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TRADE WITH CUBA:

GROWTH AND OPPORTUNITIES

HEARING

BEFORE THE

SUBCOMMITTEE ON TERRORISM, 

NONPROLIFERATION, AND TRADE

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTEENTH CONGRESS

SECOND SESSION

MARCH 15, 2016

Serial No. 114–150

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

MATT SALMON, Arizona 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

PAUL COOK, California 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

CURT CLAWSON, Florida 

SCOTT DESJARLAIS, Tennessee 

REID J. RIBBLE, Wisconsin 

DAVID A. TROTT, Michigan 

LEE M. ZELDIN, New York 

DANIEL DONOVAN, New York 

ELIOT L. ENGEL, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

BRENDAN F. BOYLE, Pennsylvania

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE

TED POE, Texas, Chairman 

JOE WILSON, South Carolina 

DARRELL E. ISSA, California 

PAUL COOK, California 

SCOTT PERRY, Pennsylvania 

REID J. RIBBLE, Wisconsin 

LEE M. ZELDIN, New York 

WILLIAM KEATING, Massachusetts 

BRAD SHERMAN, California 

BRIAN HIGGINS, New York 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

(III)

C O N T E N T S 

Page

WITNESSES 

C. Parr Rosson, Ph.D., head of department, Agricultural Economics, Texas 

A&M University ................................................................................................... 5

Mr. Ray Stoesser, president, Texas Rice Council .................................................. 17

Mr. Jason Marczak, director, Latin American Growth Initiative, Atlantic 

Council .................................................................................................................. 36

Mr. Mauricio Claver-Carone, executive director, Cuba Democracy Advocates ... 43

Richard E. Feinberg, Ph.D., professor, School of Global Policy and Strategy, 

University of California, San Diego .................................................................... 53

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

C. Parr Rosson, Ph.D.: Prepared statement .......................................................... 7

Mr. Ray Stoesser: Prepared statement .................................................................. 19

Mr. Jason Marczak: Prepared statement .............................................................. 38

Mr. Mauricio Claver-Carone: Prepared statement ................................................ 46

Richard E. Feinberg, Ph.D.: Prepared statement ................................................. 56

APPENDIX 

Hearing notice .......................................................................................................... 78

Hearing minutes ...................................................................................................... 79

Written responses from Mr. Mauricio Claver-Carone to questions submitted 

for the record by the Honorable Edward R. Royce, a Representative in 

Congress from the State of California, and chairman, Committee on Foreign 

Affairs .................................................................................................................... 80

(1)

TRADE WITH CUBA:

GROWTH AND OPPORTUNITIES 

TUESDAY, MARCH 15, 2016

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The subcommittee met, pursuant to notice, at 1:30 p.m., in room 

1334 Longworth House Office Building, Hon. Ted Poe (chairman of 

the subcommittee) presiding. 

Mr. POE. The subcommittee will come to order. 

Without objection, all members may have 5 days to submit statements, questions, extraneous materials for the record subject to the 

length limitation in the rules. 

At this time I will make my opening statement. Then I’ll recognize members if they wish to make them as well. 

In 1962, the United States imposed a trade embargo on Cuba. 

Fifty-four years later, Cuba is still communist and the Castros are 

still in charge. 

But it has succeeded—this policy—in hurting U.S. agricultural 

business. In December 2014, the administration announced that 

the U.S. would take steps to normalize the U.S.-Cuba relationship. 

Cuba was removed from the state sponsor of terrorists list. A 

U.S. Embassy was opened in Havana. The Department of Treasury 

and Commerce rolled out three rounds of trade reforms. In fact, a 

new round of travel and trade reforms was announced today. 

But it is Congress alone than can lift the embargo on Cuba. This 

hearing gives us a timely opportunity to examine the changes made 

so far to the U.S. trade policy toward Cuba and question how the 

relationship will move forward. 

The United States used to be one of Cuba’s most important agricultural trading partners. Before the embargo, Cuba bought more 

than half of the U.S. annual long grain rice. Rice exports to Cuba 

counted for over one-third of the total U.S. rice exports. 

However, this market has disappeared. The U.S. has not exported rice since 2009 because the United States has changed its 

cash on demand policy. As opposed to paying at the dock, now they 

have to pay cash before they leave. 

Rice farmers were not the only ones hit by the drop of exports 

to Cuba. Wheat farmers haven’t exported to Cuba since 2011. 

In 2014, the U.S. share of Cuban market was a measly 16 percent, down from a high of 42 percent in 2009. As I mentioned, one 

of these reasons was the U.S. Treasury Department’s interpretaVerDate 0ct 09 2002 13:27 Apr 14, 2016 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\WORK\_TNT\031516\99468 SHIRL
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tion of the rule that made it more difficult to be a reliable trading 

partner with Cuba. 

The distance between Cuba and the United States is less than 

100 miles, as we all know. The distance between the Gulf Coast 

and Cuba is about 900 miles. 

The distance between Vietnam—that also sells rice, also a communist country—to Cuba is 9,000 miles. Exporting to Cuba requires no infrastructure because American exporters have a strong 

foothold in the Caribbean and Latin American markets but not 

Cuba. 

The Port of Houston would be a natural gateway for trade with 

Cuba because it already exports a lot of products that Cuba needs. 

Although some restrictions on trade with Cuba have been eased, 

there’s still a small number of hurdles that put U.S. farmers at a 

competitive disadvantage. 

In Texas, my state, I’ve seen firsthand how the decline in exports 

to Cuba have affected American farmers. I’m thankful we have one 

of those farmers, Ray Stoesser, with us today. He’s not a political 

philosopher. He works the soil and grows rice. Ray, thanks for coming. 

U.S. exporters should have an advantage over their foreign competitors because of the lower shipping costs and transit times, and 

the product is better. 

Unlike Cuba’s current rice suppliers such as Brazil and the communist country of Vietnam, U.S. farmers can provide year-round 

availability of high-quality rice that Cuban consumers prefer. 

However, the United States is not the only option in town for the 

Cubans. As the U.S. slowly struggles to sort out what our trade 

policy is, competitors such as the European Union, China, and 

other Latin American states are stepping up to get in on the action. 

Our competitors don’t wait for the United States to make up its 

mind what it’s going to do. It says that the Castro brothers are discriminating against American businesses as a form of leverage. 

People disagree on that but it could be possible. 

We know that the Cuban Government forces American farmers 

to sell their goods to a state-owned company called ALIMPORT. 

Although trade relations have opened up, the Cuban Government 

has been overly hesitant to actually sign business deals with the 

United States because our own Government is doing things that 

are holding U.S. companies back. 

For example, U.S. farmers cannot offer terms of credit to Cuban 

buyers. That means Cuba has to make all the payments up front 

in cash when purchasing agricultural commodities. 

My opinion is the United States Government should revoke this 

policy and allow the shipper—the agricultural shipper assume the 

risk in dealing with credit issues with Cuba and not have the U.S. 

Government prevent the financial transactions from taking place. 

In theory, our farmers have the freedom to export to Cuba but 

in practice the U.S. Government prevents it. It’s time maybe to reassume and change the rules to allow our agricultural businesses 

to assume financial risk. 

The U.S. has the potential to be a strong contender in the Cuban 

market. According to some studies, lifting the embargo could potenVerDate 0ct 09 2002 13:27 Apr 14, 2016 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\WORK\_TNT\031516\99468 SHIRL
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tially bring as much as $4.3 billion to the United States through 

exports and may create as many as 6,000 jobs. 

I look forward to this hearing and seeing from our witnesses how 

we can establish a better trade relationship with Cuba that benefits primarily American businesses but also Cuba. 

I will now yield to the ranking member from Massachusetts for 

his opening statement. 

Mr. KEATING. Thank you, Chairman Poe, for conducting this 

afternoon’s hearing. I’d like to thank our witnesses. The configuration of this room is such that you seem very far away. 

In fact, Cuba is probably closer—but bear with us. We’re pleased 

to have you here and you truly bring some expertise to us. 

You’re specialists representing the front lines of U.S. exports and 

trade, academia, advocacy organizations, and I welcome the conversation that we’re going to have as the hearing progresses. 

The subcommittee previously held a hearing in September 2015 

which examined agricultural trade with Cuba with a panel of administration officials. 

Since then, the Commerce and State Departments, along with 

other agencies, have continued toward normalizing relationships 

with their Cuban counterparts. 

In January, the administration announced authorized trade with 

state-owned companies, which run the majority of the country’s 

commerce, and later this month the President will schedule and 

make a landmark visit to Cuba, which will be the first visit to 

Cuba by a sitting U.S. President since 1928. 

While this trip will cover many topics, the focus on business opportunities and trade will be front and center. It will be important 

to hear from our witnesses about their views on the pros and cons 

of trade reforms that could help U.S. businesses. 

I understand the desire for a different relationship with Cuba 

surrounding new commercial opportunities in the Cuban market. 

Currently, Cuba imports about 80 percent of its food, next to the 

European Union, China and Brazil, the country’s two highest suppliers. 

