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72–881 2012

EXAMINING THE STATUS OF U.S. TRADE WITH 

CUBA AND ITS IMPACT ON ECONOMIC GROWTH 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMERCE, TRADE, 

AND CONSUMER PROTECTION 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

APRIL 27, 2009 

Serial No. 111–32 

( 

Printed for the use of the Committee on Energy and 

Commerceenergycommerce.house.gov 


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COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California, Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JAN SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

PARKER GRIFFITH, Alabama 

ROBERT E. LATTA, Ohio 


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SUBCOMMITTEE ON COMMERCE, TRADE, AND CONSUMER PROTECTION

BOBBY L. RUSH, Illinois 

Chairman 

JAN SCHAKOWSKY, Illinois 

Vice Chair 

JOHN P. SARBANES, Maryland 

BETTY SUTTON, Ohio 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BART STUPAK, Michigan 

GENE GREEN, Texas 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

KATHY CASTOR, Florida 

ZACHARY T. SPACE, Ohio 

BRUCE BRALEY, Iowa 

DIANA DEGETTE, Colorado 

JOHN D. DINGELL, Michigan (ex officio) 

CLIFF STEARNS, Florida 

Ranking Member 

RALPH M. HALL, Texas 

DENNIS HASTERT, Illinois 

ED WHITFIELD, Kentucky 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

MICHAEL C. BURGESS, Texas 


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C O N T E N T S 

Page 

Hon. Bobby L. Rush, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 1 

Hon. George Radanovich, a Representative in Congress from the State of 

California, opening statement ............................................................................. 3 

Hon. Phil Gingrey, a Representative in Congress from the State of Georgia, 

opening statement ................................................................................................ 5 

Hon. Frank Pallone, Jr., a Representative in Congress from the State of 

New Jersey, prepared statement ........................................................................ 92 

Hon. Jim Matheson, a Representative in Congress from the State of Utah, 

prepared statement .............................................................................................. 94 

Hon. Joe Barton, a Representative in Congress from the State of Texas, 

prepared statement .............................................................................................. 95 

WITNESSES

Walter Bastian, Deputy Assistant Secretary for the Western Hemisphere, 

International Trade Administration, Department of Commerce ..................... 6 

Prepared statement .......................................................................................... 9 

Matthew S. Borman, Acting Assistant Secretary for Export Administration, 

U.S. Department of Commerce ........................................................................... 11 

Prepared statement .......................................................................................... 13 

Adrean Scheid Rothkopf, Vice President, Western Hemisphere Affairs, U.S. 

Chamber of Commerce ......................................................................................... 28 

Prepared statement .......................................................................................... 31 

Geoff Thale, Program Director, Washington Office on Latin America ................ 41 

Prepared statement .......................................................................................... 43 

Kirby Jones, President, U.S.-Cuba Trade Association, and President, Alamar 

Associates .............................................................................................................. 56 

Prepared statement .......................................................................................... 59 

Ambassador James C. Cason, President, Center for a Free Cuba ...................... 72 

Prepared statement .......................................................................................... 75 


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EXAMINING THE STATUS OF U.S. TRADE WITH 

CUBA AND ITS IMPACT ON ECONOMIC 

GROWTH 

MONDAY, APRIL 27, 2009 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COMMERCE, TRADE, 

AND CONSUMER PROTECTION, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 2:07 p.m., in Room 

2123, Rayburn House Office Building, Hon. Bobby L. Rush [chairman of the subcommittee] Presiding. 

Present: Representatives Rush, Sarbanes, Castor, Radanovich, 

Gingrey and Scalise. 

Staff Present: Angelle Kwemo, Counsel; Christian Tamotsu Fjeld, 

Counsel; Michelle Ash, Counsel; Valerie Baron, Special Assistant; 

Shannon Weinberg, Minority Counsel; Brian McCullough, Minority 

Senior Professional Staff; and Chad Grant, Minority Policy Analyst. 

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. RUSH. The subcommittee will come to order. 

This is a subcommittee hearing on examining the status of U.S. 

trade with Cuba and its impact on economic growth, and the Chair 

will recognize himself for 5 minutes for the purposes of an opening 

statement. 

I want to thank the members of the subcommittee for participating in the first trade hearing on Cuba in the 111th Congress. 

I recently visited Cuba with my colleagues in the Congressional 

Black Caucus. We met with President Raul Castro and Chairman 

Barbara Lee, and I personally met with former Cuba President 

Fidel Castro, along with Congresswoman Julia Richardson from 

California. A lot has been said and written about that trip to Cuba 

and about that meeting. 

Because of travel restrictions, many Americans don’t know what 

Cuba has become, but I witnessed a very compelling need to call 

this hearing to assess U.S. trade policies towards Cuba. I believe 

our current policy with Cuba is a failure. We must reevaluate our 

trade policy’s impact on both the Cuban and the American people. 

I strongly believe that expanding and diversifying our exports to 

Cuba will be beneficial for both countries. Some argue the current 

embargo should be maintained as a political tool that has proved 

to be effective, as was the case with South Africa. However, I must 


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say that the current embargo on Cuba is not a multilateral embargo, and we are in a different political and economic environment 

today. 

Unilateral sanctions are usually problematic and ineffective. 

Cuba has opened its doors to the entire world, and the world has 

walked steadily in. All nations in the Americas except the U.S. 

have resumed diplomatic relationships with Cuba. All of our economic competitors, including China and Brazil and Mexico and 

Japan, Canada and the European Union, are currently trading 

with Cuba. 

Cuba has also made it clear that the same doors are open to the 

U.S., and our policy should not permit American companies from 

doing business with the Cuban people. We are looking for new markets to penetrate. Our companies want to compete normally, and 

our unemployed workers want jobs. Now is not the time to ignore 

all the opportunities that are presented to us, and I believe that 

Cuba should be treated like other trading partners with similar political and economic and conditions. 

Liberalizing trade with Cuba is not without precedent and has 

already proven beneficial to both the U.S. and the Cuban people. 

In 2000, when I and other Members of Congress voted to approve 

a modest opening of trade, the overall exports from Cuba rose from 

$7 million in 2001 to $404 million in 2004. However, I must add 

the so-called ‘‘cash in advance’’ rule initiated by the previous administration in 2005 has complicated an already difficult process 

and caused Cuba to cut back on its imports from the U.S. Nonetheless, the United States has been Cuba’s largest supplier of food and 

agricultural products, with almost $2.7 million in total sales. 

Having said all this, I am not naive nor am I blind to Cuba’s 

challenges. It is undeniable that Cuba has serious political, economic, financial and social problems. Like many developing countries, Cuba has many regulatory hurdles. To be sure, political and 

economic reform must be initiated by Havana inside Cuba’s borders. However, it is also undeniable that some progress has been 

made, and that the embargo in many instances has actually increased the suffering of the very people we are trying to assist. 

Since the fall of the Berlin wall, approximately 28 nations have 

undergone transitions from Communist regimes. Countries that 

were less isolated from the West achieved more successful and 

prosperous democracies than those that were isolated. I believe 

that Cuba can make a similar transformation if we fully engage the 

island nation in the global economy. 

I commend our President for his leadership in easing the current 

restrictions on Cuba. This is the first step in the right direction. 

I support a more rapid move towards normalization of our trading 

relationships with Cuba. Today’s hearing is just a beginning in a 

series of steps that I intend to take to do all I can to both open 

up markets for U.S. commerce, especially for small minority and 

women-owned businesses, while also at the same time to help bring 

liberty and prosperity to the Cuban people. 

And I yield back the balance of my time. 

And now I recognize the Ranking Member of this subcommittee 

Congressman Radanovich for 5 minutes for the purposes of opening 

statements. 


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OPENING STATEMENT OF HON. GEORGE RADANOVICH, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF 

CALIFORNIA 

Mr. RADANOVICH. Thank you, Mr. Chairman, for calling this important hearing to examine our trade relations with Cuba. I appreciate it. 

This subcommittee’s jurisdiction includes nontariff barriers to 

trade. As we saw in an earlier hearing in the subcommittee that 

examined ways to promote our exports to help our economy, increasing our trade exports to revive our economy is a path that we 

should pursue. We manufacture many world-class goods and services the world will buy if given a chance. 

Today we examine quite a different topic: Cuba and our special 

situation with that country. Our embargo on trade with Cuba, except for food and medicine, is a longstanding policy I support due 

to the Castro regime that has been in power for over 50 years. 

President Obama has indicated a desire to go down a path to 

change that policy, including incremental changes to permit remittances and travel by Cuban Americans back to Cuba to visit their 

family. Other pundits have suggested that we go further to normalize relations. 

I believe that that would be a mistake until the people of Cuba 

are free. If that time comes, I would fully support a change in the 

policy. Our agricultural exports would find a receptive market particularly in Cuba where about 80 percent of its food supply is imported, and the country would be a natural destination for our 

fruits and vegetables, among other products. 

Unfortunately, the tyrannical oppression continues, and to pursue trade with Cuba is a major affront to those who have given 

their lives for the freedom of this Caribbean nation. I cannot justify 

in good conscience a change in policy that may produce marginal 

increases at best to our economy, and those benefits are quite questionable. 

It is true that the embargo has not yet affected the bipartisan 

policy goal of regime change, but it is equally true that foreign investment and normal trade relations with Cuba by other developed 

nations has not produced any change. If we turn the blind eye and 

set aside our leadership as the world’s promoter of democracy and 

freedom to follow in the footsteps of others, what do we expect will 

occur? 

Thus far, the Castros have been able to use trade with other 

countries to further their own goals and enrich themselves without 

benefit to the people that they proclaim to care so much about. The 

Castros care so much, they do not tolerate political dissident, they 

suppress free speech and limit religious expression, including the 

establishment of religion-based schools. Since they assumed power, 

religion has been suppressed because it was counterrevolutionary. 

In short, a Cuban citizen has limited control over his own being because that right has been taken by the Castro brothers. 

In one of the truly humanitarian exchanges after Raul Castro 

took over, Cuban citizens were permitted greater freedom to move 

within their own country. Can anyone here imagine not being able 

to travel freely without borders or send your child to a school of 

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tration’s recent decision to eliminate school vouchers for children in 

D.C. If you have the money to send your children to an elite private school, I guess that you don’t have to worry about vouchers 

for others. 

Many would like to see the travel ban to Cuba lifted completely 

from a purely substantive point regarding its effect on our economy 

that will provide little or—would provide little to our GDP and may 

even hurt our own domestic travel industry. Let us remember travel and tourism to the United States is one of our better exports 

that generates many jobs. Taking steps that would permit a oneway street permitting travel to Cuba without reciprocity would adversely hinder our balance of trade as we import more tourism. 

Add to that the substitution effect of diverting travel to Cuba that 

might otherwise have flowed to Florida or other domestic destinations, and I can only see us losing economically. In short, increased 

travel and tourism may not only hurt our domestic tourism industry without benefit to the Cuban people, while simultaneously filling the coffers of the Castros. 

