Cuba-EU: Own goal affects exports

Carlos Cabrera Perez (Café Fuerte )

Picture: cubadebate.cu

HAVANA TIMES — The Cuban economy starts 2014 with what appears to be an “own goal.”

The European Union (EU), judging from official statistics of the island, no longer considers Cuba a very poor country and took it off the list of countries under its System of Preferential Tariffs. Cuba will now pay 21% on its exports to the UE instead of the previous 4%.

The bad news came in recent days and also affects other countries considered to have stepped up a notch in their economic development, according to the system applied by the UE in its trade relations with the rest of the world.

Europe has made comprehensive changes in its tariff system and reduced from 177 to 90 the countries benefitting from preferential tariffs. To classify the countries it was guided by the periodic evaluations of the World Bank.

Discreet Silence from Havana

With the new criteria, left outside the preferential system of European tariffs are high-income countries such as Qatar, but they have also excluded nations with medium-high income as Brazil, Venezuela and Cuba which, surprisingly, has been included in this category, although Brussels did not clarify what statistics were used to base its decision.

Havana has so far kept a discreet silence on the matter, although it knew about the change, at least, from the last quarter of 2013, when Brussels informed each country and said that the new tariffs would come into effect with the New Year.

The measure, even if it is based on a real increase in the indices of Cuban wealth, remains negative for the country’s exports. The international crisis has contained prices of Cuban products which will now also be taxed at the new tariff rate. The result could lead to greatly diminished profits, as in the case of tobacco products, for example.

Cuba exports tobacco, minerals, fish products and some foods to Europe, all of which benefited from the EU Trade Preferences until this January.

Perhaps Havana is waiting to comment until January 20, when Brussels could discuss and decide whether to open bilateral negotiations with Cuba for the establishment of a bilateral cooperation agreement. But here is where with typical political tug of war enters in, and the EU has no current consensus on Cuba. A group of countries defend maintaining the “Common Position” and others advocate that the bilateral agreement is a preliminary step to eliminating this stance.

Madrid, Cuban reference

Madrid, which is a kind of reference for European affairs regarding Cuba, has said that a bilateral agreement would be positive to contribute to the transition and economic reform in Cuba, and pointed out that the agreements with the EU contain clauses relating to democracy, fundamental freedoms and human rights .

If Brussels gives the green light next week, the EU would then consider the establishment of a political dialogue with Cuba. However Raul Castro already warned in his New Year’s speech that his government’s only commitment is to the Cuban people. A repetition of a traditional stance crowing of dignity, but without tangible results in the lives of those who say they committed.

Nonetheless, the real in politics is what is not seen and the structural crisis plaguing the Cuban economy leaves fewer spaces for foolish boasting. And the Cuban leader has shown a dose of economic rationality in his mandate, as when he said that a country is like a family that cannot spend more than it earns.

His decision to pay the recent debts to different creditors also demonstrates his economic reasonableness. The fact is that when he took office, the illustrious brother (of the former leader) found that Cuba had squandered its international credit and remained just as poor.

Improvising Governance

In a speech at the National Assembly in the summer of 2013, the Cuban president lamented that many Cubans do not understand the economic “guidelines” and criticized the past trend of governing without a program, constantly improvising and depending on others, a clear reference to Moscow and Caracas .

“Cuba has to fend for herself,” said Raul Castro as he called for diversifying the Cuban economy and lamented that “a communist, I do not know where he is now,” has said that he wants no part of the economic policy because it was “a return to capitalism.”

On that occasion, Raul Castro expressed the need for more laws and to discuss them widely with citizens and in the National Assembly. He further recommended that the legislature abandon its tradition of meeting only twice a year.

Regardless of what happens between the EU and Cuba, leaving the European preferred tariff system hurts the Cuban economy. And the reasons for this condition are still not entirely clear, as Panama and Peru, growing at around 9% per year, continue to benefit from lower tariffs on their exports to Europe.