There’s no denying that there are substantial opportunities for 

U.S. businesses, particularly in the agricultural industry. 

However, I remain cautious with regard to how well-intended 

policies may impact those hurt most by the regime’s policy—the 

Cuban people. 

Opponents claim we have demanded too little from Cuba, particularly in the area of human rights. It should be emphasized that 

any economic gains made between the United States and Cuba 

should also accompany gains in civil and the civil society, free 

media and the ability for political discourse by the Cuban people. 

The jury is still out on Cuban Government’s efforts to grant additional freedoms. After all, conditions on the island have not 

changed appreciably. 

The Cuban Government continues to jail political dissidents 

without just cause, engages in other human rights abuses and fails 

to respect the rule of law. 

As we continue to reassess our policy toward Cuba, it’s fundamentally important that we strive to strike the right balance beVerDate 0ct 09 2002 13:27 Apr 14, 2016 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 F:\WORK\_TNT\031516\99468 SHIRL
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tween economic prosperity and personal freedoms for both countries. 

Thank you, Mr. Chairman. I yield back. 

Mr. POE. Chair will recognize members for their opening statements. Without objection, the Chair will recognize Mr. Crawford 

from Arkansas for a 1-minute opening statement. 

Mr. CRAWFORD. Thank you, Mr. Chairman, and I’d like to thank 

you and the ranking member for holding this important hearing to 

discuss trade opportunities. 

We’re currently missing out with Cuba. I also want to thank you, 

Chairman, for inviting me to be here. I appreciate your indulgence 

and I appreciate your partnership in efforts to open up the Cuba 

market for ag exports. 

I’d like to encourage my colleagues who favor a more incremental 

approach to Cuba trade to take a look at legislation that I’ve introduced—H.R. 3687, the Cuba Ag Exports Act. 

This bill simply allows our producers to sell food into the Cuban 

market just like we’re able to do with virtually every other nation 

in the world. 

Yield back. 

Mr. POE. Chair recognizes the gentlelady from California, Ms. 

Bass, for an opening statement. 

Ms. BASS. Thank you, Mr. Chair. 

First of all, I really appreciate your leadership on this issue and 

in particular your comments that you made regarding barriers between our two countries. 

The U.S. and Cuba have made historic diplomatic progress following President Obama’s announcement to begin normalizing relations with Cuba in December 2014. 

I note the impressive bilateral steps we have taken regarding 

law enforcement, counter narcotics, mail claims, travel, commerce, 

intellectual properties and global health. 

While it is necessary to commend the significant steps we have 

taken, it is also important to note that there is still room for 

growth in areas of agricultural trade but also in one area I’m particularly interested in and that is health care and what we both 

have to learn from each other’s countries. 

And I will mention specifically during the Q and A but there are 

a couple of areas—one, lung cancer and a vaccine around lung cancer, and another one related to diabetes, and I yield back the balance of my time. 

Mr. POE. I thank the gentlelady. 

Without objection, all the witnesses’ prepared statements will be 

made part of the record. I ask that each witness keep your presentation to no more than 5 minutes. 

As a side note, we will have votes again in approximately 2 

hours. We want to finish this hearing before that. I will introduce 

each witness and then give them time for their opening statements. 

Dr. Parr Rosson is a professor at the department head of the Agricultural Economics Department at Texas A&M University. His 

research interests focus on international trade, international marketing, economic impacts of trade, trade agreements and trade policy. 

5

Mr. Ray Stoesser is the president of the Texas Rice Council and 

a board member of the U.S. Rice Producers Association. He’s a 

third-generation rice farmer who lives on the family farm in Dayton, Texas. 

Mr. Jason Marczak is the director of the Latin American Economic Growth Initiative at the Atlantic Council’s Latin American 

Center. He is at the forefront of the center’s analysis on issues such 

as trade and commerce, U.S.-Cuba relations, China-Latin America 

energy. 

Mr. Mauricio Claver-Carone is the executive director of the Cuba 

Democracy Advocates in Washington, DC. His nonpartisan organization is dedicated to the promotion of human rights, democracy 

and the rule of law in Cuba. 

Dr. Richard Feinberg is the professor of international political 

economy at the University of California, San Diego’s graduate 

school of public policy and strategy. 

Previously, he served as senior director of the National Security 

Council’s Office of Inter-American Affairs. 

Dr. Rosson, we’ll start with you. You have 5 minutes. The Aggies 

go first. 

STATEMENT OF C. PARR ROSSON, PH.D., HEAD OF DEPARTMENT, AGRICULTURAL ECONOMICS, TEXAS A&M UNIVERSITY 

Mr. ROSSON. Good afternoon, Chairman Poe, Ranking Member 

Keating and esteemed subcommittee members. I want to thank all 

of you for the opportunity to testify here today on agricultural 

trade with Cuba. 

I have conducted the economic analysis related to this topic for 

about 15 years and continue to monitor the conditions there in 

order to facilitate U.S. agricultural exports and business interests 

trying to operate in the country. 

What we found is that one U.S. job is created for every $76,000 

in U.S. exports and furthermore an additional $170,000 in business 

activity is also created. 

Cuba’s market for imported foods approaches roughly $2 billion 

annually. U.S. agricultural exports have averaged about $365 million annually since 2002. 

But our exports have been highly erratic. They’ve ranged from a 

low of about $141 million in 2002 to a high of just over $700 million in 2008. 

More recently, our exports have declined sharply to $149 million 

in 2015. This product mix of U.S. exports has also changed. 

From 2002 through 2012, we exported a wide variety of food and 

agricultural products—corn, soybeans, rice, wheat, animal feeds, 

cotton, frozen chicken and turkey, pork, beef, dairy products, dry 

beans, snack foods, canned fruits and vegetables, grapes, pears, apples, condiments, drinks and treated poles. 

So our product mix was very diverse and highly varied during 

that period. More recently, however, U.S. exports have been concentrated in three primary product areas and that relates to frozen 

chicken, the soy complex—primarily beans and meal—and finally, 

corn. 

6

These products together accounted for about 99 percent of our exports in 2015. This change in product mix and the subsequent decline in U.S. exports can be attributed to several factors. 

First of all, Cuba has found other suppliers for many of their 

product needs, particularly rice, wheat, corn and some higher value 

foods. 

We see competition from Brazil, Canada, Argentina, Mexico, 

Spain and Vietnam, and this competition gains market share at the 

expense of U.S. exports. 

Very often, the competition provides credit and very lenient shipping terms, thereby displacing our products. 

Second, our cash in advance payment policy has made our products more expensive to Cuba, leading to delays in shipping and 

very often costly demurrage charges which are borne by the Cuban 

Government through ALIMPORT, the food import agency. 

Third, a stronger U.S. dollar and subsequently higher priced U.S. 

products has also had a negative impact on our exports, making 

them more expensive to Cubans and higher priced compared to the 

competition. 

Fourth, during the global recession, Cuba’s earnings from tourism declined along with earnings from other important exports 

such as nickel. Remittances from Cuban-Americans living in the 

United States and other countries declined as well, leaving Cuban 

consumers with less disposable income. 

Finally, Cuba is a centrally-planned economy with a portion of 

food purchases made by ALIMPORT, the central-planned food import agency. 

Competitors do not have to go through ALIMPORT to export 

their products and therefore they are lower cost and more competitive. 

Now, despite these constraints, we believe that 

Cuba has potential for growth to become a larger market for U.S. 

exporters. Based on our recent research, we believe that U.S. exports to Cuba have the potential to reach somewhere between $1 

billion and $1.2 billion annually and that is because Cuba’s demographics are favorable for market growth. 

With a population of about 11 million people with a literacy rate 

of about 99 percent, Cuba has a highly trainable work force of more 

than 5 million people. 

In addition, those aged between 25 and 54 represent 47 percent 

of the population and therefore in their peak consumption years. 

These characteristics are comparable to those of the Dominican 

Republic, which in 2015 was about a $1.1 billion market for U.S. 

food and agricultural products. 

For this potential to be realized, however, several things are important. The first is impound growth, the second is improvement 

of infrastructure and logistics and the third is continued growth in 

tourism and the continued flow of remittances. 

Consistent, transparent and facilitative trade policies will also 

help us stimulate exports as well. 

Thank you again for this opportunity to testify. I look forward to 

your questions. 

[The prepared statement of Mr. Rosson follows:]

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Mr. POE. Mr. Stoesser, you may make your opening statement. 

Fix your microphone, if you would. Push that button. Thank you. 

STATEMENT OF MR. RAY STOESSER, PRESIDENT, TEXAS RICE 

COUNCIL 

Mr. STOESSER. Mr. Chairman and members of the committee, I 

am Ray Stoesser, a third-generation rice farmer from Dayton, 

Texas. 

I am president of the Texas Rice Council and serve on the board 

of the U.S. Rice Producers Association. As a first-time witness before the Congress I am honored and humbled to appear here today. 

I will summarize my prepared statement, which has been submitted for the record. The Stoesser farm has been in production for 

over 100 years. I am blessed that my sons, Neal and Grant, have 

joined me in farming. 

