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 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.

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