Market Alert: U.S. will restore ties with Cuba

By: Elliot James | December 17, 2014 (Edited July 7, 2017)

newswriter_main3Earlier today, President Barack Obama and Cuban President, Raúl Castro, announced the beginnings to the restorations of diplomatic ties between the two states. Coming as unexpected news to most, Cuba, the Vatican and Canada had already been in private talks deliberating the ideas of a United States-Cuba restoration. President Obama announced that on January, 1961 ties were ended between the countries, but that today will mark the beginning of the normalization amongst the two states. He plans to increase the flow of travel, commerce and the flow of information on both sides. President Obama states, "That this is fundamentally about freedom and openness." Obama claims that he knows that political climate will not change overnight, but shows hopefulness. Further endorsing this campaign, President Castro broadcasted, "We have agreed to restore diplomatic relations." Thanking Pope Francis and the Canadian government, Castro is also hopeful.

Castro announced, "The economic, financial and commercial embargo that provokes enormous human and economic damages to our country should cease to exist."

President Castro wishes for change in the U.S.-Cuban marketplace.

While many are open to the political shift (Possibly anticipating the taste of their first Cuban cigar in over 5 decades), others are not happy with the new engagement. Reminding us that the Republic of Cuba is still regarded as a communist country, United States Senator, Marco Rubio (R-FL), is not as keen for this new shift. Sen. Rubio's arguments lye on the basis that the United States began to open these diplomatic ties without the "binding-commitment" to hold Cuba accountable to a transition to democracy. Holding the White House accountable, Sen. Rubio expressed his opposing sentiments earlier today. Making the passive threat, "...and I anticipate that we're going to have a very interesting couple of years discussing how you're gonna get an ambassador nominated and how you're gonna get an embassy funded," the White House and President Obama may be in for the long haul before diplomatic ties are truly normalized.

Political debate aside, what does this mean for the Marketplace?

Well for starters, although economic sanctions between the U.S. and Cuba have not been lifted, we might possibly see the beginning to market trade with the Caribbean island-nation. Alas, those that remember will once again be reunited with their Cuban cigars and reputable lobster fishing. The United States embargo against Cuba began on October 19, 1960. This economic, commercial and financial embargo has restricted the Republic of Cuba from promoting and benefiting from trade with the U.S. With the Cuban embargo currently enforced by six statutes, it may be a long time coming before such economic trade could become a reality. However, with today's political announcement, it is even more promising.

This possibility of an import-export trade may advance to something greater, on the ground, allowing for potential travel and tourism to begin between the two countries. Once travel becomes available, not far behind will be the growth of merchant and retail sales, on both sides. Looking at a much larger scale, with the imaginable opening of another country on the global market-map for the U.S., corporate exchange becomes possible and inevitably market sales and quite likely, market shares, will go up and increase. No matter the political climate at this point, although important, the normalization of ties between two countries is always a good thing for the Marketplace. It indefinitely allows for the growth of state GDP (Gross Domestic Product), the import and export of natural resources, greater medical achievements, technology sharing, business and education expansion and higher agribusiness sales. Retrospectively, this could allow for growth in PPP (Purchasing Power Parity) for the Cuban state, further leading for a higher market value of the Cuban peso (CUP).

On either side of the debate, if these diplomatic relations grow effectively, the economic ties will also flourish.

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Written by Elliot James

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