Common sense access to the Cuban market will ensure that 

Neal, Grant and my grandchildren will be able to continue operating our farm into its fifth generation. 

After more than 50 years, it is clear that our Cuban policy defies 

common sense. It punishes U.S. farmers and costs U.S. jobs. Before 

the embargo, Cuba was our largest rice export market. In 1959, 

Cuba bought 51 percent of all U.S. rice exports. 

The 11 million people in Cuba are among the greatest consumers 

of rice in the Western Hemisphere. Cubans consume 125 pounds of 

rice per person per year. This compares to only 27 pounds per person in the United States. 

In 2000, Congress opened agriculture sales and Cuba became our 

fastest growing rice market. There’s a chart that says that. In 

2004, the Cubans bought $64 million worth of our rice, providing 

1,400 U.S. jobs. 

In 2005, the Office of Foreign Assets Control restricted payment 

terms for ag sales to Cuba. As this chart indicates, our rice sales 

to Cuba plummeted to zero by 2009 and stayed there. 

By 2005, the Cubans had purchased a total of more than $1 billion in U.S. ag goods. Cuban buyers paid promptly and most often 

paid in cash, contrary to what opponents of the trade with Cuba 

had foretold. 

The only disruption of trade was brought about by the U.S. Government, not by Cuban buyers. Cuba can return to a top market 

of U.S. rice but no buyer can rely on food supplies if the exporting 

country’s government may once again restrict exports without 

warning. 

U.S. agriculture has become a secondary supplier for rice and 

other farm goods to Cuba. Cuba’s need for imported rice is enough 

to buy more than the entire Texas crop each year. This could generate almost $27,000 annually for every rice farmer in the United 

States. 

As Dr. Rosson explained, rice is just one of the many ag goods 

that Cuba must import. Based on a review by the International 

Trade Commission, we estimate that the restrictions on U.S. trade 

with Cuba cost U.S. farmers, processors and exporters at least 

$800 million every year. Sadly, our share of the Cuban market continues to fall. 

18

This January, OFAC reversed the 2005 rule on the term cash in 

advance for commodity sales to Cuba. But our reputation as a reliable supplier cannot be restored until the Cubans are confident 

that the U.S. Government will not void contracts or restrict trade. 

OFAC has relaxed sanctions to allow export financing for goods 

that support Cuba’s agricultural production, processing and distribution. So financing can now be provided to enable Cuba to compete with U.S. farmers but not to sell U.S. food to Cuba. 

U.S. law also prohibits the use of credit, credit guarantees and 

market development and promotion funds to increase sales of our 

food to Cuba. 

We continue to lose market share to competitor countries that 

are free to use these other tools. Rice farmers urge Congress to return common sense to our Cuba policy. 

We strongly support legislation such as H.R. 3238 and H.R. 3687 

to correct these discriminatory effects on U.S. farmers. We urge the 

repeal of the embargo. 

Thank you very much. 

[The prepared statement of Mr. Stoesser follows:]

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Mr. POE. Thank you, Mr. Stoesser. 

The Chair will recognize Mr. Marczak for his 5-minute opening 

statement. 

STATEMENT OF MR. JASON MARCZAK, DIRECTOR, LATIN 

AMERICAN GROWTH INITIATIVE, ATLANTIC COUNCIL 

Mr. MARCZAK. Chairman Poe, Ranking Member Keating and 

members, thank you very much for the invitation to testify this 

afternoon on trade with Cuba. It’s a great honor to be here. 

I’ll be summarizing my written testimony and will focus on the 

geopolitical implications of opening trade as well as how to build 

our commercial relations. 

First, to put this in context, it was only 15 months ago the 

United States reversed a 54-year policy that sought regime change 

and isolation but yet had clearly failed. 

It is also important to put this moment in context in the hemisphere. The pendulum is swinging away from nationalist regimes, 

whose claim to power partly rested on an anti-U.S. imperialist message. The Cuba rapprochement is accelerating this trend. 

Expanding U.S.-Cuba trade opportunities is a strategic long-term 

opportunity for the U.S. A stronger commercial relationship will 

open up opportunities for American businesses, empower the 

Cuban people and move forward broader U.S. foreign policy priorities. 

Political liberties for the Cuban people should continue to be a 

top priority for U.S. policy. But it’s time to help the people of Cuba 

secure greater economic rights as well, otherwise the Cuban people 

will continue to face economic challenges that could drive instability and mass migration just off our shores. 

It was in a press conference in 1955 when President Eisenhower 

observed that ‘‘trade is the greatest weapon in the hands of the diplomats.’’ Trade can not only raise living standards but is an instrument of peace and a means to spread Western values. 

Further, opening trade with Cuba carries ramifications for U.S. 

relations and strategic priorities in the Western Hemisphere. Venezuela plays an important role in keeping the Cuban economy 

afloat, giving the autocratic regime in Caracas sway in Havana. 

Greater U.S.-Cuba commercial relations will chip away at Venezuelan influence on the island, making it clear to those across the 

region that not even Cuba recognizes that the future is with Venezuela and its anti-U.S. tirades. 

Instead, a deeper trade relationship with Cuba will only further 

strengthen our allies such as Colombia. A stronger trade relationship and the economic dividends it could pay for both sides may 

also reduce Cuba’s need to lean toward Russia in times of economic 

uncertainty. 

Geopolitics aside, the U.S.-Cuba relationship is changing and the 

world is taking notice. But without congressional action, just as the 

U.S. is opening to Cuba, American companies are losing ground to 

international competitors from the U.K. to Brazil and Spain to 

Mexico. 

And just on Friday, Cuba and the European Union signed an 

agreement to normalize relations, allowing for closer economic ties. 

37

Losing these opportunities to our European and Latin American 

allies is frustrating. Losing them to competitors such as China and 

Russia could be reason for concern. 

And although the Cuban GDP is only around $77 billion, it is a 

market with important potential for U.S. companies in sectors such 

as agriculture, telecommunications and technology and travel and 

tourism. 

Expansion in trade will also benefit the Cuban people. Greater 

foreign investment, better access to capital and a more robust private sector will lead to fewer Cubans dependent on the government 

for jobs, income and resources, freeing them to seek greater rights 

without the fear of job loss. 

Although privately-run businesses are replacing the state sector 

in certain industries, more than 500,000 worked in the private sector, a 240 percent increase in the last 6 years. 

What is the way forward? Regulatory changes have largely exhausted what can be done without Congress with today’s executive 

actions further facilitating commerce and travel. 

But relations expand beyond just government actions. In 2015 

the Cubans were inundated by an avalanche of business executive 

delegations. This was a moment of building first contact and of exploring the potential trade opportunities in countless sectors. 

But while U.S. companies wanted to move quickly, the Cubans 

have taken a ‘‘go it slow’’ approach. To build trust, U.S. commercial 

interests should be tied both to what is possible under U.S. regulations but also to Cuba’s investment priorities. Projects that do not 

fit both qualifications will fall on deaf ears. 

Now, most of the major obstacles left to achieving normalization 

remain in the hands of Congress. In addition to lifting travel restrictions, measured steps can be taken to remove codified rules 

that would have a broad economic effect without political cost. 

Though executive action allows financing and credit to be easier 

for certain industries, agricultural exports are exempt under the 

Trade Sanctions Reform and Export Enhancement Act of 2000. 

Congress is also responsible for allowing American telecommunications infrastructure to be built. Finally, Congress can legislate to 

remove the barriers to Cuba’s entry into the international financial 

institutions. 

Amendments to the Cuban Liberty and Democratic Solidarity Act 

of 1996 would allow both for Cuba to join institutions like the 

Inter-American Development Bank as well as for funds from the institution to be spent on loans that assist Cuba. 

Technical support from the IDB would inject global standards in 

financial and economic management while providing critical assistance in transitioning to a single Cuban currency, all issues critical 

for emboldening the Cuban private sector and enhancing U.S. 

trade. 

Thank you once again for the opportunity to appear before the 

subcommittee today. I look forward to your questions. 

[The prepared statement of Mr. Marczak follows:]

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Mr. POE. I thank the gentleman. 

The Chair now recognizes Mr. Claver-Carone. 

STATEMENT OF MR. MAURICIO CLAVER–CARONE, EXECUTIVE 

DIRECTOR, CUBA DEMOCRACY ADVOCATES 

Mr. CLAVER-CARONE. Thank you, Mr. Chairman, Ranking Member, members of the committee. It’s really a privilege to be here 

and join you today to discuss these important and consequential 

issues surrounding U.S. trade policy toward Cuba. 

And I particularly appreciate being given the opportunity to be 

the sole dissenting voice in this panel, as free expression is a right 

enjoyed by 34 out of 35 nations in this hemisphere with one exception—Cuba. 

So as you are aware, pursuant to the Trade Sanctions Reform 

and Export Enhancement Act of 2000, the sale of ag commodities, 

medicine, medical devices to the Castro regime in Cuba was authorized by Congress with one important caveat—these sales must 

be for cash in advance. 

