Kentucky leaders form state council to lift Cuba embargo, boost local exports

Courtesy of World Trade Center Kentucky

A new Kentucky chapter of an organization working to lift the United States embargo on Cuba will be unveiled Tuesday, featuring prominent state leaders and seeking to boost the export of Kentucky products like poultry, soybeans and bourbon into the country that has slowly opened to the American market over the past three years.

Engage Cuba is holding a press conference Tuesday announcing the creation of its Kentucky State Council, the 17th state to open up its own local chapter of the group. Engage Cuba president James Williams will attend, along with Congressman John Yarmuth, former Democratic state auditor and CEO of Edelen Strategic Ventures Adam Edelen and the local council’s co-chair, Jonathan Blue, the chairman of Blue Equity and longtime advocate of opening up the Cuban market. The other co-chair of the local chapter is the Republican Kentucky Commissioner of Agriculture Ryan Quarles, and former commissioner and current Congressman James Comer from the state’s First District is also a supporter.

Williams of Engage Cuba told IL in a phone interview Monday that Kentucky farmers and producers are missing out on potentially millions of dollars’ worth of exports to Cuba each year due to the continued presence of the nearly six-decade American embargo on Cuba, despite efforts initiated by former President Barack Obama in December of 2014 to roll back such sanctions.

While Obama was able to restart diplomatic relations with Cuba, loosen travel restrictions for Americans, approve commercial airline travel and allow limited commercial engagement, Williams says that most of the economic sanctions within the embargo remained intact, as they were codified by Congress.

Though President Donald Trump originally campaigned on further opening up Cuba relations, he adopted a tougher stance near the end of the general elections, and in June took an executive action to roll back certain Obama reforms and make travel to Cuba more difficult.

“Obama took a big step forward, Trump took a modest step backward, and we’re still probably at sizable gains from where we were two years ago,” says Williams. “But now the landscape has shifted where Congress is going to have to take the next steps on this. The timetable for that, we’ll see. That’s part of why we’re in Kentucky, to show how much local support there is from the business, ag, civic and religious community.”

Williams noted that there are currently three bills in Congress rolling back all or part of the Cuban embargo, which have a large amount of bipartisan support should they be called for a vote. One bill fully lifts the travel ban, a second lifts the entire embargo, while another aims to open up the Cuban market for more agricultural products exported from the United States by allowing trade to happen by via credit instead of cash only.

According to Williams, American agricultural products currently make up less than 10 percent of such imports into Cuba, which is buying about $2 billion worth of agricultural products each year, mostly from countries like China and Canada, or even small countries as far away as Vietnam. This percentage of American foodstuffs imported is much lower than the typical 60-80 percent in other Caribbean countries, with Williams expecting that once the playing field is leveled and trade can happen through credit, “it will be virtually impossible for the rest of the world to compete with us in the Cuban market.”

“Right now, they have to sell everything in cash to Cuba and they’re not allowed to spend any sort of private credit,” says Williams. “And one, that’s not how trade works anymore, and two, Cuba is a cash poor country. So they’re buying some stuff from the United States… but basically we’re seeing upwards of a billion dollars off the table as a result of this policy.”

As for potential Kentucky agricultural exports, Williams says that poultry, wheat and soybeans are the products that Cubans consume significant amounts of and Kentucky farmers would have great potential to find a receptive market for such goods there. He adds that Kentucky farmers are “already exporting all over the world, so there are hundreds of millions of dollars on the table for them if we got this simple tweak.”

Williams notes that a study from the Peterson Institute found that an additional $5.9 billion of U.S. products would be exported into Cuba if the embargo was fully lifted, adding that Louisville would have a “unique opportunity” to take advantage of opportunities in services within this market, as the city has a very large population of Cuban immigrants. He says this opportunity would also extend to Kentucky bourbon. Even though Cuba does not have any direct relationship with Kentucky producers, bourbon has trickled in through third-party countries and become popular and a sort of status symbol in the country.

“I’m in Cuba about once a month, and I can tell you that whiskey drinking is the new rage in Cuba,” says Williams. “What you’re seeing now is what you’ve seen in Asia, where whiskey is a drink of the aspiring class in some ways … You’re seeing this whole new private sector in Cuba and the enhanced tourism sector in Cuba, and when you go to these new private restaurants, you see Kentucky bourbon on the shelves and people are ordering it. And it’s almost like a status symbol in some ways, to be drinking whiskey instead of rum.”

Despite remnants of the Cold War mindset and influential Cuban-American members of Congress like Sen. Marco Rubio in Florida who remain in favor of the embargo until Cuba enacts more democratic reforms, Williams notes that Americans broadly support lifting sanctions on Cuba. While some view the end of this embargo as inevitable, he adds that the more time that goes by without Congress taking action to end it, the more economic benefits to America are lost and the more other countries step in to influence the country’s future.

“We’re losing billions of dollars of economic opportunity,” says Williams. “We’re also losing the opportunity to be shaping the history of what the next 50 years of Cuba look like. This false argument of ‘Do we engage or not engage Cuba’ should really be: ‘Does the United States engage, or are we ceding this to China and Russia.’ Somebody is engaging, but will it be our influence or our adversaries? … Our hope here is that people will take into consideration not Cuba of 50 years ago, but U.S.-Cuba relations for the next 50 years and act now.”

Congressman Comer disappointed in Trump order, calls lifting embargo a ‘no-brainer’ decision

Echoing many of Williams’ points, Rep. Comer tells IL that he is strongly in favor of lifting the embargo, a position that was only strengthened after his visit to Cuba this year.

“I’ve always felt that it was a no brainer for the United States to trade with Cuba,” says Comer. “If they’re buying most of their food from China and Canada, and the United States is only 90 miles from Cuba, it makes no sense whatsoever.”

Comer says the two main Kentucky commodities that would sell in Cuba would be poultry and soybeans, “and it would be large quantities… I don’t mean a little bit here or there. Cuba could be a major, major trading partner for Kentucky.”

However, Comer — a Republican from a rural western Kentucky district that went heavily for Trump in 2016 — says he is “disappointed that the president didn’t lift the embargo outright and disappointed that he’s made it even harder to trade with Cuba with his recent executive order.”

Comer adds that he was surprised by Trump’s move, as “there was a small working group with four members of Congress that I was a part of that were meeting with White House to discuss the benefits of lifting the embargo.” However, he notes that Trump was also meeting at the same time with the Cuban-American delegation in Congress from south Florida that included Rubio, saying that group’s opinion eventually won out.

“If you take away the Cuban-American delegation, then there’s overwhelming support for lifting the entire embargo outright,” says Comer. “So, it’s unfortunate that the Cuban-American delegation in Congress is so adamantly opposed to lifting the embargo, but that’s the strong voice in the president’s ear with respect to Cuba right now.”

If Congress doesn’t act, Comer says the body will be “on the wrong side of history on this issue,” but says that if a bill ending the embargo was voted on, “it would get about 75 percent of the votes in Congress. It would be a veto-proof majority. And there would be more Republicans voting against it than Democrats.”

Comer says that he doesn’t know where Senate Majority Leader Mitch McConnell stands on the Cuban embargo, as he’s “never talked to him about this issue,” but notes that Rubio in his Senate GOP caucus is adamantly against it and that Florida is an important state in presidential elections.

By Joe Sonka, August 1, 2017
Insider Louisville

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