Date of Graduation

12-2013

Document Type

Thesis

Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level

Graduate

Department

Agricultural Economics and Agribusiness

Advisor/Mentor

Wailes, Eric J.

Committee Member

Durand-Morat, Alvaro

Second Committee Member

von Witzke, Harald

Keywords

Social sciences; Biological sciences

Abstract

After the resignation of President Fidel Castro and forty-five years of the U.S.-trade embargo, the political environment between Cuba and the United States is expected to change. With the Trade Sanction Reform and Export Enhancement Act in 2000, trade sanctions were eased for a while. Future trade between both countries would increase the welfare in both countries. This Thesis has the approach to look at the impacts on the commodities of rice and sugar, and the trade sanctions between the United States and Cuba.

Cuba is a net importer of its food supply; therefore, agriculture and food trade is an interesting business for states closely located to Cuba. Cuba also has a high consumption of rice, and the US is a net exporter of rice; the gains from trade are obvious. On the other hand, Cuba has an enormous potential in sugar cane production. Cuba was once the world's largest sugar producer with over 8 million metric tons (USDA, 2008). With increasing demand in the United States, sugar cane from Cuba could supply the United States market.

The trade analysis from the United States International Trade Commission shows that the agriculture trade between the United States and Cuba could increase by $661 million. Without an embargo, US rice producers and Cuban sugar could benefit from trade. Welfare analysis shows that the protection policy harms producers and consumers on both sides.

Given its proximity to the U.S., Cuba could benefit similarly as Mexico and Canada under the North American Free Trade Agreement (NAFTA). These countries show that free trade increases investments, imports, and exports. It is also proven that the overall welfare increases with the removal of protectionism (Stern, 2001). It is time to open the trade embargo between the United States and Cuba on behalf of the welfare of the people in both countries.

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