Prior to that, the export of food, medicine and medical devices to 

the Cuban people, I would highlight, had been authorized under 

the Cuban Democracy Act of 1992. 

I, for one, have no problem with taking cash away from the Castro regime, and that’s not a point of contention in this hearing in 

any way. It’s the consequences of expanding these cash sales to bilateral trade, financing and investment—in other words, flushing—

giving the Castro regime cash. That should be a concern to us all. 

I’d also—I can’t help but note that, you know, whatever rice sales 

had been lost to the Cuban people in 1959 I’m sure has been made 

up in multiples to the Cuban people in Miami since 1959 since 

those people are now in Miami as opposed to Cuba. 

For years we’ve heard of how an improvement in U.S.-Cuba relations and easing of sanctions and increased travel to the island 

would benefit U.S. farmers. 

Well, the fact is since December 17th, 2014 the Obama administration has engaged the Castro regime and has provided a litany 

of unilateral policy concessions. 

We’ve seen the payment terms for agricultural sales have been 

eased, American travel to Cuba increased by over 50 percent, 

Cuba’s GDP grew by over 4 percent, diplomatic relations were established and all these trade delegations have visited Havana. 

So surely, based on this, ag sales to Cuba would have grown exponentially, right? 

Wrong. U.S. ag exports to Cuba plummeted in 2015 by nearly 40 

percent and that’s not the only counterproductive result from President Obama’s policy of unilaterally easing sanctions in December 

2014. Additionally, we’ve seen political arrests have intensified. 

A new Cuban migration crisis is unfolding. The number of selfemployed workers in Cuba has decreased. Internet connectivity 

ranking has dropped. Religious freedom violations have increased 

tenfold. Castro reneged on the release of political prisoners and visits by international monitors. 

So you may ask what do all of these facts regarding political, 

civil and economic rights have to do with trade with Cuba. The anVerDate 0ct 09 2002 13:27 Apr 14, 2016 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 F:\WORK\_TNT\031516\99468 SHIRL
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swer is everything, because the Castro regime is the only client 

business partner for foreign companies in Cuba. 

If we’re going to have an honest debate about trade and tourism 

sanctions on Cuba, it’s important to understand how that regime 

conducts business. 

First and foremost, from an economic perspective the very concept of trade and investment in Cuba is grounded in the misconception about how business takes place on the island. 

In most of the world, that means dealing with privately-owned 

or operated corporations. That’s not the case in Cuba. In Cuba, the 

trade and investment is the exclusive domain of the state. There 

are no exceptions, and that state’s exclusivity to trade and investment was enshrined in Article 18 of Castro’s 1976 constitution. 

That exclusivity has extended to TSREEA sales and we’ve seen 

that of the $5 billion in U.S. ag and medical products that have 

been sold to Cuba, the unpleasant fact is that all of those sales by 

over 250 U.S. entities have only had one Cuban buyer—every 

penny—the Castro government. 

So we already know what lifting sanctions toward Cuba would 

look like. TSREEA sales have actually provided essentially the 

model for this. 

It would be Americans in the system whereby commerce is simply a tool to benefit and strengthen Cuba’s totalitarian regime and 

let’s remember what we’re talking about here. The dominant force 

in Cuba’s economy is the armed forces holding company known as 

GAESA. 

These are the same Cuban armed forces that held a stolen U.S. 

Hellfire missile for nearly 2 years that were caught twice smuggling heavy weaponry including the worst sanctions violation ever 

to North Korea, that oversee the most egregious abuses of human 

rights in the hemisphere, that have subverted human rights and 

democracy in Venezuela, export surveillance systems technology to 

other countries in the region, that welcome Russian military intelligence ships that dock in their ports, that share intelligence with 

the world’s anti-American regimes, that have three senior Cuban 

military officers indicted in the United States for the murder of 

Americans. 

These aren’t nice people in that regards. An important issue that 

I think it’s important also here to recognize is that we need to 

make sure to protect American victims of stolen property. 

According to the American Law Review, the Castro regime’s confiscation of U.S. assets was the largest uncompensated taking of 

American property by a foreign government in history. 

We need to make sure, and I urge Congress, for example, to pass 

legislation. If we’re going to consider expanding trade and other 

issues with Cuba, we should consider taking away the President’s 

waiver authority over Title III of the Libertad Act and allow Americans legal standing to pursue justice in courts. 

I also think it’s very important that we need to uphold U.S. law 

and international labor norms. Some of the measures that have 

been recently announced have been in direct—by the Obama administration have been in direct contravention of the letter, spirit 

and intent of current U.S. law regardless of your position. 

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Those should be upheld. Moreover, those deals have violated a 

myriad of international labor covenants including freedom of association, protection of wages, right to organize, discrimination, employment policy convention, et cetera. 

To conclude, there are many theories and estimates about how 

much more money one sector or another can make from conducting 

business if sanctions were eased or lifted and we’re hearing many 

of those theories and estimates today. 

However, as we’ve learned from the drastic sale over the last 

year, that’s hardly guaranteed and we need to make sure that 

those are weighed by serious factual considerations regarding the 

structure of Cuba’s business entities run by the military, its beneficiaries, the Castro family and its cronies, the rights of its victims 

both Cubans and Americans and whether such practices are in our 

national interests. 

Thank you. 

[The prepared statement of Mr. Claver-Carone follows:]

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Mr. POE. I thank the gentleman. 

The Chair now recognizes Dr. Feinberg for his statement. 

STATEMENT OF RICHARD E. FEINBERG, PH.D., PROFESSOR, 

SCHOOL OF GLOBAL POLICY AND STRATEGY, UNIVERSITY 

OF CALIFORNIA, SAN DIEGO 

Mr. FEINBERG. Mr. Chairman, thank you very much for inviting 

me to participate in this most timely hearing on the eve of the historic visit to Cuba by President Barack Obama. May I ask that my 

full text, which I will just summarize now be entered into the 

record? 

Mr. POE. Without objection. 

Mr. FEINBERG. Thank you. The views here are solely my own and 

should not be attributed to other institutions. As U.S. relations 

with Cuba gradually normalize, Cuba will become an interesting if 

modest market for the U.S. economy but of considerable value for 

many individual U.S. businesses large and small and I will discuss 

some of these market opportunities. 

But, as Jason Marczak has already emphasized, commerce with 

Cuba is about much more than the exchanges of grains and widgets. As the U.S. pivots toward a policy of positive engagement, economic exchange can be a potent political force. 

Commercial exchange can also support broader U.S. objectives of 

advancing market-friendly economic reform, a more robust and 

independent private sector in Cuba and a thriving and diversified 

foreign investment presence. 

Together, these changes make more likely—more likely the advance of fundamental U.S. interests in Cuba, the peaceful transition to a more pluralistic and prosperous Cuba to a Cuba more 

open to the world where the new normal is the free flow of goods, 

services, capital and ideas between our two nations. 

Cuba today altogether imports about $14 billion in goods and 

services. For a small economy, that’s a low import GDP ratio of 

only 17 percent. 

Cuba cannot import more because it doesn’t export to pay for 

those imports. But let’s look ahead. Let us assume that Cuba accelerates its market-friendly economic reforms. 

Let us assume that as part of that reform process Cuba’s rates 

of capital investment rise, Cuban exports become more competitive 

and therefore Cuba’s capacity to import expands. Let’s assume that 

Cuban import growths is about 5 percent a year over a 10-year period. 

If we take a compound rate of growth, sir, by 2027 Cuba will be 

importing $26 billion total, possibly as much as $34 billion. 

What does that mean for U.S. producers? Given Cuba’s geographic proximity and the complementarity between our two economies it is reasonable to project that U.S. exporters could capture 

40 percent, perhaps, more of that expanded market. 

U.S. businesses, as we’ve heard, are certainly well positioned to 

provide many of the agricultural and also industrial products that 

make up large portions of Cuba’s current import requirements as 

well as the financial and professional services that a more dynamic 

Cuban economy will require. 

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By 2027, therefore, U.S. businesses could be selling $11 billion to 

$14 billion each year to Cuba. Over the 10-year period from 2018 

post-Castro to 2027 U.S. businesses could sell during that 10-year 

period a cumulative $86 billion to $101 billion in goods and services 

to Cuba. 

Cuba also desperately needs massive inflows of foreign investment. Cuba’s domestic savings and investment ratio under 10 percent. The Latin American average is over 20 percent. Cuba must 

import more foreign investment to grow. 

The Cuban Government has recognized that. It’s advertized a list 

of 326 investment projects with an initial investment value exceeding $8 billion. 

Cuba has said it has no particular objection to U.S. firms bidding 

on these opportunities, although it will seek a diversity of investment partners. 

As we’ve already heard, many foreign firms from Europe, Latin 

America, Canada, China have already invested in Cuba. U.S. regulations, of course, prohibit U.S. firms from investing in Cuba. But 

eventually a new normal in cross-straits relations will witness 

many U.S. firms seizing these investment opportunities. 