Telecommunications is also viewed as a possible avenue to export 

more products, but doing business in Cuba requires a joint venture 

with the Castro government. Whether the net effect would be positive is debatable. Certainly other countries that do not maintain a 

trade embargo with Cuba have been free to expand their markets 

in Cuba; however, democracy advocates have yet to see the benefits 

of those ventures. This may be due in part to the very limited financial resources of the average Cuban citizen and the affordability 

of telecommunication services. Why anyone thinks that this will 

change if a company providing the service as a U.S. company rather than their current provider escapes me. 

As long as the Castros maintain a regime which oppresses individual freedom, oppresses dissenting political views, and expresses 

hostility towards religious expression, while at the same time 

maintaining a state-controlled economy to the benefit of the Castro 

family and their adherents, further trade relations beyond humanitarian aid in the name of making a buck is an injustice to the 

Cuban people and their brave freedom advocates. 

Thank you, Mr. Chairman. I yield back. 

Mr. RUSH. The Chair now recognizes the fine gentleman from 

Maryland Mr. Sarbanes for 5 minutes for purposes of an opening 

statement. 

Mr. SARBANES. Thank you, Mr. Chairman. I certainly don’t need 

5 minutes. I am in a learning mode today. I am looking forward 

to the hearing. I appreciate your convening it. 

Obviously the economic embargo on Cuba is a delicate topic. It 

seems to become more delicate every day, and more people are 

coming to the discussion. You have rightly acknowledged the 

human rights concerns that exist, but you also noted the arguments for modifying or even eliminating that embargo, and I am 

looking forward to hearing the discussion today. 

I yield back my time. Thank you. 

Mr. RUSH. The Chair now recognizes my friend and gentleman 

from Georgia Dr. Gingrey for 5 minutes. 


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OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA 

Dr. GINGREY. Mr. Chairman, thank you. I want to thank you for 

calling the hearing today on this important issue of the current 

trade embargo with Cuba and its economic impact on our country. 

In the face of our current economic struggles, our responsibility 

is to bolster the United States economy by expanding trade in a 

fair and open way that creates jobs domestically. And, of course, we 

look for every opportunity to do that. However, trade policy is not 

just economic, as we all know, but, of course, it is also foreign policy. 

In the case of Cuba, the lure of trade with the United States 

must be heavily conditioned on the improvement of human rights 

in that country. In fact, the oppressive Communist Castro regime 

has a widespread history of human rights violations and is currently listed as a state sponsor of terrorism by our State Department. Therefore, I have supported, and I will continue to support, 

the embargo. And I do not believe that the United States should 

lift this embargo until, until Cuba makes significant reforms that 

expand freedom and civil liberties for its citizens. 

Over the past decade, there have been some concessions that 

have been made for humanitarian purposes, including remittances 

for family members of Cuban Americans as well as restricted travel 

for immediate family. Most recently the Fiscal Year 2009 Omnibus 

Appropriations Act made some more modifications to existing travel restrictions, and the Obama administration has called for additional changes to remittances. But these need to be closely monitored so that they benefit the people of Cuba and not just the Castros and the Castro government. 

In the nearly 50 years that this embargo has been in place, there 

is one question that remains: Will Cuba trade with the United 

States improve political and economic conditions for the Cuban citizens, or will it simply reward and endorse the oppressive Communist government run by both Fidel and Raul Castro? 

In the intervening time, we have seen a number of our allies in 

the Western Hemisphere—this has been said by the Chairman and 

Ranking Member—and Europe as well openly trade with Cuba, yet 

Cuba has made very little improvement in human rights conditions 

despite this open trade. For these reasons, I believe the Federal 

Government, and this subcommittee in particular, needs to proceed 

very cautiously as we hear testimony today and we debate future 

ramifications of trade with Cuba. 

I look forward to hearing from both panel of witnesses, and at 

this time I yield back the balance of my time, Mr. Chairman, and 

I look forward to having an opportunity to question the witnesses. 

Mr. RUSH. The Chair certainly thanks the gentleman from Georgia. 

And now it is my pleasure and honor to welcome to this committee’s hearing two fine public servants, both who are employees of 

the Department of Commerce. The one, Mr. Walter Bastian, is a 

Deputy Assistant Secretary for the Western Hemisphere, International Trade Administration. 


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Mr. Bastian, I want to welcome you, and I want to thank you for 

appearing before this subcommittee and taking time out from your 

busy schedule to share your thoughts with us. 

Our next witness on this first panel is Mr. Matthew Borman, a 

fine gentleman from the Department of Commerce Bureau of Industry and Security. His former title is the Acting Assistant Secretary for Export Administration. 

Mr. Borman, again, my thoughts are certainly gracious, and we 

want to thank you so much for being here and participating in this 

hearing. 

We would ask, if you will—it has been a new policy on this subcommittee that you be sworn in for the purposes of giving an opening statement and participating in the hearing. So would you 

please raise your right hand—stand and raise your right hand. 

[Witnesses sworn.] 

Mr. RUSH. Please take your seats. 

Please let the record reflect that all of the witnesses there answered in the affirmative. 

Mr. Bastian, we would ask that you provide us with an opening 

statement, and you can restrict your statement, if you will, to 5 

minutes. I would say more or less 5 minutes. Thank you. 

TESTIMONY OF WALTER BASTIAN, DEPUTY ASSISTANT SECRETARY FOR THE WESTERN HEMISPHERE, INTERNATIONAL 

TRADE ADMINISTRATION, DEPARTMENT OF COMMERCE; 

AND MATTHEW S. BORMAN, ACTING ASSISTANT SECRETARY 

FOR EXPORT ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE 

TESTIMONY OF WALTER BASTIAN 

Mr. BASTIAN. Thank you, Mr. Chairman. 

Chairman Rush, Ranking Member Radanovich—— 

Mr. RUSH. And please pull the mic towards you, if you will, 

and—— 

Mr. BASTIAN. Sorry. There we go. 

Chairman Rush, Ranking Member Radanovich and distinguished 

members of the committee, thank you for the opportunity to speak 

with you today concerning recent events in our relationship with 

Cuba. I welcome your interest in this topic. 

Today’s hearing is entitled ‘‘Examining the Status of U.S. Trade 

with Cuba and Its Impact on Economic Growth,’’ but I can imagine 

that the interests of committee members extend not only to that 

subject, but also the President’s recent statements regarding his 

beliefs that we can move the U.S.-Cuba relations in a new direction. It is my hope that Members will take no offense if I do not 

take this opportunity to expand upon nor to interpret the words 

and messages that the President so capably laid out during the 

successful Summit of the Americas in Trinidad and Tobago. 

We meet at a fluid moment in U.S. policy, and, as members of 

this committee know, setting U.S. policy towards Cuba is not within the province of the Department of Commerce. 

On April 13th of this year, the President directed the Secretaries 

of Commerce, Treasury and State to take actions necessary to lift 

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tances to family members, authorize greater telecommunications 

links with Cuba, and expand the scope of humanitarian donations 

eligible for export. These changes in our Cuba policy are designed 

to encourage greater contact between family members, ease the 

flow of remittances to Cuban families, and promote the flow of information to the Cuban people. 

The Bureau of Industry and Security, BIS, at the Department of 

Commerce and Treasury’s Office of Foreign Assets Control, OFAC, 

are hard at work implementing these policy changes. My colleague 

from the Bureau of Industry and Security will discuss these 

changes in more detail in his testimony. 

Reaching out to the Cuban people in this way is a demonstration 

of our interest in sending our relations with Cuba on a more productive and positive course. The actions we are taking will directly 

benefit the well-being of Cuban citizens and will remove barriers 

between families in both countries. 

Mr. Chairman, I understand that you recently returned from a 

visit to the island, and that you, as well as a number of your colleagues, are interested in greater commercial interchange with 

Cuba. As you know, the United States maintains extensive legal restrictions on the ability of U.S. firms to trade with Cuba. The 

President has indicated his belief that the embargo should remain 

in place as a source of leverage for positive change in Cuba. 

I will very briefly delineate the mix of legislation that governs 

our trade relations with Cuba. The United States maintains a comprehensive trade embargo with respect to Cuba under numerous 

laws. That embargo was first announced by President Kennedy in 

Presidential Proclamation 3447 in 1962, under the authority of the 

Foreign Assistance Act of 1961. Implementing regulations issued 

by the Department of Commerce and the Department of Treasury 

to carry out the trade embargo on Cuba relied on general authorities of the Export Control Act of 1949 and the Trading With the 

Enemy Act. The trade embargo in Cuba has been further shaped 

over the years by various pieces of legislation, including the Export 

Administration Act of 1979; the Cuban Democracy Act of 1992; and 

the Cuban Liberty and Democratic Solidarity, otherwise Libertad, 

Act of 1996; and the Trade Sanctions Reform and Export Enhancement Act, TSRA, of 2000. 

TSRA limits Congress’ ability to promote and support U.S.-Cuba 

trade. Under TSRA, the Department is prohibited from providing 

the routine export assistance to U.S. exporters to Cuba that our 

U.S. and Foreign Commercial Service regularly provides to other 

U.S. firms. Despite the broad restrictions on trade with Cuba, U.S. 

producers exported more than $700 million in agricultural goods to 

Cuba in 2008, making the U.S. the largest source of food to Cuba, 

and making us Cuba’s fifth largest trading partner. 

Conclusion. President Obama indicated at the Summit of the 

Americas that the United States seeks a new beginning in its relations with Cuba. The measures announced on April 13th were intended as a signal to the people of Cuba and to the Government 

of Cuba that the United States is prepared to pursue policies that 

will strengthen the ties between the people in our countries and 

bolster progress towards a free and democratic Cuba. 


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Thank you, Mr. Chairman. I am pleased to answer any questions 

that you or the other members of the committee may have. 

Mr. RUSH. Thank you, Mr. Bastian. 

[The prepared statement of Mr. Bastian follows:] 


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Mr. RUSH. And now I’ll recognize Mr. Borman for 5 minutes, 

more or less. 

TESTIMONY OF MATTHEW S. BORMAN 

Mr. BORMAN. Thank you, Mr. Chairman. 

Mr. Chairman, Ranking Member Radanovich and distinguished 

members of the subcommittee, I would also appreciate the opportunity to appear before the subcommittee today to discuss the Bureau of Industry and Security’s role in implementing the U.S. 

Trade embargo on Cuba. I also ask that my written statement be 

included in the record. 

Mr. RUSH. So ordered. 

Mr. BORMAN. As my colleague Mr. Bastian has already outlined, 

there are a welter of laws and regulations that govern our trade 

with Cuba, and I won’t enumerate them again. I would point out 

in particular the Libertad Act, among other things, codifies the 

trade embargo on Cuba, and it requires that the embargo would remain in effect unless certain conditions are met, most notably either there is a transition government in place, or there has already 

been a democratically elected government. So the Libertad Act 

codifies much of the current embargo. 

Having said that, of course, though, the President and all Presidents retain some discretion to make exceptions to the embargo. 

And as a result of that, that discretionary authority, the Commerce 

Department has the authority to issue licenses for particular transactions or general authorizations for particular types of transactions under certain conditions. And as Mr. Bastian has already 

noted, the Bureau of Industry and Security regulates the export of 

commodities, software and technology to Cuba, while the Office of 

Foreign Assets Control, Department of Treasury, regulates all 

transactions with Cuba, including the financing related to exports. 