In the coming months or years, maybe we will learn if the source of this harmful measure for the Cuban economy is the result of a change in European standards or the result of an enthusiastic communist bureaucrat’s altered figures in the perpetual quest of the Castro regime to deny or hide the obvious.


21 thoughts on “Cuba-EU: Own goal affects exports

  • January 20, 2014 at 1:57 pm
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    I am not suggesting your obsession is unique to you, John. I’m quite aware of it’s pedigree. What I meant is that not all news about Cuba is automatically proof of nefarious US plots. The EU has it’s own foreign policy, often at odds with the US. If the US dictated Cuban policy to Europe & Canada there would be no European and Canadian tourists on the island.

  • January 20, 2014 at 11:28 am
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    The median income in the US is $51, 017. It doesn’t take a math genius to know that “half the labor force makes less than $27k per year” is a silly and stupid lie. Did your folks at ZNet tell you this?

  • January 19, 2014 at 4:35 pm
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    I stand by my figures.
    The fact that half the labor force makes less than $27k per year lends credence to my take on things and I get my information from reliable sources and critics of the US government policies at ZNet which you necessarily and assiduously avoid.
    You need to get out more and not rely on the government for self-serving statistics.

  • January 19, 2014 at 7:14 am
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    The reason for the stock market rise to record levels, sadly enough, is mainly due to US government infusion of trillions of dollars. As a free market conservative, this will come back to haunt us. Also, government intervention at its worst. If you think Cuba has it bad via bad economic decisions, wait for the bubble to burst here. The same folks who brought us the financial crisis over five years ago are not free and richer than ever. That, of course, is another story. Cuba’s problem is pretty much what you stated Moses. I am a major fan of complete and total freedom for all Americans to visit and spend freely in Cuba. My experience with “visiting” Czechoslovakia and Romania in the heat of the Russian invasion and ‘interacting’ with the peoples there, gave me assurance that communism would be dead shortly thereafter. You and I know it was. That’s what I envision with Cuba and the Castro brothers regime.
    Patience but most of all, freedom!

  • January 18, 2014 at 9:45 pm
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    Your new jobs data is incorrect. Check your analysis. It’s ridiculous to believe that 67% of the nearly 3 million new jobs in the last 5 years are minimum wage. According to the Bureau of Labor Statistics http://www.bls.gov/opub/ted/2013/ted_20130325.htm , the estimate of all minimum wage new jobs as a % of total new jobs in the last 5 years is not more than 10 percent. Historically, MW jobs never exceed 5% of the total workforce. C’mon cut all the BS.

  • January 18, 2014 at 6:03 pm
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    Here’s one of the first sentences in that article :

    “Experts from the EU’s 28 member states this week “agreed on the principle of reviewing relations with Cuba,” an EU diplomat told AFP on condition of anonymity.”
    That normalizing contains a very big if.

  • January 18, 2014 at 6:00 pm
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    If I were the only one who thinks that the capitalist countries have always sought to prevent socialism and other democratic economic forms , your thought that it is my particular obsession would have some possible merit .
    You need only go to the “Killing Hope ” website and review the 54 heavily detailed and documented interventions to see that even ex-State Department people think that .
    Were you to broaden your reading list and your sources for your information to include ZNet and to read what is to be found at that website on a regular basis, you’d see that I’m far from being alone in my thinking.
    Thanks for the link on the EU.