And Mr. Chairman, we know that U.S. investments abroad bring 

U.S. exports in their wake. Therefore, as the Cuban economy accelerates and U.S. investments—and U.S. businesses invest in Cuba, 

U.S. exports will also grow. 

So therefore, my estimate of $11 billion to $14 billion in annual 

U.S. exports to Cuba a decade from now may prove to have been 

overly modest. 

Now, just a brief word about the Cuba private sector. This is a 

very important part of our strategy. To date, the Cuban Government has authorized 1⁄2 million of its citizens to work in the selfemployment private sector. 

According to my calculations, as many as 11⁄2 million additional 

Cubans have at least one foot in the private sector. That’s as many 

as 2 million Cubans, 40 percent of their workforce compose the 

emerging private sector. 

The U.S. is already a big piece of this emerging private sector in 

Cuba. U.S. investors are dining at private paladares, lodged at private guest homes and purchasing the creations of independent artisans, and remittances from the United States are driving many of 

these new businesses and they’re allowing homeowners in Cuba to 

remodel their dwellings, employ private contractors and participate 

in the newly legal real estate market. 

Cuba’s emerging entrepreneurs and middle classes and by many 

measures, which I don’t have time to go into today, Cuba is a middle class society. 

These private entrepreneurs and middle class Cubans will seek 

a Cuba that is more normal, more like other societies in the Caribbean Basin where individuals have access to middle class consumption patterns and have ample opportunities to realize their talents, 

participate in public affairs and pursue their careers independent 

of state control. 

Finally, Mr. Chairman, later this week President Obama and the 

First Lady will step foot on Cuban soil. President Obama will atVerDate 0ct 09 2002 13:27 Apr 14, 2016 Jkt 000000 PO 00000 Frm 00058 Fmt 6633 Sfmt 6633 F:\WORK\_TNT\031516\99468 SHIRL
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tempt to nudge the Cuban Government to press forward on their 

economic reforms with greater vigor. 

But most important, I think, will be the messages that he delivers directly to the Cuban people. He will meet with the island’s 

emerging entrepreneurs and middle class citizens. 

He will engage with civil society and political dissidents. 

Mr. POE. The gentleman’s time has expired. The rest of your 

statement will be made part of the record. 

Mr. FEINBERG. Thank you, sir. Thank you very much, Mr. Chair. 

[The prepared statement of Mr. Feinberg follows:]

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Mr. POE. The Chair will now recognize himself for questions. 

Then we’ll let the members of the panel or the dais make comments and questions. Thank you once again, gentlemen, for being 

here. 

It seems to me that the U.S. policy against Cuba, the Castro regime, as articulated by Mr. Claver-Carone, a lot of reasons why the 

Government of Cuba is not acting appropriately by international 

standards. 

We cannot solve all those problems here today. Maybe we can 

talk about one of those, which is normalizing relationships regarding the issue of trade. 

It seems to me that Cuba trades with everybody in the hemisphere except us. They get their rice from Vietnam. Happens to 

still be a communist country. 

And getting rice from Vietnam that they consume I do not understand how that punishes the Castro regime by not letting us sell 

agricultural goods to Cuba with Vietnam as a competitor. It would 

just seem to me that that doesn’t punish the Cubans. It helps the 

Vietnamese and it punishes the United States. 

Now, Mr. Claver-Carone has talked about some changes in U.S. 

policy that actually, because of the changes, agricultural sales to 

Cuba and specifically rice dropped as opposed to increased. 

Now, I’d like you all to weigh in on this. Mr. Marczak, can you 

weigh in on this issue that Mr. Claver-Carone mentioned? U.S. 

changes its policy and the policy doesn’t help trade. 

It reduces trade, and how did that affect the Cuban Government 

on dealing with us because of that change in policy in 2004 or 

2005, whichever it was? 

Would you explain that specifically, please? 

Mr. MARCZAK. Chairman Poe, thank you for the question. 

I think that we have to look at the, first of all, the decrease in 

agricultural exports to Cuba, which is not a result of the President’s—President Obama’s actions but it’s a result of a number of 

different factors on the island and also a result, as my colleagues 

on the panel have mentioned—a result of the lack of competitiveness that our agricultural——

Mr. POE. Lack of what? 

Mr. MARCZAK. Lack of competitiveness. 

Mr. POE. Okay. 

Mr. MARCZAK. That our agricultural exporters have in so far as 

exporting their products to Cuba when looked at comparison to 

other countries around the world. 

As you mentioned, Mr. Chairman, Vietnam is a prime example 

of that. It’s a country that is taking advantage of the fact that the 

U.S. should naturally be the number-one agricultural exporter to 

Cuba. 

But because of the restrictions that lay in U.S. law including restrictions that Congress could potentially modify, the United 

States——

Mr. POE. Let me interrupt a minute. We trade with Vietnam, do 

we not? 

Mr. MARCZAK. Yes, we do. 

Mr. POE. And Vietnam, like other countries, have human rights 

violations that we’re concerned about as a nation, correct? 

64

Mr. MARCZAK. That’s correct. 

Mr. POE. Continue. 

Mr. MARCZAK. That’s correct. And I would also say that our opening with—trade with Vietnam has allowed for an opening and a degree of liberty in Vietnam. 

Obviously, Vietnam remains a communist country but we see the 

result of an opening of trade with Vietnam in so far as providing 

greater economic liberties and opening the door for political liberties to the Vietnamese. 

So, in conclusion, in answer to your question, Mr. Chairman, you 

know, the policy that Congress has the ability to change and policy 

that could be changed, I think, without a lot of political cost specifically in the agricultural sector could allow U.S. agricultural exporters to be more competitive and to also ensure that the Cubans, you 

know, get their agricultural products and help to create jobs here 

in the United States rather than creating jobs back in Vietnam. 

Mr. POE. Specifically, what change could be made? I know Congress can—has to be the one to lift the embargo but what are you 

talking about regarding the financial situation of cash on demand 

as opposed to credit, letting the agricultural community assume the 

risk rather than prohibiting it completely? Delve into that specifically in the remaining time that you have? 

Mr. MARCZAK. Yes. Specifically, Congress could—the administration has allowed for the financing of exports in a range of sectors 

through executive action. 

But Congress has the sole authority because of Helms-Burton to 

be able to remove the restrictions that prohibit agricultural export 

financing, and without that financing and, as you suggest, that financing—the risk for that financing could be taken by the exporters themselves. But without the ability to provide financing for 

those agricultural products our exporters and our products are at 

an inherent disadvantage. 

Mr. POE. All right. My time has expired. 

I’ll recognize the gentleman from Massachusetts, Mr. Keating. 

Mr. KEATING. Thank you, Mr. Chairman. 

Sunday’s New York Times included an article that highlighted 

the United States’ and Cuba’s different visions of economic engagement and we touched on some of these things. 

But tourism has long satisfied Cuba’s need for foreign currency 

and it’s clear that there remains a stark disparity between the willingness of Cuban businesses or authorities to enter into trade with 

the United States companies and the desire of our domestic business people to do so. 

One statistic in that article that was cited by the president of 

U.S.-Cuba Trade and Economic Council—he said that he counted 

500 visits to Cuba by American business people since December 

2014, more than 140 visits by United States representatives and officials but he can count on the number of—count on his fingers, you 

know, just the business deals that had been reached. 

Meanwhile, Cuban officials repeatedly just point to the trade embargo as an example of the United States’ lack of commitment to 

strengthen relations. 

I’d just like to—and we touched on some of these things but give 

everyone a chance—how would you explain this lagging growth of 

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trade between U.S. and Cuba? What other things that we haven’t 

touched on to explain that lack of growth, given the trade restrictions? Mr. Feinberg? 

Mr. CLAVER-CARONE. I’ll take a stab. I’d be happy to take a stab 

because I think it ties into both of these questions. 

You know, the issue here, if we were talking here about trade 

with the Cuban people, as a matter of fact even trade with Vietnam where there are private entities that you can be involved with 

trade with, it’s a whole different story, you know, because it’s not 

politicized trade. 

Trade with Cuba is all politicized because there’s only one customer. If that were to change, my testimony would have been very 

different today. 

But the fact is our sales and what the Castro regime is doing 

with—particularly with what you notice is essentially trying to coerce the U.S. business community to pursue its geopolitical gains—

its needs, in the same way that it took an American hostage in 

order to gain—to coerce the United States into releasing three 

spies including one that was serving two life sentences for the murder—for murder conspiracy of some Americans and now wants to 

coerce the business community in order to unilaterally finance its 

regime. 

And I think that that right there is the fundamental problem 

here—the fundamental difference with Vietnam. The fundamental 

also difference with Vietnam and Brazil and the sales to them is 

that those are essentially subsidized by the state, by entities and 

deals that are less than transparent in which the state is essentially financing those completely. 

I mean, we’re not even going to be able to compete with those 

deals in that regards because it’s all politicized and that’s the problem. When that opens up, then we can have a different picture and 

a different story. 

Mr. KEATING. Is there any—some people have suggested that 

there’s a deliberate effort reducing imports to the United—you 

know, from the United States to increase political pressure on the 

United States for additional sanction easing measures. Do you 

think there’s any truth to that, Dr. Feinberg? 