So we at BIS handle things going to Cuba, and Treasury handles 

essentially everything else, all other interactions between the U.S. 

and Cuba. We do ours through the Export Administration regulations. Treasury has a separate set of their own regulations. 

Now, pursuant to the laws and regulations, almost everything in 

the U.S. economy needs a license and individual authorization to 

go to Cuba, and there is currently a general policy of denial for 

most items going to Cuba under the existing embargo. Notwithstanding the general policy of denial, however, in 2008, we at BIS 

processed 358 applications for licenses to export to Cuba. And of 

those 358 applications, 235 were approved, 114 were returned 

without action, and 8–9 were denied. The total dollar value of those 

approved licenses was about $11⁄2 billion. 

And in addition to those individual licenses, we also processed 

151 notices of agricultural exports to Cuba. This is a particular license exception we have implemented pursuant to the Trade Sanctions Reform Act, or TSRA, as we call it. Of those 151 that we processed last year, 143 were approved, and they were worth about 

$3.2 billion, and the remaining 8 were returned without action. So 

those were the authorizations that we at BIS authorized individually and under the TSRA exemption. 

One other thing I would point out is that these authorizations in- clude about $95 million of exports that we authorized in the last 


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quarter of 2008 for hurricane relief specifically, and we did those 

in an average processing time of 5 days, which, as you can imagine 

in a government bureaucracy, is quite fast. 

Mr. RUSH. I am quite impressed. 

Mr. BORMAN. Now we are worried about the pending revisions to 

our regulations at BIS, based on the President’s announcement. As 

Mr. Bastian noted, the President directed the Secretary of Commerce in particular to further expand the scope of the license exception; that is, the general authorization regarding gifts, gift parcels to Cuba. A wider variety of items will become available to be 

included in the gift parcels. The dollar value for the gift parcels 

will go up from $400 to $800. And the universe of recipients will 

be expanded, although there will still be no gift parcels permitted 

to either high government officials, Communist Party members, or 

institutions or organizations controlled by either the government or 

the party. 

We will also establish a new license exception for consumer communications devices, cell phones, satellite phones, personal digital 

assistance, digital camera, again to further the free flow of information between the United States and the Cuban people and 

among the Cuban people. 

And the last change that we will implement as a result of the 

President’s decision is to lift the personal baggage limitation. Currently there is a limit of 44 pounds per person to take with them 

to Cuba. When we finalize our regulation implementing the President’s directive, that limitation will be removed. So that is what we 

are doing to implement the President’s directive. 

In conclusion, I would just say again that what we do is largely 

governed by statute as well as regulations, and we continue to 

work with our interagency partners, principally the State Department, in this area to implement the President’s directive to meet 

the basic human needs of the Cuban people and facilitate contacts 

between the American people and the Cuban people. 

And with that I conclude my oral statement, and also I am happy 

to answer questions. 

[The prepared statement of Mr. Borman follows:] 


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Mr. RUSH. The Chair thanks the gentleman, and indeed the 

Chair thanks both of the witnesses for their fine statements. 

The Chair now recognizes himself for 5 minutes for the purposes 

of questioning these witnesses. 

Because of Cuba’s—let me restart that. Because of the U.S.’s unilateral embargo, we sometimes assume Cuba’s economy is cut off 

from the world. That has certainly not been the case, from my understanding. Investors from all over the world are offering joint 

ventures in Cuba. Countries like Venezuela, Brazil, China, Vietnam extend credit to Cuba. And indeed, a Spanish company is 

leading an effort to drill for oil in Cuba’s territorial waters this 

year, if I am not mistaken. And I believe that the American companies should be afforded the same investment opportunities in Cuba. 

Let me ask both of the witnesses, what do you foresee happening 

if the U.S. normalizes its trade relations with Cuba? Can you indicate what markets would be ripe for entry in the U.S.—for the 

U.S.? What markets are there that American companies might be 

able to penetrate most readily and most thoroughly if, in fact, we 

were to normalize trade relationships? 

Mr. Bastian, would you please begin? 

Mr. BASTIAN. Thank you, Mr. Chairman. 

As you might imagine, we don’t have an awful lot of information 

on the specific needs of Cuba insofar as business is concerned. We 

don’t share information with our trading partners, other trading 

partners, principally because we don’t trade with Cuba to begin 

with. But I think it is a pretty safe assumption to say that in the 

areas of infrastructure, I think we have already covered as an example briefly telecommunication. But I think if you took a look at 

general infrastructure, transportation equipment, port-handling 

equipment, things of that nature, ports, railroads, airplanes, things 

of that nature, they could offer some significant, probably, opportunity to U.S. business, certainly things that we would be taking 

a look at. 

But keep in mind also that at the moment we do—we are the 

fifth largest supplier to Cuba of product; not manufactured goods 

necessarily, except maybe some in the medical field, but basically 

agricultural goods. But I think if we took a look initially at those 

sectors, how do you move goods across the island to reach the 

Cuban people, I think those would be essential to look at. 

Mr. RUSH. Mr. Borman. 

Mr. BORMAN. In addition to what Mr. Bastian said, I think based 

on the data available to us, some of the other areas that would 

have some potential would be food processing, handling distribution. And as he said, in the medical area last year we licensed 

about 47 individual transactions for medical sales to Cuba worth 

about $64 million. So I think that would be another area. 

Mr. RUSH. Do you have an estimate for the lost business opportunities that have occurred as a result of the embargo? How many 

U.S.—how many business opportunities has U.S. companies lost as 

a result of the embargo? Have you got an estimate? 

Mr. BASTIAN. Mr. Chairman, I think the really short answer is 

no, we don’t. Again, we clearly are not approached by U.S. companies that are—you know, that said, I could have sold so much to 

Cuba that we have not gotten. So I think you could probably take 


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a look at maybe—there was a really old study done, I think, by the 

ITC back in about—I think around 2001, in that timeframe there. 

But the data, of course, in that case is 8 years old, but it might 

give you an indication. But beyond that, I am not aware of any information that is out there that talks about sales foregone. 

Mr. RUSH. OK. Mr. Borman. 

Mr. BORMAN. I don’t have any other information on that, Mr. 

Chairman. 

Mr. RUSH. All right. If the embargo were lifted, what do you believe would be the impact in Cuba when the Cuban people see a 

difference in their daily lives if the Cuban Government still controls the distribution of goods? And secondly, how can we be assured that the Cuban Government will grant the appropriate licenses and other authorizations to American companies to do business? Do you have any information? Can you help us along with— 

in answering those questions? Mr. Bastian? 

Mr. BASTIAN. Thank you, Mr. Chairman. 

Speculation is very difficult and sometimes a pretty dangerous 

thing to get into, but I think it did mention something that is absolutely key, and that is this is a two-way street. The President, as 

an example, has announced some measures, is interested in pursuing those, and what we need to do is find basically a partner for 

that dance that will make—show a willingness to continue this 

course of action. I think that would probably be my response. 

Mr. BORMAN. The only thing I would add to that, obviously a lot 

of the impact would be dependent upon the funds available to the 

Cuban people to actually purchase U.S. goods on a commercial 

basis. So that is a bit unknown at this point. 

Mr. RUSH. OK. My time is up. And now I will yield for the purposes of questioning 5 minutes to the Ranking Member. 

Mr. RADANOVICH. Thank you, Mr. Chairman. 

And again, welcome to the subcommittee. 

Mr. Bastian, I wanted to—I just noticed in your testimony on the 

amount of agricultural exports that occurred in trade between the 

U.S. and Cuba in 2008 was $700 million. Can you give me an idea 

how much that might be—that amount might be due to an increase 

in commodity prices? As you will recall, last year some of those export prices were rather high. 

Mr. BASTIAN. I don’t have the exact number off the top of my 

head. I will get it for you. But I think that you are absolutely right, 

because it was a significant jump in dollar amount over the last 

couple of years, due in large measure to commodity prices. 

Mr. RADANOVICH. If there were a way to get the information to 

the committee to measure increase in exports in something other 

than dollars—— 

Mr. BASTIAN. I understand, sir. We will get that back to you. 

Mr. RADANOVICH. All right. Thank you. 

Also, the Castro regime confiscated many businesses and took intellectual properties such as trademarks when they took over 

power, and claim they now—claim that they now own those properties. How does the U.S. address trade policy with countries that 

don’t honor property rights? 

Mr. BASTIAN. I do believe that that is a question that really does 

need to be directed to State Department on that. 


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If I might, you do bring an interesting point, which is lifting the 

restrictions on Cuba on trade is part of what needs to be done. I 

think the other part of the things you referred to, I think you mentioned in the beginning an interest in nontariff barriers, and I 

think there is a whole host of issues that we need to take a look 

at if we are going to get the maximum benefit for U.S. companies. 

Mr. RADANOVICH. Perhaps you can ask this. I would like to ask 

it. How should we deal with Cuba regarding our companies’ intellectual property, given the profits Cuba has made selling confiscated property of former Cuban companies, usually in the form 

of rum or cigars? 

Mr. BASTIAN. I think we would have to take a real hard look at 

that. And these are some of the issues, among others, that we 

would have to take a look at and get resolution to it, I think, before 

we can move forward. 

It also brings up the whole question of intellectual property, 

about the security for, you know, potential future investors in the 

island. There are a host of issues that we need to take a look at, 

the ones that you deal with. 

Mr. RADANOVICH. Thank you, Mr. Bastian. 

Mr. Borman, the BIS is working on a regulatory change to implement the directive to permit license exemptions for donations of 

personal communications devices to Cuban citizens, but not to the 

Cuban Government. How can we ensure that the donations are not 

confiscated or redirected to the government? 

Mr. BORMAN. Well, that really will depend on the knowledge people have of the individuals getting it and then various ways of feedback we have. You know, we don’t have a way to go and necessarily 

check on the individual items once they are there, but there are a 

variety of other information sources we have that will help us assess that. 

Mr. RADANOVICH. OK. Have you defined what a personal communications device is? 

Mr. BORMAN. Yes. It is something that is really a retail sale. So, 

as I mentioned, it is things like personal digital assistance, mobile 

phone, satellite phones, laptop, desktop computers, digital cameras. 

Certainly nothing above a personal consumer level, nothing that 

businesses or governments would really use in any significant way. 

Mr. RADANOVICH. OK. About one-third of license applications 

that you received in 2008 were returned without action. Why were 

the applications returned? 

Mr. BORMAN. For one of two reasons. In some cases the licenses 

were not actually needed. There is a narrow strata of items like agricultural exports that we don’t need an individual license. And the 

other group would be ones that there are simply not enough information on. So, for example, the license application, there is just not 

enough information on the proposed end user in Cuba for the U.S. 

Government to make an informed decision. And so we return that 

saying essentially you can’t ship unless you come in and give us 

more information. 

Mr. RADANOVICH. Mr. Bastian, one last question. As long as the 

embargo is the official U.S. policy, where do the companies that are 

permitted to export agriculture and medical products receive export 

assistance? 


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Mr. BASTIAN. They don’t. We are talking about sales of agricultural commodities, which is basically cash in advance from Cuba. 

Mr. RADANOVICH. Thank you very much. 

I yield back the balance of my time. 

Mr. RUSH. The Chair thanks the gentleman. 

