 2009 Barack Obama lifted travel restrictions to Cuba for
Cuban-Americans that had been imposed by his predecessor, George W Bush,
allowing them to travel back and forth to visit relatives on the island
without any limit to the number of journeys. Meanwhile, Raúl Castro,
Cuba's president, has removed the requirement for Cubans planning
foreign trips to obtain an exit visas and fostered the growth of new
private businesses in Cuba. This has increased the purchasing power of
successful entrepreneurs and created new demand for business equipment
and consumer goods to sell.

The trade has allowed Cubans to acquire goods that are otherwise scarce
or very expensive. Families on both sides of the Florida Straits have
been using the trade to circumvent restrictions created by both US
sanctions, which prohibit the export of US consumer goods to Cuba, and
Cuba's centrally controlled economy, in which the state has a
near-monopoly on imports. The result of the restrictions has been a lack
of access to US goods, poor quality substitutes purchased from distant
markets, and persistent shortages in Cuban shops.

The informal trade has been welcomed by Cubans on the island with hard
currency to spend. But it's a problem for the broader economy as the
demand for these imports draws precious hard currency out of the
country. It also exacerbates growing income inequality within Cuba by
increasing the relative economic advantage enjoyed by Cubans with family
in the US.

The Cuban government, by restricting rather than banning this trade,
seems to recognise that it is neither possible nor desirable to end it.
The measures that have now taken effect represent a partial and
temporary fix, which is designed to placate those Cubans who are unable
to benefit from the trade but will aggravate frustrations among the
traders and their customers.

The apparent arbitrariness of the rules invites ridicule: as the foreign
press has noted, the new rules are 41 pages long, and state:

Travelers will now be allowed to bring in 22 pounds (10 kilos) of
detergent instead of 44; one set of hand tools instead of two; and 24
bras instead of 48.
And at a time when Castro has called for restrictions on non-state
economic activity to be removed, the restrictions seem anachronistic as
well as ridiculous.

But, with a dual currency system in which a severely undervalued Cuban
peso gives those with access to hard currency – or the "Convertible
peso" — enormous relative economic privilege, the socialist government
feels obliged to "do something", while it attempts to grapple with the
deeper causes of inequality and shortages.

In preparation for a reform of the currency system, the authorities have
been trying to build international reserves. And, although the planned
currency unification will not solve the problem overnight, it is
necessary to eventually narrow the gap between Cuban peso earners and
the privileged minority with ready access to hard currency.

Beyond this reform, the state importers, distributors and retailers need
to become more responsive to consumer preferences, and Cuban productive
capacity needs to grow. These challenges are on the agenda of a process
of profound, albeit gradual and cautious, transformation of the economic
system that is currently underway in Cuba.

But even if the Cuban government were to successfully deal with all
these shortcomings, the urge among Cuban-American visitors and returning
Cubans to heave enormous bundles of goods from the US would not
disappear, so long as the US government maintains its trade sanctions.
In effect, US policy forces its exports to Cuba to be channelled through
this route.

The route also provides images that fit the US anti-Castro narrative –
of US plentitude and Cuban shortages – while at the same time ensuring
that the money flows only one way: from Cuba to the US. Meanwhile,
paradoxically, US restrictions on Cuban informal imports into the
American "free market" are very much tighter than Cuban restrictions on
US imports, as anyone arriving in the US from Cuba with Cuban cigars or
rum in their luggage can testify.

Although these latest restrictions by the Cuban government are clearly
cumbersome, discriminatory and inefficient, the biggest obstacle to the
normalisation of trade between the US and Cuba remains US sanctions.

Source: Cuba tightens bra limits, but serious threat to trade comes from
US sanctions -
http://theconversation.com/cuba-tightens-bra-limits-but-serious-threat-to-trade-comes-from-us-sanctions-31137