U.S. Cuba Trade

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THIS PRESENTATION IS BASED ON CASE OF U.S.-CUBAN TRADE OF INTERNATIONAL BUSINESS

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U.S. Cuba Trade

  1. 1. U.S. – Cuban Trade Governmental Influence on Trade A Case Study of International Business Management Presented By:- Shubhank Gupta Trimester VI GHS - IMR
  2. 2. <ul><li>Capital Havana </li></ul><ul><li>Official languages Spanish </li></ul><ul><li>Government </li></ul><ul><li>Socialist Republic, </li></ul><ul><li>Single-party communist state </li></ul><ul><li>President Fidel Castro </li></ul><ul><li>Independence </li></ul><ul><li>Spain  October 10, 1868  </li></ul><ul><li>Republic May 20, 1902 from </li></ul><ul><li>United States </li></ul><ul><li>Cuban Revolution January 1, 1959  </li></ul><ul><li>Population   2008 11,423,952 (73rd) </li></ul><ul><li>GDP  (PPP) 2008 Total$144.6 billion  </li></ul><ul><li>  Per capita$12,700 (70th) </li></ul><ul><li>GDP (nominal)2008  Total $55.18 billion  </li></ul><ul><li> Per capita$4,830 </li></ul><ul><li>HDI  (2008) 0.855 (high) (48th) </li></ul><ul><li>Currency Cuban peso (CUP) </li></ul>
  3. 3. Cuban Economic History <ul><li>Before 1959 the U.S. was Cuba’s main trading partner. </li></ul><ul><li>Florida was Cuba’s largest U.S. State trade partner. </li></ul><ul><li>40 percent of all cargo being routed through Miami’s customs district was transported to Cuba. </li></ul><ul><li>85 percent of Cuba’s exports were transported to the united states. </li></ul>
  4. 4. Gross Domestic Product
  5. 5. Foreign Trade Growth (1995-2005)
  6. 6. Top ten Import products by Cuba in 2001 Source: International Trade Center (ITC) Website, www.intracen.org/menus/countries.htm
  7. 7. Top ten Export products by Cuba in 2001 Source: International Trade Center (ITC) Website, www.intracen.org/menus/countries.htm
  8. 8. Main Cuban Exports and Imports EXPORTS IMPORTS NICKEL OIL & LUBRICANTS TOBACCO FOOD SUGAR & By-Prod. MACHINERY /EQUIP. FISHERIES METALS & MANUF. CEMENT CHEMICALS RUM VEH. /TRANSPORT. COFFEE PHARM. & MED.DEV OTHERS OTHERS
  9. 9. US strong with… <ul><li>Airplanes </li></ul><ul><li>Tractors </li></ul><ul><li>Agriculture </li></ul><ul><li>Office supplies </li></ul><ul><li>Food </li></ul><ul><li>Computers </li></ul>
  10. 10. Changes of U.S. Export to Cuba (millions dollars) <ul><li>Allows for U.S. Food and medical exports to Cuba under certain conditions. </li></ul><ul><li>In its first two year of implementation, the U.S. Exports to Cuba rose by a factor of almost 40. </li></ul>Source: USA Trade Online, U.S. Census Bureau, 2003
  11. 11. 2003 U.S. EXPORT to Cuba by category Source: USA Trade Online, U.S. Census Bureau, 2003 <ul><li>96% of 2003 U.S.exports to Cuba are food related. </li></ul><ul><li>Compared to 2002 exports, those of 2003 rose by 79%. </li></ul>
  12. 12. Impact of free trade with Cuba in the U.S. Economy <ul><li>Cuba is the largest and most economically viable market in the Caribbean and the closest one to the U.S.; Over 11 million inhabitants, plus an expanding tourist industry. </li></ul><ul><li>Its wealth of underutilized natural and human resources makes it an ideal economic trading partner for the U.S. </li></ul>
  13. 13. Barriers to International Trade <ul><li>Several devices used to control international trade. </li></ul><ul><ul><li>Quota’s </li></ul></ul><ul><ul><li>Tariffs </li></ul></ul><ul><ul><li>Embargoes </li></ul></ul>
  14. 14. Cuban Embargo <ul><li>US can not trade with Cuba </li></ul><ul><li>Can not travel to Cuba </li></ul><ul><li>Places sanctions on those countries that do trade with Cuba </li></ul><ul><li>For the purpose of showing disapproval for their government (communist nation) </li></ul>
  15. 15. <ul><li>The Energy Sector provides attractive business Opportunities </li></ul><ul><li>Increasing trade leads to Increasing communication services </li></ul><ul><li>Lifting the travel ban and the restrictions on Cuban- Americans visiting the Island will have an impact on both, the U.S. (particularly Florida) and Cuba </li></ul><ul><li>Airlines and shipping companies will benefit from two ways trade </li></ul><ul><li>Increased business in ports and airports </li></ul><ul><li>Potential opportunities in software and banking Services </li></ul><ul><li>Successful development of Cuban biotechnology. </li></ul><ul><li>Business related to Environmental Protection would be of interest for both sides. </li></ul>Some Key Points
  16. 16. Should the U.S. Seek to tighten the economic grip on Cuba ? if so , why ? Question 1
