WASHINGTON — U.S. exports of apparel, textiles and other manufactured goods could see a significant boost if the U.S. lifts its trade embargo with Cuba, according to a report issued Monday by the U.S. International Trade Commission.
The ITC was asked by the Senate Finance Committee to conduct an analysis of trends in Cuban imports, the effect of U.S. restrictions on trade and travel with Cuba and a qualitative assessment of Cuban non-tariff measures. The report also provided a sectoral analysis of potential U.S. exports of goods and services if the American embargo were lifted and Cuba lowered its trade barriers.
If the U.S. lifts its trade restrictions on exports to Cuba, the ITC projected that American apparel exports could grow to $700,000 from less than $50,000 a year, while U.S. textile exports could grow to $6.9 million from $100,000.
And if Cuba simultaneously lowered its trade barriers, U.S. textile exports could reach $8.5 million and apparel exports could grow to $900,000, the report found.
Overall manufactured exports alone are estimated to grow to over $1.2 billion from $225 million, according to the report. The share of U.S. manufactured products is projected to increase to 12 percent from 2 percent.
The ITC warned, however, that even if U.S. restrictions are lifted, Cuba could maintain its trade barriers on imports, which may affect the ability of American companies to trade with or invest in the country.
The business community has been closely watching strides taken by the Obama administration in the past few years to reestablish economic and travel ties with Cuba. While many companies are optimistic about the potential market, there is a general understanding that it could take years to develop. In addition, Cuban President Raúl Castro warned Cubans over the weekend to beware of U.S. attempts to undermine the revolution, and that a one-party system was vital to the country’s future — indicating his government will not move quickly to ease trade barriers. The Cuban market will remain largely closed to U.S. exports until the American trade embargo is lifted.
The sweeping policy changes outlined by President Obama and steps taken are the first since 1961, when the U.S. severed diplomatic ties with Cuba, and subsequently placed an economic embargo on the Communist country during the Cold War.
Before initial U.S. restrictions were implemented in 1960, Cuba was a major U.S. trading partner, ranking as the seventh-largest American export market. In 2014, however, it ranked as the 125th-largest, with U.S. exports, primarily in agricultural products, to Cuba totaling just $299 million. That number fell to $180 million last year.
The president does not have the authority to lift the embargo. That will take an act of Congress, which remains divided on the issue. But industry officials have said the easing of restrictions and restoration of diplomatic ties with Cuba could eventually help pave the way for more exports to the island nation.
There is also optimism in the industry about the potential in Cuba for the development of the manufacturing base, including apparel manufacturing.
The ITC found that overall U.S. exports of agricultural products and manufactured goods could increase to $1.8 billion from a base-year average of $400.8 million within five years, a 347 percent increase from their 2010-13 averages.
The estimates for export growth are even more significant if the U.S. lifts its restrictions and Cuba reduces its import barriers to the average level of other developing countries, the report found. In that case, U.S. exports of agricultural and industrial products would increase by an additional $442 million, or a total of $2.2 billion.
“Results show that there may be substantial new trade in many industries, primarily in ones where there is currently little or no trade, such as non-food manufactured goods,” the ITC said. “This is largely a result of fewer current restrictions on agricultural goods relative to manufactured goods. The results show that most of the new U.S. exports to Cuba would come at the expense of other countries’ exports to Cuba as well as Cuba’s domestic producers.”