Mr. FEINBERG. So I think, first, in terms of limitations on our 

side, up until a few weeks ago, U.S. exporters were only permitted 

to export to the emerging small-scale private sector in Cuba. 

So we were still not allowed to export to the state-owned enterprises which still make up 80 percent of production in Cuba, okay, 

so that was a big no on our part. 

And with regard to investment, many U.S. firms when down 

there thinking about investment. That is totally off the table because of U.S. sanctions still to this day. Okay. So we have those 

restrictions on our side. 

Now, on the Cuban side, we have said the small-scale private enterprise we are happy to sell to you. There is where the Cubans 

have been dragging their feet and I would suggest a couple of reasons for that. 

One is ideological. They tend to prefer the state-owned enterprises as still socialists. So they don’t like us preferring and giving 

advantage to the small-scale private sector. 

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Now, most recently the Obama administration did say okay, U.S. 

firms under certain conditions can also sell to state-owned enterprises. 

So we’ll see now when President Obama is down in Havana if 

he’ll be able to say okay, we gave you something that you were 

pushing for—now open channels for U.S. firms to sell to the emerging private sector in Cuba, and I hope very much he can bring 

home that concession from Cuba. 

Mr. KEATING. Well, let me take it a step further. Let’s assume 

that result. Are they going to still—because they have this ideology, are they going to still try and limit the activity with the private side? They’re going to continue to do that even more so 

maybe? 

Mr. FEINBERG. Well, so they’ve allowed, as I mentioned, 500,000 

in the private sector so far. There are still all sorts of limitations. 

The President will be meeting with a group of these private sector entrepreneurs, I understand. I think we’ll have a—he will have 

a dialogue with them. He’ll listen, what are your major problems. 

Mr. KEATING. You think there’s an ideology there so this is being 

manipulated? 

Mr. FEINBERG. It’s a combination of ideology and power. I mean, 

the government—power comes through the control of the economy 

and the state-owned enterprises. That causes them to want to limit 

the growth of the small-scale enterprises, without a doubt. 

Mr. KEATING. That’s interesting. Thank you. I yield back. 

Mr. POE. The Chair recognizes the gentleman from Pennsylvania, 

Mr. Perry. 

Mr. PERRY. Thank you, Mr. Chairman. 

I hate to be the guy that doesn’t want to join the Cuba lovefest 

here but I need to associate my remarks with Mr. Claver-Carone. 

And then that I’m probably not going to talk about trade here. 

I got a couple statements to make and I know you’re all interested 

in making money and that’s great. So am I. 

From General James Clapper, director of national intelligence, 

last month, the threat from foreign intelligence entities is persistent, complex and evolving. Targeting and collection of U.S. political, military, economic and technical information by foreign intelligence services continues unabated. Russia and China pose the 

greatest threat followed by Iran and Cuba. 

I’ll just remind you that something you all know, they’re about 

100 miles off the coast of Florida, right. Two weeks prior the U.S. 

military Southern Command held its annual Caribbean regional security conference. 

Senior members of Castro’s KGB-trained spy agency were invited 

to participate. I find that particularly irritating and self-destructive 

as a person who served decades now in the United States military. 

I also want to remind you of the listening posts, the largest ones 

in the world based at Lourdes, which is sponsored by Russia and 

reopened after we brought Cuba to their knees financially and the 

Soviet Union as well and forced them to close it at some point but 

reopened, and the one by China at Bao Cao. 

I would also like to remind you that Cuba’s—this is from the 

Cuban—the state-sponsored newspaper, Cuba’s communist propaganda newspaper, Granma, has published an article claiming that 

67

President Obama’s scheduled visit to Havana in March dispels decades of evidence that the Cuban Government violates the human 

rights of its citizens on the very weekend in which Cuban state police arrested almost 200 dissidents for peaceful marches against 

communism. 

And I’d further like to remind you of recent arrests of U.S. State 

Department officials—an official and his wife for over 30 years of 

spying at the State Department named Walter and Gwen Myers as 

well as Ana Montes, who worked for the Defense Intelligence Agency as a United States citizen, as a Cuban spy. 

While you all might like to dance with the devil to make a couple 

bucks, you can be—and with all due respect to Dr. Weinberg when 

you said they prefer the socialist model—I’ll remind you, as you 

probably well know that socialism is an economic construct. Communism is the political construct that forces the economic construct. 

These folks in power have no interest at all in changing their 

ways and they are going to use us and our foolishness, our generosity to further their intentions. 

And while you all might be happy that we have a socialist running for the presidency of the United States, I find it particularly 

vexing that American service members spent and pledged their 

lives and often gave their lives in the fight against exactly that. 

And now we’re saying yet again it’s great to engage with these 

folks in the hope—in the hope that they will change after 40 or 50 

years. 

I don’t know what delusion you folks are under but listen, if 

you’re under one that’s great but do me this favor and I would hope 

that the President would do us this favor as well, which is if you’re 

going to make a deal when a deal’s been made let’s find out what 

we’re getting up front as opposed to giving everything away and 

then hoping that we’ll get something on the other side. 

And so with that I will ask one question—one question only. 

Anybody can answer it. Everybody can answer it. What did we 

get—specifically, tangibly, what did we get for the deal that we just 

made? 

Mr. MARCZAK. I’m happy to take the first response to that. 

Thank you, Congressman, for your question. I think, first of all, 

I think I’m not trying to dance with the devil to make a few bucks 

here, right. 

I’m the director of the Latin American Growth Initiative at a 

nonpartisan think tank here. I have no skin in the game in so far 

as cash on this. 

But I think what we have to look at insofar as what is the—what 

is the best way to seek greater political and economic liberties for 

the Cuban people. I think that that’s——

Mr. PERRY. I’m with you. Economic is one of the powers that we 

have. But I wonder what we’re getting, what we have gotten for 

the deal. 

Mr. MARCZAK. Yes. 

Mr. PERRY. We gave in—we already gave, right? So what do we 

get? What do we hope to get? 

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Mr. MARCZAK. Yes. Yes. I would say there’s a few things that 

we’ve—well, first of all, I think there’s a few things that we’ve gotten from the actions of the last 15 months. 

One is that on a geostrategic perspective we’ve increased the 

power, the positioning of the United States and our perception 

among our allies not just across the hemisphere—countries that 

are incredibly important for us to work with. 

Our policy toward Cuba has been the thorn in our side insofar 

as seeking greater relationships across Latin America, encountering other regimes that I think that we would be in agreement 

with that we also want to—that are also restricting the ability of 

their people to express their political liberties including that regime 

in Caracas, Venezuela. 

Mr. PERRY. If I may ask you, with your indulgence, Mr. Chairman, which Latin American countries have we increased our stance 

with by—via our position with Cuba now? Which Latin American 

countries? 

Mr. MARCZAK. I would say we have increased our stance with 

Brazil, with Argentina, with Colombia, with probably Mexico. I 

would say most countries in the hemisphere had gotten to the point 

that they could no longer defend our policy. 

Now, insofar as what does that mean for the Castros, right—

what does this—our policy should not be one that keeps the Castros in power. Our policy should be one that seeks to provide greater liberties for the Cuban people. 

And I would contend that over the last five-plus decades our embargo has been the crutch and the answer for the Castro regime 

of why the country is continuously suffering from economic ills. 

Whenever there’s a problem in Cuba the answer is it’s because 

of the embargo. Now, obviously the embargo still remains in place 

but by chipping away at some of the—some of the restrictions in 

our policy we’re taking away bit by bit the reasons in which the 

Castro regime can blame others from the outside, specifically the 

imperialists from the United States, for the economic problems that 

they have in their own country. 

Mr. PERRY. Thank you, Mr. Chairman, I yield. 

Mr. POE. The other four gentleman may submit their answer for 

the record in writing to Mr. Perry’s question. I understand we’re 

going to have votes very soon. 

So I’ll recognize the gentlelady from California, Ms. Bass. 

Ms. BASS. Thank you, Mr. Chair. 

I think my questions are from a little slightly different direction 

there but with all due respect to my colleague over there. 

You know, I have had problems for many years with the U.S. 

policy directed to Cuba and our policy with regime change through 

the embargo, to me, has really hurt U.S. businesses. 

And I appreciate you describing from the agricultural industry 

ways that you could certainly expand your business if, you know, 

we were to remove the remaining barriers. 

I have also always resented the fact that my freedom was denied 

to travel wherever I choose to travel regardless of what regime 

might be in power. I have resented the fact that my own country 

prohibited me from travelling to where I would like to go. 

69

I had mentioned before that I wanted to talk about health care 

and I do have a question for you about agriculture as well. 

You know, the Cubans have invented a vaccine that helps with 

lung cancer and there is also a medical product that they have a 

medication that helps reduce the need to amputate for diabetics. 

Diabetics—the lead cause of feet amputation in the United 

States and probably many other countries is diabetes and the Cubans have a medication that helps with that. 