  • January 18, 2014 at 5:52 pm
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    Your figures are from the corporate media and are as truthful as the official poverty level of $23,000 for a family of four .
    Unemployment figures do not count those who have stopped looking nor those underemployed at the minimum wage jobs after losing good paying jobs.
    67% of the new jobs being created are minimum wage jobs.
    Secondly, globalization is a recognized fact and it has cost millions of U.S jobs permanently and is continuing.
    What is not so widely accepted is that the ongoing and rapidly accelerating automation of the workplace will be the final nail in capitalism’ s coffin .
    What is even less accepted is the logarithmic pace at which this is happening .
    Do Google up the automation of the workplace, when machines replace humans and such and spend a few hours catching up .
    Do you or do you not accept the validity of Moore’s Law which states with great accuracy that computing capacity doubles every eighteen months and which has been correct for 30 years now ?
    Moore’s Law dictates that the 12 petaflop capacity we have now will get past the human brain level of 1000 petaflops in just ten years .
    If DUMB, program -run robotics are taking jobs away fro humans very quickly now, just what do you think super-human level robotics and AI will do to the human workforce ?
    In the meantime since Cuba distributes the wealth fairly equitably and for human need , that automated future will nit affect that socialist -style economy but will kill the capitalist system because no workers = no paychecks= end of capitalism .
    It’s happening right in front of you and you can’t see it.
    Yes the U.S capitalist economy is working well for the top 10% or so but not for the rest of us.
    The vast preponderance of the money made since the so-called end of the recession went to the top .0001% and the working class lost considerable ground.
    There are the same number of workers in the U.S workforce as there were ten years ago and the population has grown considerably with about 225,000 more people trying to enter a workforce that last month hired only 75,000.
    You are whistling past capitalism’s graveyard and are averting your eyes from what is happening .
    Do some looking into that automated future that dooms capitalism at Google
    What do you have to lose from knowledge ?

  • January 18, 2014 at 5:17 pm
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    As a former food quality tester cuba has one of the highest quality seafood seen in the eu. Should be sold as such. Better then most countries beats in quality compared to all. Should be sold at a premium around the world. Do comparison testing to prove it and take advantage.

  • January 18, 2014 at 3:26 pm
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    Maybe because I don’t push kooky ideas like the US is going to collapse in 15 years and Cuba will magically rise to level of…Sweden.

  • January 18, 2014 at 1:54 pm
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    Why????….is it always a “I am always right…everyone else has no clue” attitude coming from your biased US of Arms comments?

  • January 18, 2014 at 11:28 am
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    There are no hard numbers to support your doom-n-gloom projections for the US economy AND nothing that supports your optimism for the Cuban economy. The US stock market is at all-time highs. Unemployment is at the lowest point in 5 years and we have regained the jobs lost as a result of the last recession. There is still much work to be done but people are better off this year over last and there is more reason to be hopeful. Cuba, on the other hand is reporting worse agricultural output than projected. Declining exports and increasing import needs. Demographically, the news is just as bad. The infrastructure is crumbling and the leadership is well…older. Your comment is simply kooky.

  • January 17, 2014 at 2:32 pm
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    There are Cohiba cigars from Dominican Republic, produced by Cuba exiles who lost their factories and farms in Cuba. But Cohibas are luxury items and the EU is probably looking to raise the taxes on their sales. If you are rich enough to smoke Cohiba’s you won’t notice a couple extra dollars in tax.

    But ordinary cut tobacco for cigarettes would compete with EU production from Italy, Greece, Spain and Bulgaria. Those governments would act to raise protectionist tariffs.

    At the same time, the EU is moving to soften their diplomatic stance toward Cuba:

    “EU set to normalise ties with Cuba”

    http://au.news.yahoo.com/world/a/20811748/eu-set-to-normalise-ties-with-cuba/

    So you can’t read your particular obsession into everything that happens, John.

  • January 17, 2014 at 7:34 am
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    Cohiba cigars are uniquely Cuban are they not ?
    Havana Club Rum would seem to be the same
    Guyabera shirts ditto .
    Sugar seems to be the one thing that would have to compete with European produced items.
    This seems to confirm that the EU is seeking to aid the U.S in its hegemonic /imperialist foreign policy as is usually the case.

  • January 17, 2014 at 6:03 am
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    Cuba exports cane sugar, which would compete with EU beer sugar, tobacco, fish and minerals. The EU has tended to act to protect their own industries and agricultural producers.