The Chair now recognizes the gentleman from Maryland Mr. 

Sarbanes for 5 minutes. 

Mr. SARBANES. Thank you, Mr. Chairman. 

Mr. RUSH. We will allow you 5 minutes. 

Mr. SARBANES. Thank you. 

I guess the U.S. embargo is the most restrictive trade embargo 

on Cuba in the world, right? 

Mr. BORMAN. Well, we do have fairly restrictive trade policies in 

some other countries, Iran, Syria, North Korea. 

Mr. SARBANES. No, but, I mean, there is no other country in 

terms of imposing an embargo against Cuba that comes near to 

what—— 

Mr. BORMAN. Compared to other countries. 

Mr. SARBANES. Right. 

What is the next most restrictive trade policy imposed on Cuba 

by another country that you would—is there any—— 

Mr. BASTIAN. I don’t know. 

Mr. SARBANES. OK. 

Mr. BORMAN. Yes, I am not aware of what other countries’ policies are. 

Mr. SARBANES. We have talked about this distinction between 

the government and the people and steps that can be taken to try 

to ease some of the—or promote more interaction with the people 

of Cuba as opposed to with the government, which is tricky. It is 

tricky when we try to make that distinction in a lot of places, and 

I can think of a number of other examples. But are there—and 

some of this has to do with just allowing dollars and resources to 

flow straight to residents of Cuba. But are there—is there any kind 

of NGO infrastructure or other ways of getting resources to the 

people as opposed to the government? And after you comment on 

that, could you describe the impediments that the government 

might present to having that happen? 

Mr. BORMAN. Well, certainly on the NGO side there are some 

NGOs that have a fairly established track record of operating with 

Cuba. In fact, particularly on the medical side, the medical donations we authorize are really through those organizations. 

And I suppose there is always a possibility that the government 

will decide to do things differently, but I think there is enough information flow in and out of Cuba that it will be fairly apparent 

if the government decides to do things in a more restrictive way 

than they are currently doing in terms of letting those NGOs receive things from donors in the U.S. and distribute them directly 

to the people. 

Mr. SARBANES. Are there restrictions on the NGO activity that 

you know of now that exists, that where if they ease those, that 

would be kind of the leading indicator that the government is dealing in a different way with that kind of humanitarian assistance 

and other assistance? 


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Mr. BORMAN. That I don’t have an answer to, but we can check 

on that and get back to you on that. 

Mr. SARBANES. OK. I appreciate it. 

And the steps that the President took or asked people to take 

just recently in terms of lifting certain restrictions, are any of those 

ones that had been eased in the past and then tightened again, or 

would you view them all as new in either kind or degree? 

Mr. BORMAN. On the gift parcels and the baggage, those were effectively changes to tightenings that were made in the previous administration. The donations of consumer communication devices, 

that is a new license exception. 

Mr. SARBANES. OK. Thank you. 

I yield back my time. 

Mr. RUSH. The Chair thanks the gentleman. 

Now the Chair recognizes the gentleman from Georgia Dr. 

Gingrey for 5 minutes. 

Dr. GINGREY. Mr. Chairman, I thank you. 

You know, we are going to hear from the second panel in a few 

minutes, and I was just reading the testimony from the United 

States Chamber of Commerce, and a statement is made, and their 

conclusion, regarding the embargo that has been going on for the 

past 50 years: Instead of isolating Cuba from the rest of the world, 

it has isolated the United States from our allies. The Cuban dictatorship could never have withstood five decades of free trade, free 

markets and free enterprise. That is a conjecture and stated pretty 

strongly. 

I also want, Mr. Chairman, to read a recent—or from a recent 

press release that the Diaz-Balart brothers, Lincoln and Mario, 

who represent the Cuban American community mainly in and 

around Miami. And they were talking about something that President Obama said during his inaugural address on January 20th. 

And let me quote from President Obama: To those who cling to 

power through corruption and deceit and the silencing of dissent, 

know that you are on the wrong side of history, but that we will 

extend a hand if you are willing to unclench the fist. And that ends 

the quote. 

The United States policy of state says, the liberation of all political prisoners, the legalization of all political parties, independent 

labor unions and the press, and the scheduling of free internationally supervised elections is what we treasure in the United States 

law in regard to dealing with a country like Cuba. 

Let me ask Mr. Bastian first. The Castro regime confiscated 

many businesses and their intellectual properties, such as trademarks, when they took over power and claim they now own those 

properties. Now, for those who would say, well, we are trading with 

China, and this is a Communist regime, I don’t know that China 

has ever taken over or confiscated any American property, U.S. 

property, and done what Cuba did shortly after the Castros took 

over. 

How does the United States address trade policy with countries 

that do not honor property rights? How should we deal with Cuba 

regarding our companies’ intellectual property given the profits 

Cuba has made selling confiscated property of former Cuban companies? 


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Mr. Bastian. 

Mr. BASTIAN. Thank you, Congressman. 

I think this is something that we tried to refer to earlier, and 

these are some of the issues that we absolutely need to get resolved. And we are familiar with the issues or the specific examples, I think, that you were alluding to. So these are the type of 

issues—I think this is what—it is quite a step. It is a long step 

from saying, OK, we are going to do this, we are going to establish 

these commercial relations with Cuba and make it reciprocal, and 

then clean up a lot of these issues we have to deal with and a lot 

of pressure to do that. 

Dr. GINGREY. Obviously it is complicated. 

Let me quickly ask Mr. Borman, BIS is working on a regulatory 

change to implement the directive to permit license exceptions for 

donations of personal communication devices to Cuban citizens, but 

not to the Cuban Government. How do we ensure that those donations are not confiscated or redirected to the government? Why do 

they fall under the personal communication device definition? 

Mr. BORMAN. Well, again, because these will be donated often by 

relatives, I think. It will become very quickly apparent if the 

Cuban Government changes its current policy and starts confiscating these types of things from individuals, and we have the 

flexibility in our regulatory scheme to change that if it turned out 

that was the case. 

Dr. GINGREY. Well, I am about to run out of my time, Mr. Chairman, but I would just say that I agree with President Obama and 

the statement that he made at his inauguration. We need to see 

an unclenched fist, and I don’t think that we are seeing that. And 

this business of saying, well, we are the only country; all the other 

Western Hemispheric countries are trading and getting this economic advantage by trading with Cuba. That is trying to say, well, 

the end justifies the means. And, you know, I think we have got 

a matter of principle here, and I do agree with the Diaz-Balart 

brothers and Ileana Ros-Lehtinen and others who represent Cuban 

Americans who suffered and their families who continue to suffer 

under this brutal Communist dictatorship 90 miles from our shore. 

Mr. RUSH. The Chair thanks the gentleman. 

And the Chair now recognizes the gentlelady from Florida Ms. 

Castor for 5 minutes of questioning of the witness. 

Ms. CASTOR. Thank you, Mr. Chairman. Thank you very much 

for holding this very timely hearing, and thanks for—thanks to our 

witnessing for appearing today. 

I represent the Tampa Bay area in Florida. My hometown of 

Tampa has extensive historic family and economic ties to Cuba. 

Prior to the revolution, there was very robust trade and travel. 

There were ferries that ran from the port of Tampa to Cuba. Cattle 

shipments left the port of Tampa, and many other agricultural 

products. So the Tampa area has a great interest in modernizing 

the relationship, and President Obama’s announcement was greeted with great enthusiasm by Cuban American families in my hometown and across the State. 

Travel agents now are absolutely overwhelmed. They don’t 

know—they can’t keep up with the requests from family members 

to travel, and the bureaucratic barrier that was previously in place 


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was really a shame. My office deals with these—the family travel 

requests on a routine basis, and the stories of dying grandparents, 

where family members now would like to go see them—I had one 

case of a bone marrow transplant. The only—the sister was in the 

United States; the brother was there. She was the only match, and 

she had to go through all these bureaucratic hurdles to get there. 

But there is another bureaucratic hurdle in place now, and I 

hope that you all can help. Currently there are only three airports 

in the United States that can—that are permitted to service charter flights or any air flight—any air travel: Miami, New York and 

L.A. Meanwhile, central Florida probably has the highest population of Cuban Americans outside Miami. And we have requested 

the Treasury and Commerce to help us quickly with getting another airport, Tampa International or some of the others, approved 

on an expeditious basis. Can you help? 

I know this is an OFAC issue, but it seems to be directly consistent with President Obama’s direction. The problem is that these 

families really shouldn’t be subjected to a longer waiting period or 

additional cost having to travel to Miami just to get to the island. 

Mr. BORMAN. We are in receipt of your letter to Secretary Locke. 

And after looking at it, it has become apparent to us that it is really the Department of Homeland Security Customs and Border Protection Unit that has the principal responsibilities. So we have already reached out to them and made them aware. 

Ms. CASTOR. That is very interesting, because we have talked to 

the Department of Homeland Security, and they said, no, this is 

Treasury. And they—you know, this is—the people hate this about 

government, you know, passing the buck. Where do we need to— 

where do we need to go to get this taken care of? I am asking for 

your help as these families wait in line to try to see their family 

members. 

Mr. BORMAN. As I said, in looking at the response that we have 

developed to the letter, it has become clear to us it is DHS. But 

we will take the responsibility of making sure the right agency 

comes back to you with that question and deals with that issue. 

Ms. CASTOR. Don’t you agree, this is consistent with President 

Obama’s direction, and it doesn’t make a lot of sense to just have 

L.A., New York and Miami where—when we have other cities 

across the country that are ready, willing and able to handle travel. 

Yes, I will take the nodding. 

Mr. BASTIAN. Yes. Let me just—we will take a look at it. Keep 

in mind particularly that we have one of your Tampa sons, assuming everything goes well up here, will be Under Secretary, who will 

show you fervor and zeal in getting this resolved. 

Ms. CASTOR. That is right. Mr. Chairman, a native son of Tampa 

has been nominated to serve as the Under Secretary of Commerce 

for International Trade, Frank Sanchez. He is outstanding. And I 

look forward to an opportunity for you two to get together. 

Mr. RUSH. Thank you very much. I look forward to the same opportunity. 

Ms. CASTOR. Thank you very much. 

I will yield back. 

Mr. RUSH. The Chair now entertains—well, the Chair will now— 

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nize a second round of questioning. We will give each Member an 

additional 3 minutes to ask a question. So in that regard, the Chair 

recognizes himself for 3 minutes. 

Are either of you familiar with the report that was issued by the 

Ranking Member of the Committee on Foreign Relations, Senator 

Lugar, Richard Lugar, the Ranking Republican Member? Are any 

of you familiar with that report? 

Mr. BORMAN. I read it. 

Mr. RUSH. You read it? OK. And are you familiar with his comments and conclusions on this report on page 11? Now, I am going 

to read it just for reference here: In hindsight, the U.S. embargo 

has not served our national security agenda since Cuba seems to 

be an effective threat to the security of the United States. In the 

immediate post-Cold War era, the cost of maintaining this policy 

was negligible compared to the domestic political benefit derived 

from satisfying Cuban American groups in the U.S. The U.S. justified the embargo policy as an incentive or inducement for negotiation with the Cuban Government, the rationale being that the U.S. 

would lift the embargo or parts of it in response to reform on 

human rights and democracy. This narrow approach, however, will 

not further—has not furthered progress in human rights or democracy in Cuba, and it has come at the expense of other direct and 

regional strategic U.S. interests. 

