Export Tax A Good Way To Stick It To Cuba? Or A Good Way For Cuba To Stick It To Us?

Jun 8, 2017

COMMENTARY

While South Florida breathlessly awaits President Trump’s decision on whether to roll back his predecessor’s normalization of relations with Cuba, something else is happening in Washington that could nudge normalization forward – or severely set it back.

Arkansas Congressman Rick Crawford is drafting a bill that would slap a 2 percent tax on U.S. food exports to Cuba. The levy would be used to pay the 6,000 U.S. companies and individuals who had businesses and other properties seized by Cuba’s communist revolution. Their certified claims amount to $2 billion (up to $8 billion with interest) and are a big hurdle for moving U.S.-Cuba normalization beyond the re-establishment of diplomatic relations and the opening of U.S. travel to the island.

Crawford’s main aim is to help U.S. farmers make nice with the Cuban-American congressional caucus, which hates the U.S.-Cuba thaw and resents the agriculture lobby’s push to sell more food to the Castro regime. But the Arkansas Republican – and at least one Cuban-American caucus member, Miami Congressman Carlos Curbelo, who has come out in favor of Crawford’s bill – may not realize just how fraught his Cuba export tax proposal is.

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Let’s say it works the way Crawford envisions. Let’s say Cuba agrees to keep doing business with U.S. agricultural companies – despite knowing the price of the food it’s importing may be higher because those firms are passing Crawford’s tax on to the customer. Let’s say Cuba – whose revolution is founded on defying U.S. attempts to impose its Goliath will on the hemisphere’s Davids – nevertheless allows itself to repay some of the U.S. property claims via this gringo-crafted arrangement.

It would demonstrate nothing less than Havana’s willingness to pony up reparations for the property seizures, at least tacitly, something it has so far resisted in normalization negotiations. That in turn could, and most definitely should, jumpstart the U.S.’s willingness to dismantle its 55-year-old trade embargo against Cuba – normalization’s other big stumbling block.

The proposed tax on food exports to Cuba could demonstrate Havana's willingness to pony up for U.S. property claims. But is it more likely - and absurd - that it would end up letting Havana off the hook for those claims?

The prospect is tantalizing: Crawford’s legislation could end up removing the two major obstacles to more fully normalized U.S.-Cuba relations.

But since this is Washington and Havana – the Hatfields and McCoys of the Americas – that’s a big “if.” Truth is, Havana may just as likely balk at the whole thing.

Because Cuba imports three-fourths of its food, it follows international market prices fairly closely. So it’s doubtful Cuba would agree to pay 2 percent more to buy soybeans – especially when the seller is the U.S.

So let’s say Crawford’s plan doesn’t work the way he envisions.

Let’s say Cuba refuses to buy the taxed food altogether, for political as well as financial reasons. (That might be foolish since the U.S.’s shipping costs to Cuba are a lot lighter than, say, China’s or Russia’s. But the embargo prevents Cuba from using credit to buy U.S. food, so Havana will figure it evens out.) U.S. farmers suddenly find themselves shut out of a market of 11 million people just 90 miles from Florida.

Let’s also say Cuba keeps buying Uncle Sam’s wheat but refuses to pay the additional 2 percent, thereby forcing U.S. companies to swallow Crawford’s tax. American capitalists instead of Cuban communists are then the ones paying property claims reparations. That seems absurd if not legally questionable.

CUBA OFF THE HOOK?

But here’s another absurd part: it would be a gift to the Castro regime. It would essentially let Cuba off the hook for at least a part of that $2 billion. That might give Havana less reason to come to the claims reparation table because, hey, los yanquis are picking up the check.

And no reparations talks would effectively silence any talk of Washington ending the embargo. But then, does anyone really believe Havana would be upset to see the demise of el bloqueo – the Cuban regime’s convenient political scapegoat for its chronic economic blunders?

U.S. agricultural representatives and politicians meet with Cuban farmers on the island in 2015 shortly after U.S.-Cuba relations were normalized.
Credit Ramon Espinosa / AP via Miami Herald

Who knows, the Cubans might be disposed to play along with the Crawford tax – provided President Trump doesn’t irk them by trashing the new normalization set-up as part of his campaign pledge to strike “a better deal.” (His announcement could come this month, possibly in Miami.)

But if Trump rolls back a large chunk of normalization, and if Crawford’s bill eventually becomes law, the negotiator-in-chief may stick the U.S. with an even costlier Cuba deal.