The Evolution of Global Economies Seminar 7

1. Seminar: 7
B416: The Evolution of Global Economies

2. 2
Pre Seminar Preparation
Read the attached case study – Chapter 7, page 324 –
US-Cuba Trade.
International Business - 14th Edition by John D Daniels,
Lee H Radebaugh & Daniel P Sullivan, Pearson, ISBN
978-0-273-76695-7 (available via DawsonEra)

3. Before and After the Revolution
• Since 1899, Cuba has relied on foreign aid
– Until Castro’s rise to power in 1959, more than
2/3 of Cuba’s foreign trade was with the U.S.
• disguised aid - exports of sugar to the U.S. at above
market price
– Aid from the USSR and Venezuela
• After 1959 the U.S. canceled its sugar imports
and U.S. oil companies stopped exports

4. The Cold War Sets In
• In 1962, the U.S. instituted a trade embargo
stopping all trade between the two countries
– all diplomatic relations were also severed

5. Enacting the Embargo
• Cuban Democracy Act
– passed in 1992
– extended the U.S. embargo on Cuba to include
foreign subsidiaries of U.S. companies operating
abroad
– to get the embargo lifted, Cuba was required to
hold democratic elections

6. Shifting Sympathies
• When it was initially implemented, the U.S.
embargo had global support
• Over time, that support has diminished
– loss of UN support
– former supporters are now trading with Cuba

7. The Cold War Thaws
• Should the embargo remain?
– the fall of the Berlin Wall
– the end of the Cold War
• In 2000, new legislation permitted certain
exports
– now the U.S. is Cuba’s fourth largest trading
partner

8. The Argument for Policy Change
• Did the embargo actually work?
• Fidel Castro (and later Raul Castro) remained
in power
• Today, there is increasing pressure to
normalize U.S.-Cuba trade relations as a
means of encouraging change

9. Are There U.S. Business
Advantages in Cuba?
• Opportunities for U.S. companies
– Demand for foreign products and services
• tourism
• transportation
– Highly qualified workforce
• But,
– GDP is low
– purchasing power is limited

10. Is the Embargo a
Cold War Relic?
• Is the embargo a relic of the past?
• Today,
– China is a member of the WTO
– Vietnam is trading with the U.S.

11. Questions
1. Should the United States seek to tighten the
economic grip on Cuba? If so, why?
2. Should the United States normalize business
relations with Cuba? If so, should the United
States stipulate any conditions?
3. Assume you are Cuba’s leader. What kind of
trade relationship with the United States
would be in your best interest? What type
would you be willing to accept?

12. Questions
4. How does the structure and relationships of
the U.S. political system influence the
existence and specification of the trade
embargo?
5. Much U.S. tourism, especially via cruise
ships, goes to the Caribbean. Do you think
that the end of U.S. travel restrictions to
Cuba will add or displace tourism going to
other Caribbean countries?

13. End of Seminar
© Pearson College 2015