Today it is clear that a reform of our policy would serve security 

and economic interests in managing migration effectively, in combating the illegal drug trade, among other issues. And it goes on 

and on and on. And I want to ask unanimous consent that Senator 

Lugar’s report of February 23, 2009, be entered into the record. 

Without objection, so ordered. 

[The information was unavailable at the time of printing.] 

Mr. RUSH. Do you have any response to the Lugar report, Mr. 

Borman? Have you had a chance to see it? What are some of your 

commentary, your reactions to that report? 

Mr. BORMAN. Well, I have read it. I have to say that I don’t have 

any commentary on it. I think this is something that the folks in 

the administration that are looking at Cuba policy at large would 

be looking at in conjunction with a variety of other inputs on the 

Cuba policy. But we at the Department of Commerce have not been 

specifically tasked to review that and come up with a response. 

Mr. RUSH. Mr. Bastian, the ITC Administrator is an advocate for 

U.S. businesses all over the world. In your experience, what sort 

of protections and assurances do people expect from the U.S. Government while operating overseas? And should American companies expect the same sort of support if and when they do business 

with Cuba? 

Mr. BASTIAN. Mr. Chairman, the International Trade Administration, particularly through our U.S. and Foreign Commercial 

Service where we have a network of over 100 offices across the 

United States and about that same number, I think, overseas, 

abroad, provides a number of services for the information gathering, putting buyers and sellers together, finding agents and representatives for U.S. firms. These are all services which we would 

certainly have—would make available to U.S. companies, you 

know, should the situation change, keeping in mind that at the moVerDate Mar 15 2010 04:32 May 08, 2012 Jkt 072881 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 E:\HR\OC\A881.XXX A881

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ment the embargo precludes us from doing anything with the U.S. 

business community insofar as Cuba is concerned. But we do have 

the ability to react and react quickly to changing situations, whether it is something that comes about as a change in an economic situation or political situation, or a natural disaster, reacting to hurricane destruction and things of that nature. Yes, we can do that 

pretty quickly. 

Mr. RUSH. The Chair has run out of time. The Chair now recognizes the ranking member, Mr. Radanovich, for 3 minutes. 

Mr. RADANOVICH. Thank you, Mr. Chairman. I’ve got one question for either member of the panel regarding business in Cuba. 

There was testimony that will be given during this committee 

hearing of 500 international companies represented in Cuba, and 

many with substantial investment there. However, according to the 

State Department, the business environment is so unfriendly that 

the number of joint ventures dropped from 540 in 1982 to 287 in 

2005. Because of the government’s recentralization efforts, it is estimated that one joint venture and two small cooperative production ventures have closed each week since the year 2000; and foreign domestic investment dropped from 448 million in the year 

2000 to 39 million in 2001 and to zero in 2002. 

Are these 500 international companies independently owned or 

are they joint ventures? If they are joint ventures, why the difference between the State Department figures and your testimony—not your testimony, but the testimony that we’ve heard before the committee? 

Maybe you can comment on, does the business climate work in 

Cuba for companies, international companies, that are doing business there? 

Mr. BASTIAN. A lot of the information that we have is anecdotal, 

as I mentioned before, because we don’t go out and collect information on Cuba, and we don’t spend terribly much time talking to colleagues in other governments about their companies’ experiences. 

We usually have other things we want to talk to them about. 

But anecdotally, I think the answer is, it’s not the easiest place 

in the world to do business. And we are aware of whether the joint 

ventures are a direct investment—but everything is a joint venture 

of some sort—that have failed, where the foreign partner certainly—what you got going in is not what you expected to find. So 

there is a lot of that. 

Again, not to beat that horse to death, but it goes back to the 

kinds of issues that you’re interested in, the nontariff types of obstacles that exist. 

Mr. RADANOVICH. Thank you, Mr. Bastian. 

Mr. Borman, anything to add? 

Mr. BORMAN. No, I don’t have anything to add. 

Mr. RADANOVICH. All right. Thank you very much. 

Thank you, Mr. Chairman. 

Mr. RUSH. The Chair now recognizes Ms. Castor for 3 minutes. 

Ms. CASTOR. Thank you, Mr. Chairman. 

Gentlemen, President Obama’s announcement and the White 

House document that followed were very specific when it came to 

telecom companies, any telecom company in this country. What 

should they be doing now to investigate economic opportunities? 


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Mr. BASTIAN. We haven’t had any reaction from the Cuban Government yet on what’s happening. I’ll tell you, quite honestly, I’ve 

had—if you had asked me this question Friday at 3:00, I would 

have said, no company has called me on this yet. 

To give you an indication, at about 3:05 I did get my first phone 

call. And they weren’t as interested in the specific opportunity or 

condition of the market as they were in what’s just the general 

likelihood that this will happen at some point in time. And I think 

you will probably find that there are a number of companies that 

have already got some market research that they’ve collected 

through other sources, most of them outside the United States. 

Ms. CASTOR. I’ve been contacted as well, and just, people want 

to understand the process. 

Mr. BASTIAN. That’s absolutely right. 

Ms. CASTOR. So right now we’re waiting to see what the next 

step from the Cuban Government is; is that correct? 

Mr. BASTIAN. Yes, ma’am. 

Ms. CASTOR. There’s no organized effort at commerce. There 

might be, maybe our next panel would have some information on 

that, but as of right now, Commerce doesn’t have a strategy, but 

telecom companies should stay tuned. 

Mr. BORMAN. Well, no, they can contact us on our part because 

we can tell them about what specific licensing requirements would 

be and how to coordinate that with Treasury. Because, again, for 

us, if they are looking at opportunities that would involve the export of hardware or software or technology, that’s what’s covered 

by us. The financial arrangement part of it would be covered by 

Treasury. 

But that’s what we can tell them about, how we would deal with 

an application for some kind of transaction. As Mr. Bastian said, 

the other part is what the Cuban Government will do, because 

somehow all the telecom providers will have to deal in some way 

with the Cuban Government. 

But they should contact us. 

Ms. CASTOR. Thank you very much. 

I yield back. 

Mr. RUSH. Dr. Gingrey is recognized for 3 minutes. 

Dr. GINGREY. Thank you, Mr. Chairman. As we’ve heard in the 

testimony and some of the questioning in regard to opening up 

trade to Cuba, more so than we currently have done and that it 

would maybe increase human rights and be more effective than the 

embargo has been, and yet we have negotiated a trade agreement 

with Colombia, a country not too terribly far from Cuba, that is 

working very closely with us. 

I think it’s a fair statement to say that President Uribe is a 

friend of the United States and has done an outstanding job in 

dealing with the FARC, trying to abide by every request that our 

Congress has made regarding labor relations; and I think they’ve 

made great progress. 

And yet here we’ve been sitting on a trade agreement, bilateral 

trade agreement with Colombia for over 2 years. And it’s not just 

about trade and the importance of having that bilateral relationship and open our markets to them and theirs to us, but it’s a huge 

security issue. And why we would take our eye off that ball and 


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all of a sudden focus it on Cuba, where we don’t have a friend in 

the Castros and the amount of trade we’re talking about I don’t 

think compares to Colombia? 

I would love to hear both of your thoughts in regard to that. Why 

take our eye off the main issue in regard to dealing and ratifying 

that bilateral trade agreement with Colombia and focus on Cuba? 

Maybe we can walk and chew gum at the same time, but go ahead 

and comment on that. I would appreciate it. 

Mr. BASTIAN. I think the issues are—maybe at first blush they 

appear to be somewhat similar, but I don’t think they are. I think 

there are huge emotional issues, political issues and social issues, 

when you come to deal with Cuba. In particular, I think, on the 

emotional and political side the issues are different than they are 

with Colombia. 

I do agree with you that President Uribe has made excellent 

strides and tried to get that agreement through and to try to accommodate the United States. I think it’s clearly a discussion, 

though, that will be held between Uribe’s administration, the President himself, because he does get involved—by that, I mean President Uribe because he does personally get involved in these—and 

Ambassador Kirk at the U.S. Trade Representative’s Office to move 

this ahead. 

Dr. GINGREY. Mr. Borman? 

Mr. BORMAN. Trade agreements are really in Mr. Bastian’s bailiwick, so I have nothing to add to his comments. 

Dr. GINGREY. Thank you, Mr. Borman. 

Mr. Chairman, I yield back. Thank you. 

Mr. RUSH. The Chair thanks the gentleman. 

The Chair now wants to again thank the witnesses for appearing 

before us today. You have, with your narrow perspective—and I do 

respect the fact that your perspective had to be narrow because it 

could not enter into policy areas, which are not your purview and 

have not been clearly defined by the Obama administration as yet. 

So I certainly appreciate your being with us to give us this narrow perspective as it relates to your jurisdiction. 

We want to again thank you so much for being a part of this subcommittee hearing; and we ask now that the panel, first panel, be 

dismissed. And thank you so very much. 

Mr. BORMAN. Thank you, Mr. Chairman. 

Mr. RUSH. The Chair now calls the second panel to the desk. It 

is my pleasure to introduce the outstanding witnesses on this second panel. And to my left, your right, we have with us Ms. Adrean 

Scheid, is that correct, Rothkopf. Ms. Rothkopf is the Vice President of the Western Hemisphere Affairs Division of the U.S. Chamber of Commerce. 

And next to Ms. Rothkopf we have with us Mr. Geoff Thale, who 

is the Program Director for the Washington Office on Latin America. 

And next to Mr. Thale is Mr. Kirby Jones. Mr. Jones is the President of the U.S.-Cuba Trade Association. 

And next to Mr. Jones, to his right—left, rather—would be Ambassador James Cason. Ambassador Cason is the President of the 

Center for a Free Cuba, and he’s the former Principal of the Chief 

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come all of you witnesses. And it is the practice of this subcommittee, a new practice I might add, to swear in the witnesses, 

so I would ask that you stand and raise your right hand. 

[Witnesses sworn.] 

Mr. RUSH. Please let the record reflect that all witnesses have 

answered in the affirmative and have taken their seats. 

STATEMENTS OF ADREAN SCHEID ROTHKOPF, VICE PRESIDENT, WESTERN HEMISPHERE AFFAIRS, U.S. CHAMBER OF 

COMMERCE; GEOFF THALE, PROGRAM DIRECTOR, WASHINGTON OFFICE ON LATIN AMERICA; KIRBY JONES, PRESIDENT, U.S.-CUBA TRADE ASSOCIATION, AND PRESIDENT, 

ALAMAR ASSOCIATES; AND AMBASSADOR JAMES C. CASON, 

PRESIDENT, CENTER FOR A FREE CUBA 

Mr. RUSH. We will allow you 5 minutes for the purposes of opening statements, and we’ll begin with you, Mrs. Rothkopf. 

STATEMENT OF ADREAN SCHEID ROTHKOPF 

Ms. ROTHKOPF. Thank you, Chairman Rush, Ranking Member 

Radanovich and members of the subcommittee. I greatly appreciate 

the opportunity to speak to you today. My name is Adrean 

Rothkopf, and I am Vice President for Western Hemisphere Affairs. 