And so one question I have for Dr. Feinberg is do you think that 

the President could issue a general authorization for Cuban-developed pharmaceutical and other medical products? 

The problem is, as I understand it, is that we are allowing this 

medication, which is called Heberprot—we are allowing it to be 

tested—clinical trials in the United States. 

But we will not give a company the ability to market it and no 

company in the world is going to invest the expense into a clinical 

trial unless they have the ability to market the drug as well. 

So I want to know, given the current restrictions, if you think 

that that might—you know, that the President might be able to 

issue that. 

And then to Mr. Stoesser from the—from the Texas Rice Council, 

you know, one of the other things that I think our companies as 

well as the Cubans could benefit by is our scientific technology—

our scientific knowledge, farming technology and farm equipment 

in terms of sales. 

And then I believe Dr. Feinberg said that there is already a restriction that our commerce in agriculture has to be with small 

farmers. I think that that’s what you were saying. 

So those are the questions I would propose—I would pose to Dr. 

Feinberg and also to Mr. Stoesser. 

Mr. FEINBERG. So just to clarify, so my general comment about 

U.S. sales was for all products other than agriculture. 

Ms. BASS. Oh, I see. 

Mr. FEINBERG. Which has separate legislation, and some medicines. So I think when President Obama goes down there we will 

see the warmth of the Cuban people. 

Ms. BASS. Oh, by the way, I’m going on a trip. So thank you for 

telling me about what I’m going to experience when I’m there in 

terms of meeting with small farmers. Go ahead. 

Mr. FEINBERG. Okay. Excellent. Well, I think then you also will 

experience the warmth of the Cuban people and their admiration 

and appreciation for the President of the United States and for 

Americans in general, and that is one result of the people-to-people 

diplomacy that has been going on for the last several years as a 

result of the relaxation of certain sanctions. 

As you point out, Cuba has a very active biotechnology sector. 

They have developed these various vaccines, as you point out. 

Now, for them to be marketed in the U.S., of course, they have 

to go through clinical trials. As you may know, the Roswell Cancer 

Center in New York is working on the lung vaccine, which seems 

promising but, of course, we have to be sure that it’s effective and 

safe. 

I do completely agree with your basic point that the United 

States ought to say in general with regard to medicines which are, 

70

after all, lifesaving—a very obvious humanitarian product, that if 

they pass FDA regulations ought to be available to American——

Ms. BASS. Humanitarian for us. 

Mr. FEINBERG. Precisely. For us, on our side. Yes. So humanitarian. 

Now, I think there, there is the additional element, however, 

that the Cuban Government has been hesitant to allow joint ventures or even licensing to not only U.S. but international pharmaceutical companies in general, and that’s another area where one 

has to recognize that the timidity of the Cuban state—their lack 

of knowledge and their fear of global markets—is something that 

they’re going to have to gradually work their way through. But we 

can encourage them in that regard. 

Ms. BASS. Thank you. 

Mr. POE. The gentlelady yields back her time. 

Mr. Stoesser, you’ll have to put that in writing, the answer to her 

question. 

The Chair recognizes the gentleman from Arkansas, Mr. 

Crawford. 

Mr. CRAWFORD. Thank you, Mr. Chairman. 

To Mr. Stoesser and to Dr. Rosson, my understanding of the cash 

in advance rules have been rewritten again to be less restrictive. 

But there’s been no noticeable improvement to rice exports to 

Cuba. 

Do you believe the Treasury Department’s reinterpretation of the 

rules will have any impact on our competitiveness in Cuba or will 

our ag export posture remain weak until exporters are able to offer 

credit to Cuban importers? 

Mr. STOESSER. It’s my understanding that commodities were not 

included in that recent ruling, only tractors and telecommunication 

things but not agricultural commodities. 

Mr. CRAWFORD. Okay. 

Mr. STOESSER. And I think that rule needs to be changed to include commodities, of course. 

Mr. CRAWFORD. Sure. Dr. Rosson, the U.S. poultry sector has 

seemed to find ways to have a stronger export presence in Cuba. 

What’s keeping other ag industries from implementing a similar 

framework? 

Mr. ROSSON. Well, I think when we look at the overall commodities situation globally today, things like nickel, for example, those 

prices are at near historic lows and that affects the ability of the 

Cubans to generate enough foreign exchange to purchase products. 

Now, what’s different about much of the poultry that we export 

there it’s largely leg quarters, which are sold at a discount relative 

to other cuts of poultry. So therefore they naturally have a competitive advantage. 

Where we tend to lose is the fact that we don’t offer credit—that 

our payment terms are somewhat restrictive. And so by the time 

we transfer funds around the—between Cuba, a third country, back 

to the United States, we’ve lost time and as a result we have vessels that are held up and being charged extra money because of 

those delays in shipping and the Cubans bear that cost and the result is they tend to turn elsewhere for some of their supplies. 

71

Mr. CRAWFORD. You conclude that food and ag exports have the potential to exceed $1 billion annually but even stronger exports 

can be achieved through further infrastructure improvement investment. To what extent do you believe that U.S. direct investment in the private Cuban agribusiness would strengthen our export posture? 

Mr. ROSSON. I think investment is absolutely crucial. My experience of having been there several times over the last number of 

years port infrastructure, road infrastructure needs improvement. 

I’ve had personal experience working with companies that were 

exporting frozen foods into the Cuban market and we’d have a 

power outage and those frozen desserts would melt, then they’d refreeze and you take those out and display them at a food show and 

you run into problems trying to sell your product. 

So infrastructure is crucial. Reliable power, good infrastructure, 

improvements in all load, off load capability. The port is important, 

and then another aspect is business development. We have not 

been active in business development there because we’ve been precluded. 

Now we do have the opportunity to do that and by business development I’m talking about working with the private sector individually to try and improve their capacity to do business and develop their economy on a fairly small scale in the beginning but 

which has the potential to grow, and as that growth occurs we 

would see incomes rise and we would see improvement in the 

Cuban consumer’s ability to buy food. 

Mr. CRAWFORD. Mr. Marczak, do you believe that American investment in private Cuban agribusiness might help accelerate privatization in the Cuban ag sector? 

Mr. MARCZAK. Yes. I believe that the Cuban—what the Cuban 

private sector needs is more investment from outside, right. I think 

that there’s a few things. 

One is that—you know, that includes fully lifting the remittance 

cap as well so the Cubans—the small businesses in Cuba can have 

access to the necessary financing and investment that would be—

that is critical for their long-term survival and I think as well the 

agriculture sector, specifically the growth in the number of agricultural cooperatives, has been a real success insofar as the incremental. 

Again, we have to look at success in measured terms. This is 

only a few years after a long policy of completely closed off. But it’s 

an area in which there is—it’s ripe for further engagement from 

the private sector and private sector growth. 

Mr. CRAWFORD. Do you think that U.S. investment might help 

reduce the Castro regime’s role in the Cuban economy more quickly 

than maintain our current isolationist posture? 

Mr. MARCZAK. I believe that current—I believe that investment—

the more investment from the U.S. the more jobs that creates in 

the Cuban private sector, the fewer Cubans are dependent upon 

the state for their jobs and the more Cubans can express their free 

will without the potential recourse of losing their only income. 

Mr. CRAWFORD. Thank you. I yield back. 

Mr. POE. The Chair recognizes the gentleman from Minnesota, 

Mr. Emmer. 

72

Mr. EMMER. Thank you, Mr. Chair, and thanks to the witnesses 

for being here today. 

Mr. Claver-Carone, when’s the last time that you visited Cuba? 

Mr. CLAVER-CARONE. The Castro regime, as you know, has a list 

of 100,000 Cubans at least that they don’t allow——

Mr. EMMER. Mr. Claver-Carone, reclaiming my time. 

Mr. CLAVER-CARONE. They don’t—they don’t give me a visa. They 

don’t give me a visa. 

Mr. EMMER. When’s the last time that you’ve been there? 

Mr. CLAVER-CARONE. When I was a little kid because they don’t 

give me a visa because people that are critical of the Castro regime 

don’t get a visa because I think that’s important to know. 

Mr. EMMER. Thank you. Thank you very much. Reclaiming my 

time. 

I find it interesting when you talk about what’s happening in 

Cuba because if you had been there recently you would see that the 

Castros, they live in what I would describe as suburban Dallas—

a nice neighborhood with boulevards and well-manicured lawns 

and nice big homes and the rest of the population they don’t live 

in—well, I would say they do live in very underwhelming circumstances and that would leave one to believe when they see it 

firsthand and they experience that whether the embargo is in place 

or not the Castros are going to do just fine. It’s actually more about 

the Cuban people when we talk about trade. 

This is a mutual relationship with value on both sides, and I 

guess I think when you talk about the issues of religious freedoms 

and other humanitarian concerns they’re real and I don’t have any 

doubt maybe to the degree and where they’re happening but I 

think we can agree that that’s still real. 

The fact is, however, that these have existed now for 55 years 

and the embargo has been in place actually more than 55 years. 

The embargo has been in place for 55 years. It hasn’t changed. 