  17. 17. <ul><li>Since the rest of the world is trading with Cuba, the U.S. embargo does not stand anywhere in the row . </li></ul><ul><li>It does not impact the trade of Cuba with other countries. </li></ul><ul><li>The complete scenario looks like a Cold War </li></ul><ul><li>However, the U.S. is being consistent with its policy on human rights, and who knows it just might work. </li></ul><ul><li>Specifically, only US, Israel and Uzbekistan are rejecting the voice of the United Nations General Assembly to seize this type of trade treatment. </li></ul><ul><li>More cases appear every year in the news regarding the US embargo consequences on the lives of millions of Cubans. Food, medicine and other important supplies are withheld from the citizens of this island due to its political history and recent communist upheaval that led Fidel Castro in power </li></ul>
  18. 18. Should the U.S. Normalize business relations with Cuba ? if so , should the U.S. Stipulate any conditions? Question 2
  19. 19. <ul><li>In my opinion Yes, </li></ul><ul><li>Normal relations may lead to greater democracy. </li></ul><ul><li>No, Cuba will not necessarily trade with U.S. like the 1950’s. </li></ul><ul><li>U.S. cant stipulate any conditions. </li></ul><ul><li>There is no guarantee that trade will bring about human rights or regain lost property. </li></ul><ul><li>The U.S. should end the trade and business embargo with Cuba and move quickly to allow tourism between our two countries. Most important, we should restore full diplomatic relations with Havana. Only then will we have the leverage to press the new Cuban leadership to restore human rights, establish a free market-based economy, and move to democracy. </li></ul>
  20. 20. Assume you are Fidel Castro. What kind of trade relationship with the U.S. Would be in your best interest ?What type would you be willing to accept? Question 3
  21. 21. FIDEL CASTRO <ul><li>Fidel Alejandro Castro Ruz (born August 13, 1926) is a Cuban revolutionary leader who was prime minister of Cuba from December 1959 to December 1976 and then president, premier until his resignation from the office in February 2008. </li></ul><ul><li>Castro came to power as a result of the Cuban revolution that overthrew Fulgencio Batista, and shortly thereafter became Prime Minister of Cuba. </li></ul><ul><li>In 1965 he became First Secretary of the Communist Party of Cuba and led the transformation of Cuba into a one-party socialist republic. </li></ul><ul><li>In 1976 he became President of the Council of State as well as of the Council of Ministers. </li></ul>
  22. 22. <ul><li>Castro would want to save and improve Cuba’s economy with direct aid from U.S. government . </li></ul><ul><li>Simultaneously, he would want to prevent any influence that might cause social or political change. </li></ul><ul><li>If Castro allows this then further growth is possible because after, when in 2000 the export to U.S was opened then Cuba became 25 th largest agricultural market for U.S with sales exceeding $400 million in U.S. </li></ul>
  23. 23. How does the structure and relationships of the American political system influence the existence and specification of the trade embargo? Question 4
  24. 24. <ul><li>Structurally, Congress and the President listen to lobbyists and campaign donors who oppose Castro’s regime. America also has a long standing adversarial relationship with Communist countries which makes policy changes unlikely. </li></ul>
  25. 25. Conclusions
  26. 26. A real potential exists for significant trade in goods and services between Cuba and the U.S.
  27. 27. The elimination of the blockade and restoration of bilateral trade between both countries would benefit not only Cuba, but also the U.S. business community
  28. 28. Cuba’s natural resources and skilled labor, as well as its geographical proximity to the U.S. add up to opportunities for American business
  29. 29. Arguments have been raised portraying Cuba as a threat for U.S. businesses, particularly, for Florida´s...
  30. 30. … Florida is called to be the most benefitted area in the U.S. in terms of trade and investments with Cuba
  31. 31. Current Trade Relations <ul><li>Under the Trade Sanctions Reform and Enhancement Act of 2000, exports from the United States to Cuba in the industries of food and medical products is permitted with the proper licensing and permissions from the U.S. Department of Commerce and the United States Department of the Treasury. </li></ul><ul><li>The U.S. embargo on Cuba will remain in place despite Fidel Castro's announcement that he's resigning as Cuba's leader. </li></ul>
  32. 32. Thank you..!!!!

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