We applaud the recent moves by both Congress and the Obama 

administration to ease the embargo on Cuba. The Chamber sees recent bipartisan legislation and statements by the administration as 

important first steps toward a policy more likely to promote a transition to democracy and full civil liberties in Cuba and to bring significant economic opportunities to American farmers, businesses 

and workers. 

While ultimately what we would like to see is an end to the embargo, which we view as one of the biggest foreign policy failures 

of the past half century, rather than encouraging Cuba to democratize, the embargo has helped prop up the Communist regime. Instead of isolating Cuba from the rest of the world, it has isolated 

the United States from our allies. 

Our two countries are natural trading partners, and prior to the 

embargo the United States accounted for nearly 70 percent of 

Cuba’s international trade. Cuba was the seventh largest market 

for U.S. exporters, particularly for American farm producers, but 

the embargo forced Cuba to seek out new sources for its domestic 

consumption. 

Under the Trade Sanctions Reform and Export Enhancement Act 

of 2000, the sale of commercial agricultural exports was permitted, 

but with a variety of restrictions and licensing requirements, including cash-in-advance payments via third-country banks. Despite 

heavy regulation, by 2004, U.S. agricultural exports to Cuba rose 

from less than 1 million to 392 million, 42 percent of the Cuban 

market. 

In 2008, U.S. exports to Cuba reached 718 million, yet the majority of agricultural trade with Cuba is done by large multinational 

companies as small- and medium-size exporters are deterred by the 

complexity of regulations. Other negative impacts on food and agricultural exports include restrictions on the ability to travel for the 

purpose of establishing commercial relationships and restrictions 


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on visits from Cuban officials to confer with U.S. suppliers, inspect 

facilities and discuss sanitary and phytosanitary issues. 

In 2001, the International Trade Commission estimated that the 

embargo costs U.S. exporters up to $1.2 billion annually in lost 

sales. While the U.S. Chamber recommends that an updated study 

be conducted to fully evaluate the missed opportunities, it is clear 

that these include agriculture. The ICC estimates that if all restrictions on trade and travel are lifted, sales of poultry, beef and pork 

could rise by 25.7 to 37.8 million. 

Additionally, Cuba has the potential to become the top foreign 

market for U.S. rice. A Congressional Research Service study estimates that removing restrictions on trade would increase rice exports by 14 to 43 million. 

Tourism: Lifting the travel ban will create jobs in the U.S. and 

Cuban tourism industries and will have an impact on direct investment in tourism infrastructure, such as hotels, shops, cruise ship 

ports, airports. The ICC estimates that lifting the travel ban would 

increase U.S. Visitors to Cuba from 171,000 in 2005 to between 

554,000 and 1.1 million. Additional tourist arrivals would increase 

U.S. Sales of agricultural goods to the island because of the increased tourist demand for food and because of higher Cuban economic growth, boosting domestic demand for high-quality U.S. food 

products. 

Machinery: As Cuba rebuilds after widespread hurricane and 

tropical storm damage in 2008, the island is an important potential 

market for construction equipment and agricultural machinery. Additionally, Cuba has a dilapidated infrastructure system. An eventual opening or reform of the Cuban economy will create opportunities for U.S.-made equipment to rebuild the island’s infrastructure. 

Oil: There is a natural need for U.S. oil companies to participate 

in the exploration of Cuban offshore oil fields. Subsurface similarities with existing oil fields in the U.S. Gulf of Mexico would allow 

U.S. companies that have experience in the Gulf to mitigate complicated technical challenges in local deepwater development, leading to cost, environmental and safety efficiencies. 

Additionally, Cuba’s proximity to the U.S. allows for a transportation cost premium for the U.S. market that would serve to moderate energy prices to the United States. At the same time, with 

Cuba’s maritime boundary just 45 miles away from the U.S. coastline, we ought to be concerned about who and how Cuba’s oil fields 

are being developed from an environmental standpoint, as an oil 

spill could mean significant environmental damage for the United 

States. 

We believe that opening trade with Cuba will bring political and 

economic change to the island, but establishing a commercial relationship will certainly raise legitimate business concerns on the 

part of U.S. companies. The Cuban Government will have to provide certain guarantees and safeguards in the areas of rule of law, 

environmental protection, infrastructure for travel requirements, 

the safety environment, intellectual property protection and incentives for innovation and labor rights. 

Additionally, there are important considerations regarding financing. However, these concerns should not impede a lifting of 


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trade restrictions with Cuba. U.S. businesses can quickly and easily benefit from open trade. 

Thank you very much. 

Mr. RUSH. Thank you very much. 

[The prepared statement of Ms. Rothkopf follows:] 


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Mr. RUSH. Now the Chair recognizes Mr. Thale for 5 minutes. 

STATEMENT OF GEOFF THALE 

Mr. THALE. Thank you, Mr. Chairman. I’m Geoff Thale, the Program Director of the Washington Office in Latin America. WOLA 

is a human rights organization, and we look at Latin American policy and the Cuba policy from the perspective of human rights. I’ve 

submitted written testimony, but here I would just like to briefly 

summarize it. 

What I would like to do is talk a little bit about whether, from 

our point of view, trade can contribute to improving the human 

rights situation in Cuba, and if so, how. And I would like to end 

by reiterating what I think you will hear from some of my other 

colleagues here about the trade opportunities and investment opportunities we’re losing. 

As an organization, as an institution, we don’t believe that trade 

by itself in Cuba or anywhere else automatically brings gains and 

increases in democracy and human rights. But when trade is part 

of a broader strategy that includes diplomatic and political engagement on human rights issues and when they are internal and domestic pressures for the respect of human rights, then there are 

possibilities to see improvements in the human rights situation. 

In the case of Cuba, we believe strongly that increased trade, increased travel and engagement can only benefit the human rights 

situation in Cuba and bring benefits to the United States as well. 

Let me just say a word about the human rights situation itself. 

It’s easy—it’s very tempting to view the human rights situation in 

Cuba from sort of stereotypical points of view. It’s extremely important not to whitewash the very serious and very real problems. It’s 

important not to exaggerate them as well. I think it’s really clear, 

if you look at the State Department’s human rights reports, there 

are real restrictions on the freedom of association, on freedom of 

speech. It’s very clear that Cuba holds between 100 and 200 political prisoners, depending on how you count it. 

These are all clearly unacceptable violations of internationally 

recognized norms. The U.S. Government should call on the Cubans 

to end that, the human rights community should, the international 

community should generally. 

At the same time, we look at human rights in the rest of Latin 

America. And if you look further at those same State Department 

reports, you won’t see reports of political killings in Cuba or political disappearances or extrajudicial executions, which we see elsewhere in the region; and you won’t see systematic accusations of 

torture, which is obviously an issue we have looked at in the Guantanamo context here. So I think, from our point of view, it’s important to see the mixed bag you see in Cuba on human rights situations. 

If you ask about the United States’ ability to influence the 

human rights situation in Cuba itself, I think, from our point of 

view, our ability is nonexistent. We’ve had 50 years of an embargo—almost 50 years of an embargo—little trade with some narrow 

exceptions, limited contact, limited diplomacy; and the result is, we 

have very little influence and very little leverage. 


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Cuba is free to ignore our views on human rights because we 

don’t make much significant difference to the government or its 

economy or its politics or its diplomacy. And so our view is, an engagement would change that. 

By engaging through trade, by engaging through travel, by engaging through diplomacy, we’ll develop relationships in Cuba over 

time and we’ll develop tools over time that can be used to dialogue 

with and to encourage greater respect from the Cuban Government 

for human rights and democratic practices. 

And I don’t think that’s a magical formula. We’re not going to see 

change overnight; we’re not going to see dramatic steps from today 

to tomorrow, but it’s clearly a better strategy to pursue engagement including trade, travel and diplomacy than it is to continue 

the current embargo. 

And I think it’s important to underscore, that’s a point of view 

that most of the world believes. Latin America, Europe, Asia, Africa, most of the Middle Eastern countries all engage with Cuba. 

Some key allies and partners of ours, especially Brazil and the 

Spanish Government, systematically engage with the Cuban Government on trade issues and link that to dialogue on human rights, 

democracy issues, political prisoners. 

And, again, I don’t think they expect dramatic change overnight. 

They see themselves as laying the groundwork, as preparing for 

the future and as developing relationships there. And the truth is, 

the United States is standing on the sidelines. And we’re standing 

on the sidelines at a time when we have economic reasons to engage with Cuba. 

As Ms. Rothkopf noticed—mentioned, as I assume Mr. Jones will 

mention as well, there are agricultural interests and agricultural 

possibilities in Cuba, there are interests from our ports on the Gulf 

Coast, there are tourism and travel interests, there are medical interests and medical opportunities, there are political energy interests. There’s a whole set of economic opportunities that we’re forgoing for the sake of a policy that’s not bringing us any real benefit 

in terms of human rights and democracy. 

So I think our view is that we ought to move toward a policy of 

engagement, that that policy ought to include moving toward ending our embargo on trade and taking advantage of the opportunity 

that brings us there. We’re pleased to see that President Obama 

has taken the first initial steps in that process. 

We’re pleased, Mr. Chairman, to see that you traveled to Cuba 

recently, engaged in the beginnings of dialogue and diplomacy here. 

We hope we’ll move forward in that way because we think it’s good 

for human rights in Cuba as well as good for the United States. 

Mr. RUSH. Thank you. 

[The prepared statement of Mr. Thale follows:] 


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Mr. RUSH. The Chair now recognizes Mr. Jones for 5 minutes. 

STATEMENT OF KIRBY JONES 

Mr. JONES. Mr. Chairman, members of the committee, thank 

you. I appreciate the opportunity to be here, as well. 

The last 47 years the cornerstone of U.S. policy toward Cuba has 

been the embargo. But if one looks at the original and subsequent 

reasons for this policy, it is hard, if not impossible, to point to a 

single success that this policy has had in achieving any of its objectives. 

The embargo has achieved, in fact, the exact opposite of what 

was originally intended and is not serving the interest of the 

United States Government nor of United States citizens. No other 

country in the world has an embargo on Cuba. 

I have been traveling back and forth to Cuba for 35 years, and 

I have seen a lot of changes in those years. It may be that the U.S. 

policy has been stuck for 47 years, but Cuba has not. A new trade 

and investment economy has emerged in Cuba in the last 15 years, 

a mix of capitalism and socialism, and not just a little dose of capitalism. Every sector in Cuba now has a foreign private investor. 

This includes mining, energy, hotels, beer, bottled water, port management, cosmetics, biotechnology, real estate, agribusiness and 

telecommunications, just to name a few. 

Cuba has removed subsidies from almost all its former state enterprises and merged or eliminated ministries. To undertake its 

foreign business Cuba has created dozens of freestanding holding 

companies. Where once totally dependent on sugar, Cuba has 

greatly diversified its source of revenues now to include nickel exports, personal services, tourism, foreign remittances, citrus and 

seafood exports, worldwide sales of rum and cigars and exports of 

biotechnology products. Whatever adjectives serve those who continue to want us to believe that Cuba is on the brink of economic 

collapse, the reality is otherwise. 