The definition of insanity, I’ve been taught, is doing the same 

thing over and over and over and expecting a different result, and 

I’m not even going to bother to ask how you think that the current 

state of economic sanctions is going to change something in the 

next 55 years. 

Instead, I think I want to turn to Mr. Marczak and ask when it 

comes to the embargo it was initially put in place as a policy to isolate the Castro regime and to destabilize the Castro regime so that 

ultimately the Cuban people could self-determine once again and 

enter into these agreements that we’re talking about, this growth 

opportunity. 

But in fact, Mr. Marczak, isn’t it true that what’s happened is 

the policy has isolated the United States. It hasn’t isolated Cuba 

because Cuba’s doing business with everybody around the world 

and everybody in the Western Hemisphere with the exception of 

the United States, correct? 

Mr. MARCZAK. Correct, Congressman, and I’m sure that you’ve 

seen when you’ve been to Cuba as well the number of foreign Embassies across Havana. 

Cuba has more foreign Embassies than any country in the Western Hemisphere outside of the United States. So Cuba has successfully used the embargo and the isolation and destabilizing intenVerDate 0ct 09 2002 13:27 Apr 14, 2016 Jkt 000000 PO 00000 Frm 00076 Fmt 6633 Sfmt 6633 F:\WORK\_TNT\031516\99468 SHIRL
73

tion of the embargo to claim an outsized role insofar as geopolitical 

posturing and insofar as its place not only in the global affairs but 

as a leader in the global south. 

Mr. EMMER. So talking about growth then—trade and growth—

right now the question is not really about whether Cuba is going 

to be able to do business because there are entrepreneurs from all 

over the world rushing into Cuba right now as we speak because 

of the President’s unilateral action to start to relax whatever the 

administration can outside of Helms-Burton. 

The question really is whether or not the United States entrepreneurs will have that same opportunity. Isn’t that correct, Mr. 

Marczak? 

Mr. MARCZAK. That is correct. There’s a real concern that because of the—if we have this opening of regulations the rest of the 

world sees the writing on the wall that our policy and the embargo 

is eventually going to be lifted. 

Mr. EMMER. So lastly—I mean, I heard one of my colleagues talk 

about China and Russia and Iran. I mean, isn’t the risk that those 

types of players will move in to Cuba and isn’t that—isn’t that really what’s happened with our foreign policy since the 1950s, that 

our policy literally pushed this regime to Russia and don’t we risk 

that again? 

Mr. MARCZAK. Yes. You correctly state that Russia has been the 

fall back for the Cubans at times of economic uncertainty. The Chinese are looking at increasing their investments in Cuba. 

Mr. EMMER. Thank you. 

Lastly, Mr. Stoesser, thank you so much for being here. I just 

want to clarify, you aren’t just in the business of agriculture to 

make money with a 100-year business. 

I take it you have some pride in feeding the world with what you 

do? 

Mr. STOESSER. I sure do. I want my sons and grandsons to be 

able to do what I did because they love it, too. I love to farm. 

Mr. EMMER. Thank you. 

Mr. STOESSER. I need to have it return. 

Mr. EMMER. Thank you. I yield back. 

Mr. POE. The Chair will recognize the gentleman from California, 

Mr. Sherman. We are voting so if the gentleman would be precise. 

Mr. SHERMAN. I know that another colleague asked Mr. ClaverCarone whether—when was the last time you were in Cuba. I assume that the last time you were in Cuba would have been the last 

time that you would be a free man. 

One of my colleagues tried to get me to go to the Gaza Strip and 

I had to explain to him that my record was not in accord with that 

of Hamas. 

Biggest opportunity for Cuba is tourism. Is there any—I would 

evidence that we’re going to increase the total amount that Americans have to spend on their vacations or if Americans spend money 

on their vacations in Cuba they won’t be spending it elsewhere. 

Mr. Claver-Carone, is there—would this just pull tourist dollars 

away from Puerto Rico, the Virgin Islands, Florida and other tourist destinations in the United States? 

Mr. CLAVER-CARONE. I always say that first and foremost if 

you’re looking for a tourist destination Miami Beach is basically 

74

going to help our economy a lot better or Cape Cod or California 

has beautiful beaches and things of that sort. So I believe we 

should support our economy. But I think the important thing is——

Mr. SHERMAN. And even if you do want to go to a foreign country 

you can go to how many different Caribbean countries are there 

who will then buy U.S. products on fair terms? 

Mr. CLAVER-CARONE. Absolutely, and the whole concept that we 

hear so much with agricultural trade is that we want U.S. tourists 

to go over there so then there’s a demand created for more products 

from here from the United States. 

But essentially we’re feeding the same American mouth whether 

we feed it in Miami Beach or we feed it in Barrero Beach. I think 

it’s essentially the same product. 

But I think that brings to an important point is the reason we 

have these travel-related, tourism-related transactions in Cuba is 

because it’s the Cuban military and security services’ number one 

source of income. The Cuban military is the largest hotel owners 

in Latin America. They own more hotel rooms than the Walt Disney World Company. We sanction tourism toward Cuba and we 

sanction oil to Iran for a reason, because one is the number one 

source of income versus that of another. 

Mr. SHERMAN. There are, I think, 6,000 certified U.S. claims 

where the Cuban Government has appropriated American assets. 

Does Cuba have any interest in settling any of those claims? 

Mr. CLAVER-CARONE. Not that I’m aware of in that regards. They 

like to talk a lot and we see that there’s a lot of talk and I think 

in that regards we need to consider, as I mention in my testimony, 

the rights of Americans. 

President Obama and President Bush and President Clinton before him had always waived Title III of the Libertad Act that provided a right of action for American victims of that. 

But now if we’re going to allow investment in essentially for the 

Castro regime to lease back to us our own stolen property then we 

should perhaps consider having a prior right of action as is current 

law in order for the American victims of this trafficked property to 

be able to receive compensation. 

Mr. SHERMAN. Let me ask the other witnesses, in order to export 

agricultural items to Cuba will it be necessary for us to provide the 

financing? 

Mr. FEINBERG. So let me say I think that, first of all, in general 

Cuba does state to state credits. They seek soft bland credits when 

possible. That’s basically what lies behind, for example——

Mr. SHERMAN. So in order to export the Cubans are going to ask 

the U.S. Government to—so we have 6,000 Americans who were 

ripped off by the Cubans in the past and now the U.S. taxpayer 

is supposed to make unsecured loans to the same government that 

ripped off 6,000 others. Gee, fool me once, shame on me. Fool me 

twice, you know. 

Mr. FEINBERG. So if that’s a question, so over the last 55 years 

of embargo we have not succeeded in getting compensation for 

those Americans who did lose their properties. 

So I would say under the current policy of engagement we have 

a better chance at least of getting some compensation for those lost 

properties and the Cuban Government has agreed and already we 

75

had a first round of discussions with the Cuban Government on the 

resolution of these claims. 

As you may know, the Cuban constitution——

Mr. SHERMAN. If I could just interrupt. If we—as I understand 

it we allow agri-food exports to Cuba and so the question is not 

whether we’ll have free trade in agricultural products to Cuba but 

whether we’ll have taxpayer-subsidized——

Mr. POE. Your time has expired. 

The Chair recognizes the chairman of the full committee. 

Chairman ROYCE. I’m just going to be very brief because of the 

vote. But I’d like to submit for the record some questions. 

The Obama administration has announced several regulatory 

changes that have allowed them to chip away at the embargo. Most 

recently the administration announced a regulatory loophole that 

will allow us to facilitate Cuba’s use of U.S. dollars to make international financial transactions. 

How is Cuba’s banking system set up and is it sufficiently transparent is the first question I put for the record. Will the Cuban 

people be able to partake in such transactions or would it be for 

state entities only? 

Would allowing such transactions be consistent with legislation 

passed by the U.S. Congress? In other words, would it be legal? 

And with current OFAC Cuba sanctions regulations that restrict 

Cuba’s ability to transact in U.S. currency? And what have been 

the practical effects for the average Cuban citizen of the relaxing 

of OFAC Cuba sanctions regulations? 

Have U.S. negotiators secured the right of Cuban workers to collect their earned wages or does the Cuban Government continue to 

collect wages directly from the employer to then distribute as low 

as 5 percent of those wages to the corresponding worker, keeping 

the rest for the Cuban Government? 

Those are the questions I’d like to ask not only for the panel to 

respond to but I intend to submit that in writing to the administration as well. 

Thank you, Mr. Chairman. I yield back. Thank you, Ranking 

Member, as well. 

Mr. POE. I thank the gentleman. What the chairman was saying 

was he’s asked you those questions so now respond in writing, if 

you would. 

There were other questions Mr. Perry asked and there were some 

other members that asked questions as well. You will receive those 

questions again and respond within 10 days in writing to those 

questions. 

Thank you, gentlemen, for being here today. This has been a 

very thought-provoking hearing. I appreciate all of your testimony 

and as mentioned earlier your testimony is a part of the record. 

The subcommittee is adjourned. 

[Whereupon, at 3:45 p.m., the committee was adjourned.] 

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