WASHINGTON — President Obama on Wednesday said the U.S. will reestablish and expand diplomatic, economic and travel ties with Cuba, an important step that potentially could open new export opportunities for brands and retailers that have been shut out of the Cuban market for more than 50 years.
Obama addressed the American public from the White House, outlining sweeping U.S. policy changes, the first since 1961, when the U.S. severed diplomatic ties with Cuba and, subsequently, placed an economic embargo on the country during the Cold War.
Obama’s announcement came after Cuba agreed to release an American contractor who had been imprisoned in Cuba for five years.
“In the most significant changes in our policy in more than 50 years, we will end an outdated approach that, for decades, has failed to advance our interests, and, instead, we will begin to normalize relations between our two countries,” Obama said. “Through these changes, we intend to create more opportunities for the American and Cuban people and begin a new chapter among the nations of the Americas.”
While Obama’s executive actions were seen as a positive by many in the business community, the Cuban market will still remain largely closed to U.S. exports until the U.S. trade embargo is lifted.
Obama does not have the authority to lift the embargo. That will take an act of Congress, which remains divided on the issue.
At the center of Obama’s new Cuban policy is the establishment, or normalization, of diplomatic relations. Obama has instructed Secretary of State John Kerry to begin discussions with Cuba to renew ties. To that end, the U.S. also plans to open an embassy in Havana.
The U.S. will relax travel restrictions on family visits, government business and other areas, such as professional research, but tourist travel still remains banned.
Certain commercial activity and exports will be expanded, and some financial transactions will be authorized, such as allowing U.S. financial institutions to open accounts at Cuban financial institutions to process said authorized transactions as well as permitting the use of U.S. credit and debit cards by travelers in Cuba.
“We are taking steps to increase travel, commerce and the flow of information to and from Cuba,” Obama said. “I believe that American businesses should not be put at a disadvantage and that increased commerce is good for Americans and for Cubans. So, we will facilitate authorized transactions between the United States and Cuba. U.S. financial institutions will be allowed to open accounts at Cuban financial institutions. And it will be easier for U.S. exporters to sell goods in Cuba.”
Industry officials said the easing of restrictions and restoration of diplomatic ties eventually could help to pave the way for more exports to Cuba as well as a broader discussion on the embargo on Capitol Hill.
“These are positive steps toward creating a conducive business environment for U.S. companies,” said Nate Herman, vice president of international trade at the American Apparel & Footwear Association.
“Cuba is not a major manufacturer of apparel or footwear right now,” Herman said. “There will probably be interest in selling into the Cuban market. Cuba has a huge tourism industry, and, obviously, the opportunity to sell to the tourist set in Cuba would be good.”
Julia Hughes, president of the U.S. Fashion Industry Association, said, “There has been talk in the industry that Cuba could be an opportunity for sourcing very close to home.”
“Normalization of the relationship is a good thing,” Hughes said. “There is an opportunity for sourcing there, but, obviously, as they expand access for retailers and American brands, there is also an opportunity for selling to consumers who haven’t had the access to our products. We are not there yet, but it is definitely an opening, and we’ll be watching it closely.”