Having said that, like all developing countries, Cuba does have 

many problems: major foreign debt obligations, foreign currency exchange regulations are shifting, domestic pricing policies for imported consumer food products have inhibited market growth, labor 

regulations need improvement, transparency regarding foreign investment is a longstanding concern and limits our place on entrepreneurial expansion. 

But Cuba is also the largest country in the Caribbean with a size 

comparable to Pennsylvania. According to both the CIA and the 

Economist Intelligence Unit, Cuba had growth rates of 10.2 percent 

annually from 2005 to 2007. This has fallen to 4.4 percent in 2008 

due to the worldwide recession and devastating hurricanes. Largely 

unknown is that Cuba has the third largest deposits of nickel in 

the world and is the ninth largest tourist destination in the Americas without any Americans. 

I first met Fidel Castro in 1974. I have known him now for 35 

years. All of these changes in the way Cuba now does business 

were initiated under Fidel Castro, but are now not dependent on 

him or Raul Castro, for they have already implemented much of 

the very transition that some still say would come only after Castro 

no longer heads Cuba. 


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To wait to lift the embargo for some so-called ‘‘post-Castro era,’’ 

as if all will change and somehow be different, is not at all a productive business plan nor, quite frankly, is it a productive political 

strategy either. 

After 40 years of no trade and just over—a bit over 7 years, the 

U.S. now supplies, as has been mentioned several times, more food 

to Cuba than any other country. In 2008, U.S. companies received 

$718 million from the sale of agricultural products to Cuba. In aggregates, since this trade began, contracts for more than 11 million 

metric tons worth over $3.6 billion, including shipping and services, 

have been signed, comprising 300 different products including 

wheat, rice, corn, soybeans, tomato sauce, eggs, chicken, cookies, 

apples, wine, ground turkey, chewing gum, utility poles, live cattle, 

organic fertilizer and rice. These have been bought from 157 different companies from 37 States; 23 different ports have been used 

for more than 1,100 ship journeys of which 73.5 percent have been 

made with U.S.-owned or chartered vessels. 

But U.S. companies are forced to operate under a serious disadvantage in comparison to companies from other countries. The 

rulings in 2005 by the previous administration have caused Cuba 

to cut back on some imports from the United States. Most important in preventing U.S. companies from the full realization of their 

current trade has been and is the inability to offer private credits. 

There are some who argue that this restriction should be maintained because they feel Cuba is a bad credit risk; but whether or 

not to extend private credit to Cuba should be a decision taken by 

each company, not by the U.S. Government. If these restrictions, 

unique in international commerce, were lifted, Pedro Alvarez, 

Chairman and CEO of Alimport, which imports all U.S. Agricultural products to Cuba, has stated that U.S. firms could provide 

over 50 percent of Cuba’s food needs which annually reach almost 

$2 billion, which would be an increase of several hundred million 

dollars a year over current levels. There have been studies that indicate that U.S. firms have lost over $100 billion since the early 

’60s because of the embargo and that the annual cost now could be 

as high as $4 billion a year. 

In my opinion, the key to starting a process of business with 

Cuba which will benefit American workers and the U.S. economy 

will be for Congress to pass and for the President to sign H.R. 874 

and S. 428, which will allow all Americans to travel to Cuba. Two 

million Americans are projected to visit Cuba in the first 2 years 

of open travel. Studies have shown that this in turn will result in 

an injection of $1.6 billion into the U.S. travel and support service 

industry, and most of that helping the small- to medium-size travel 

agents, airlines, additional food exports to feed the U.S. visitors 

and advertising in promotional programs. 

Virtually anything that Cuba now purchases might very well be 

purchased from the United States. In this list of potential products, 

I am including fertilizers and pesticides, pharmaceutical products, 

textiles and apparel, steel, farm machinery and construction equipment, power generation machinery, electronics, plastics, tires and 

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tourism, and of course, a growth in the importation of U.S. agriculture. 

Mr. RUSH. Mr. Jones, would you please summarize your statement. 

Mr. JONES. U.S. Firms will be able to offer what companies from 

Europe, Canada and Latin America can never provide. 

And finally, in addition to sales, there will be several opportunities for investment: agribusiness, hotels, marinas, golf resorts, 

housing and building renovation, telecommunications and overall 

infrastructure. These are just some of the opportunities that will 

be open. 

I’ll be glad to take any questions. Thank you, Mr. Chairman. 

Mr. RUSH. Thank you very much. 

[The prepared statement of Mr. Jones follows:] 


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Mr. RUSH. The Chair now recognizes Ambassador Cason. 

Ambassador Cason, you’re recognized for 5 minutes more or less. 

STATEMENT OF AMBASSADOR JAMES C. CASON 

Mr. CASON. Mr. Chairman, members of the committee, thank you 

very much for the opportunity to appear before you today to discuss 

this topic of great importance. Until very recently I was a career 

Foreign Service officer with 38 years’ experience, mostly in Latin 

America. One of my postings was to Cuba where I was Chief of 

Mission from late 2002 to late 2005. 

I am speaking here today as President of the Center for a Free 

Cuba, a nonpartisan NGO and a 501(c)(3) organization; and therefore, nothing I say here today supports or opposes any bill before 

Congress, and we administer a USAID grant. 

We at the Center for a Free Cuba provide humanitarian assistance to the people of Cuba and assist civil society and democratic 

activists there. We send uncensored information in shortwave radios, among other things, to Cuba. The Center favors licensing 

measures announced by the President that will allow U.S. firms to 

attempt to enter the Cuban telecommunications market. Havana 

limits its citizens access to the Internet, cell phones and other information or media out of its control. If Cuba expands the speed 

and availability of the Internet, lowers the exorbitant cost of Internet cafes, Cubans will communicate faster and more easily among 

each other and with the wider world. Greater access to and use of 

the Internet by average Cubans, especially the young, will promote 

civil society in a democratic process there. 

We support Cuban-American travel to the island on humanitarian grounds and travel by researchers, academics and others 

who make a serious effort to discover for themselves Cuba’s reality. 

We are opposed to tourist travel by American citizens with no relatives on the island because such travel will only provide funds to 

the Cuban security apparatus which owns the tourist infrastructure. Such ‘‘bathing suit tourism’’ will do nothing for Cubans nor 

will it in any way help promote democracy. 

Mr. Chairman, I would like now to ask that a recent paper I 

wrote, entitled The Case Against Travel to Cuba, be entered into 

the record. 

Mr. RUSH. Hearing no objection so ordered. 

[The information was unavailable at the time of printing.] 

Mr. CASON. Thank you very much. 

Just as we oppose unprincipled tourist travel to Cuba, we do not 

feel that a unilateral ending of what remains of the embargo now 

will promote greater economic or political freedom in Cuba or great 

benefit to American companies. 

Lech Walesa and Havel told the Center recently that nowhere in 

the world have authoritarian regimes changed their ways because 

of trade or tourism. It has been international solidarity, constant 

pressure and tangible and moral support for democratic freedom 

fighters that have made the difference. 

When the Castros are gone, the embargo will serve as leverage 

in helping the military owners of hotels realize it is in their interest to support a democratic opening, for if they do, we can provide 

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ington Post has recently editorialized, giving away what little leverage we have for nothing now will gain us nothing and will harm 

those fighting for change on the island. Please note that all the rest 

of the world trades and allows travel to Cuba, but that has not 

made any difference in the totalitarian nature of the regime. 

As long as Cuba refuses to allow independent labor unions the 

right to exist, we oppose U.S. businesses entering into joint venture 

arrangements with the Cuban Government. Havana exploits workers and takes 95 percent of what joint venture partners pay the 

government for labor. Strikes are not permitted and many independent labor organizers have been given long prison sentences. To 

invest in Cuba today is to participate in the exploitation of defenseless Cuban workers; and I would not be surprised if, after freedom 

comes to Cuba, there is a backlash against Canadian, Spanish and 

other investors who have taken advantage of docile Cuban labor to 

make a fast buck. 

American farmers are privileged in their dealings with Cuba. 

They get cash and take no credit risk. As we’ve heard, we are the 

largest food provider to Cuba. Why would any agribusiness exporter want to give credit to Cuba? Why would American citizens 

support such a measure when Cuba is an international deadbeat? 

It has defaulted many times and owes foreign creditors over $25 

billion, not to mention another $22 billion of unpaid Cold War era 

debt. Its economy is moribund, and it is in arrears everywhere. Per 

capita, Cuba owes $4,000 each; its debt equals 86 percent of GDP. 

It is the tenth most indebted country in the world, and its Moody’s 

credit rating is Caa1, speculative grade, very poor. Dunn & Bradstreet rate Cuba as one of the riskiest economies in the world. 

I would note that Cuban’s average monthly wage is around $20. 

The average Cuban lacks money for most necessities. U.S. food 

goes largely to the tourist industry or is marked up 256 percent 

and sold to those who receive remittances in dollar stores. There 

is no consumer demand for our products and no prospects in sight 

for this to change until the regime begins to pursue free market 

economic policies. 

There are no Cuban entrepreneurs, no free market policies, no 

economic opportunity and no purchasing power. There is just the 

regime, which resists change in a panicky attempt to maintain 

total power for the nomenclature. 

Reuters reported last week that there is a severe cash crunch in 

Cuba and foreign businessmen feared Cuba could be near insolvency. The liquidity crisis has become critical. Small foreign businesses are reportedly desperate and are not being paid, state companies have been ordered to stop all imports, prices and demand 

for all Cuban exports are down and nothing suggests Cuba’s economy will get any better soon. 

Now, recent polls conducted in Cuba reveal that only 6 percent, 

there, of the citizens see the embargo as a problem. What they 

most want is for the government to give them a better life, a decent 

job, hope for the future. They said they want change, democracy 

and economic freedom. They want elections, they want to join the 

world, they want to be able to travel and run their own businesses 

in Cuba. Whether the U.S. trades more with Cuba is irrelevant to 

their lives. 


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The Center for a Free Cuba opposes any loosening of restrictions 

on commerce with Cuba now for the following five reasons: 

Trade and tourism will not hasten a democratic transition there; 

Cuba is a terrible credit risk and cannot pay most of its bills; 

It exploits its workers shamelessly; 

It’s an insignificant market for U.S. Consumer and other goods, 

and only the government, not the people, benefits from trade with 

us; 

There are no Cuban exporters or entrepreneurs. 

Mr. Chairman, only if and when a new Cuban leadership demonstrates through deeds, not words, as the President has said, that 

it is moving toward democracy and market freedoms, then we will 

be among the first to say, let’s deal. 

Thank you very much for allowing me to testify here today. 

Mr. RUSH. The Chair thanks the gentleman. 

[The prepared statement of Mr. Cason follows:] 


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Mr. RUSH. The Chair recognizes himself for 5 minutes for questioning. 

The U.S. has a long history of trading with numerous nations 

with poor records on human rights and shoddy business and credit 

relationships. The list is very, very long. We import considerable 

amounts of oil from Nigeria, from Venezuela, despite their shoddy 

records on human rights and political freedom. 

Pakistan itself is the recipient of billions of dollars in American 

aid despite Islamabad’s long history of repressing political freedom. 