    Products considered luxury items, such as Havana Club rum and Cohiba cigars would attract higher tariffs. The wealthy who buy these products can afford the higher taxes and the EU governments are more than happy to tax them.

  • January 16, 2014 at 9:53 pm
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    Havana Club rum, Cohiba cigars, Guayabera shirts, raw sugar to name a few.

  • January 16, 2014 at 6:58 pm
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    Griffin.
    That’s a good point and it may well be the reason but I would doubt that Cuba has anything to export that would compete with EU products .
    Do you know of any off hand ?

  • January 16, 2014 at 6:57 pm
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    Fidel Castro has retired from participating in such things.
    Also I am well aware of the negative effects of the U.S war on the Cuban economy .
    I am also aware that the U.S economy is visibly faltering as the latest unemployment/employment figures show .
    The Cubans will struggle through these hard times with their revolution intact for the foreseeable future while capitalism in the U.S and worldwide faces a total collapse within 15 years..
    I’ve been reading through anarchist Murray Bookchin’s works lately and back in 1979 he detailed the transformation of capitalism from the relatively innocuous form upon which the country was founded to the current feral form in which small businesses and farms have been swallowed up in a way never imagined by the founding fathers and which will, through the elimination of workers via the ongoing globalization and the soon to be tsunami of automation , cause the death of capitalism .
    The current malaise as regards unemployment in the U.S is grossly understated as there are now the same number of people in the workforce as there were ten years ago and the population has grown considerably .
    There is an excellent analysis of this at ZNet today.
    So….yes the Cuban economy is struggling but the population has and will continue to put up with the hardships that all share while in the U.S. the exponentially growing gap between the few haves and the great many have-nots will cause social upheavals that will end capitalism within that 15 years just as the same “let them eat cake ” French leadership attitude brought
    down France’s brand of royalty .

  • January 16, 2014 at 1:08 pm
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    You obviously know little about the real Cuba. Over the last five years, economic conditions in Cuba have worsened in the worst way. Although there are more overpriced new private restaurants in Havana and a few new late-model Hummers on the streets, Cuban infrastructure like roads and water systems are literally crumbling before the eyes of a helpless and hapless regime. Buildings collapse like dominoes after each heavy rainfall. Across the board agricultural production is down and Cuba is considering issuing deficit bonds to bridge the gap between revenues and outlays. Venezuela is likely to decrease its subsidy of Cuban oil imports and with demographic trends showing a shrinking and aging population, there is little hope for a reversal of current outcomes. I can not imagine how the EU would determine that Cuba is no longer a poor country EXCEPT that based solely upon the puffed up self-reported economic statistics and boastful projections of the Castros, the EU has taken the bait. The US has little or no influence over EU policy as it relates to Cuba. On the contrary, there is movement to reconsider the EU Common Position regarding Cuba and there will likely be a EU policy of limited engagement over isolation to take place in the next year. One further note: one of the attractions to the Economic Development Zone just west of Havana was that products exported from this zone to EU countries enjoyed the lower tariff. Increasing the tariff not only reduces profit margins on existing exports but reduces the attractiveness to foreign investors who are considering investing in Cuban-made products assembled or manufactured in this zone.

  • January 16, 2014 at 12:41 pm
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    Another possibility is that the EU bureaucrats are responding to their national governments struggle with recession by raising tariffs on products which might compete with European industries and jobs. Simple economic protectionism is the most obvious explanation.

  • January 16, 2014 at 9:50 am
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    IMO, this move by the EU indicates two possibilities .
    Either the Cuban economy has successfully beaten back the half-century old U.S war on its economy to the point that the EU now considers it to be as prosperous as Brazil or, as is more likely, the European lap dogs of U.S.imperialism seek to further impoverish the Cuban society in order to force them back into the capitalist fold as is the explicit purpose of the U.S. embargo which, so far , has failed to achieve its purpose. .

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