Indeed, at one point, the United States traded with Iraq, even during the height of Saddam Hussein’s brutality against insurgents in 

Shiite communities. 

Yet, despite all our long and continued history of doing business 

with nations with questionable or even poor records on human 

rights—and I might add China is a glaring example of this—this 

nation of Cuba has been singled out for a trade embargo because 

of its human rights issues and problems. 

Is there a double standard and why is there a double standard? 

Ms. Rothkopf, would you please respond to my question. 

Ms. ROTHKOPF. Yes. Thank you very much. 

Yes, you’re absolutely right, the U.S. does have a history of engaging with many countries around the world in which human 

rights problems exist or political prisoners are unjustly deprived of 

their freedoms. And we have chosen another path, engagement. 

From China to Saudi Arabia, from North Korea to Afghanistan, we 

choose to engage to help advocate for those who have been abused 

by their systems. Engaging brings more of these stories to light; engagement brings countries more fully into the international community where established systems and multilateral mechanisms 

can work on behalf of the victims. 

I think we have to acknowledge that the embargo has failed to 

help the political prisoners in Cuba, and it’s actually hurt the average Cuban by damaging the economy. But it hasn’t damaged it 

enough to change things in the mind of the government, it’s just 

damaged it to hurt the innocents in the country. 

So I do say, yes, we have had a double standard. 

Mr. RUSH. Mr. Thale, should we subject some of these other 

countries to similar embargoes? Should we stop importing oil from 

Venezuela and Nigeria or even Saudi Arabia? Should we issue a 

trade embargo with China, and what would the effect of that be to 

the economy of our Nation? 

Mr. THALE. Thank you, Mr. Chairman. I think that’s actually a 

really good question. I think it’s a good question because it underscores the extent to which we ought to strive to have a single 

standard in how we approach trade and human rights and diplomacy issues around the world. 

I think our view is that there are limited selective occasions 

where sanctions do make sense. I think, by and large, sanctions 

have been effective forms of coercion against governments with 

whom we have disagreements. I think Cuba is one of the clearest 

examples of that; and I think the message is, we ought to engage 

with countries and, as part of that engagement, have human rights 

on the explicit agenda. We ought to do that with Cuba, we ought 

to do it with China, and we ought to do it around the world. 


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Mr. RUSH. Thank you. 

Mr. Jones, can you give us a perspective on the possibility of the 

President’s recent pronouncement as it relates to the telecommunications industry? How do you foresee that from two vantage 

points—one, from the vantage point of the American corporations, 

and two, from the vantage point of the human people. 

Mr. JONES. First, just a minor point: American cell phones won’t 

work in Cuba. So we can send all the cell phones we want, but it’s 

not going to do any good. I mean, it ignores the fact that Cuba has 

a 12-year now joint venture with Italy which is in the process of 

redoing the whole telecommunication system in Cuba. They’ve 

launched a cell phone system; it doesn’t cover the entire country, 

it covers the major population centers. There have been installations of public phones and an upgrade of telephone communications 

hardware. 

So U.S. companies are going into a market where there already 

is a foreign investor. Sometimes we tend to think if we’re not there, 

nobody is there, but that’s not the case in Cuba. 

Having said that, I have talked to Cuban officials who recognize 

that, were 1 million Americans to come to Cuba in free travel, 

they’re going to have to make changes so that they can service 

Americans and their cell phones, which will mean a joint venture 

between some American company and Stet, the Italian company, 

there to widen the cell phone coverage, to engage in a business 

agreement and finances going back and forth for the expansion of 

that coverage, and to install a system where U.S. cell phones will 

work. 

But, again, American companies will be going into a situation 

that has been working for 12 years. 

Mr. RUSH. My time is up. I want to recognize the ranking member for 5 minutes. 

Mr. RADANOVICH. Thank you, Mr. Chairman. 

Mr. Cason, welcome to you and everybody else here to the committee. I do have a question regarding your testimony. 

You mentioned in your testimony a Reuters report that Cuba 

may be in a fiscal crisis and near insolvency, on top of the fact that 

it already has $25 billion in unpaid debt and owes an additional 

$22 billion in Cold War era unpaid debts. 

Why are other countries still doing business, like this Italian 

company, with Cuba if they’re not being repaid, if that’s indeed the 

case? 

Mr. CASON. Well, what Cuba has been doing—even when I was 

there, we saw it all the time—they will take products from foreign 

countries, they will wait as long as they can to pay them and pay 

them a little bit to try to restructure the debt. 

They did that with Mexico, for example. It’s a constant sort of 

kiting in the sense that they have so much debt and so little productivity and so little of what they export that’s not already being 

sold, that they don’t have the money they need to provide for all 

these great markets that people have been talking about. 

The fact is, they are tremendously indebted. There is no consumer demand because the average Cuban has no money, can barely survive, so it all depends on the whims of the government. And 

Fidel buys on political grounds, particularly from the United 


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States, because he’s trying to influence votes in Congress, or what 

he buys depends on a lot of calculations he made where he’s going 

to get the main bang for the buck. 

Mr. RADANOVICH. Thank you, Mr. Cason. 

If American business, including agribusiness, were not required 

to accept cash-only terms of business and, instead, started giving 

credit to Cuba, what do you see happening in that—under that scenario? 

Mr. CASON. Well, I think any company that would want to not 

take cash before they even ship the goods when all these other 

countries are having great difficulty getting money would be nuts. 

I mean, they have the best deal going. 

I think that what would happen is, we will start running up 

huge debts with Cuba, and they may or may not pay us, depending 

on—like they do with the rest of the world. 

Mr. RADANOVICH. Can you tell me whether there would be more 

than credit risks involved if cash was not required for purchases 

of goods? 

Mr. CASON. The real risk is, this is not a market that is making 

decisions. This is Fidel and Raul who decides who gets paid, who 

gets booted out. 

When I was there, there was a move after many years to dissuade Spanish small and medium businesses from remaining. 

That’s why, in those figures we heard earlier, there is a large number of companies that have left. And it’s because they have decided 

that it’s time for them to go, they’ve changed their mind. 

Mr. RADANOVICH. Thank you, Mr. Cason. 

You have mentioned also in your testimony a point which I 

would like you to elaborate on, if you would, please; and that is 

that to invest in Cuba today is to participate in the exploitation of 

defenseless Cuban workers and that there would be a backlash 

against Canadian, Spanish and other investors, who have taken 

advantage of the docile Cuban labor to make a fast buck. 

Could you expand on that, please? 

Mr. CASON. I talked to a lot of people in Cuba when I was there, 

and since then, who tell me that when the day comes and when 

there’s freedom in Cuba, the fact that the United States, on principle, did not exploit Cuban labor the way I mentioned it, will be 

seen as a favorable development for American companies; but that 

the Spanish and others who have taken advantage—that you can’t 

strike, that you can’t have labor organizations—are going to not 

have the sympathy of the general public afterwards. And how that 

plays out, we’ll have to see. 

And I would remind you also that Lech Walesa has written a letter to the President recently saying, please don’t forget the situation of labor rights in Cuba when you talk about changing your policy toward Cuba. And I think that’s very important. 

Mr. RADANOVICH. OK. Thank you, Mr. Cason. 

Ms. Rothkopf, I couldn’t help but notice in your testimony on the 

Chamber’s desire to do business in Cuba that you would want to 

be able to do business. 

A couple of minor things to get out of the way: That would be 

that—there’s a long list here—the Cuban Government will have to 

provide certain guarantees and safeguards to U.S. business in the 


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areas of rule of law, the environmental protection, infrastructure 

for travel requirements, intellectual property protection and incentives for innovation and labor rights, also important considerations 

regarding financing. 

That’s quite a long list. I mean, do you care to comment on that? 

That’s a pretty high barrier to overcome. 

Ms. ROTHKOPF. Sure. 

I think the reason that that was included in my testimony was 

to make the point that we think that opening trade with Cuba is 

going to bring political and economic change to the island, but just 

because we were to open and make that option available, that 

doesn’t mean that everybody is going to rush in and automatically 

do business. 

And I think that the important thing is to say that we don’t 

place that limit on other countries, on businesses. Businesses will 

make a smart decision based on business decisions and whether it 

makes sense for their company. 

A company that doesn’t have the safety requirements that they 

need, they’re going to stop operating. If they’re not getting the intellectual property protection that they need, then they’re not going 

to continue to do business with that country. If infrastructure isn’t 

there for the travel requirements, they’re not going to go in. 

So basically what we’re saying is, U.S. businesses are successful 

because they take a smart look at the business opportunities. And 

my point is that they are going to continue to take a smart look 

at the opportunities and they’re going to make a smart decision 

based on what the Cuban Government decides to do or not to do. 

Mr. RADANOVICH. Thank you very much. 

Thank you, Mr. Chairman. 

Mr. RUSH. The Chair thanks the gentleman. 

The Chair now recognizes the gentlelady from Florida, Ms. Castor, for 5 minutes. 

Ms. CASTOR. Thank you, Mr. Chairman. 

Thank you all very much for being here today. 

Following President Obama’s announcement that lifting of the 

restriction on Cuban-American families and their ability to travel 

to Cuba, it’s been met at home with great enthusiasm. And I wanted to give you one example of a newspaper headline that followed 

within the week. It’s from the Tampa Tribune, but it had a similar 

message in many other papers: Thirst for Cuba Trade and Travel. 

And I think folks at home, they’re very hopeful for the economic 

opportunity that modernization of the relationship will bring eventually—great potential in the ports in Florida, ag products, all 

products, the cruise industry, et cetera. But I think, because of the 

family ties and historic ties, that we have folks who do not want 

economic opportunity to come at the expense of progress and 

change on the island, especially on human rights. 

So now where are we? President Obama appeared at the Summit 

of the Americas and made another overture, met rather surprisingly with a response from the Cuban President that said everything is on the table, followed up by brother Fidel Castro who said, 

well, wait a minute. 

If you all are advising the Obama administration and the Congress now on how to proceed, what is the plan? It’s unlikely that 


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it’s going to come by just a lifting of the embargo. That may not 

practically happen. So what is the plan? What are we going to be 

seeking on human rights improvement, and where can we make 

progress? 

And if you all can each take about 45 seconds to answer. 

Mr. CASON. Well, I think the embargo has always been a tool. 

And both President Bush and, I think, reiterated by President 

Obama have said that if we see evidence that the Cuban Government is serious about engaging—it takes two to tango, give us a 

sign—and begins moving in the direction of where we want to see 

Cuba, which is greater freedom and economic prosperity for the 

Cuban people, then everything is open for discussion. 

But Hillary Clinton said a couple of days ago in a hearing that 

she has seen no response yet from Cuba, and Fidel keeps undercutting his little brother by saying he didn’t mean that, he’s still in 

control. And I think he’s made it clear from day one of his administration that he—he said, when this war is over, I’ll start a longer 

and bigger war of my own; the war I’m going to fight against them, 

I realize that will be my true destiny. 

He, Fidel, will continue to do everything he can to sabotage, I 

think, a closer engagement between the two countries. 

Ms. ROTHKOPF. I completely agree with you. We don’t want the 

economic opportunities to come at the expense of the possibilities 

of democracy. But we actually believe that broadening economic engagement with the island through additional commercial and people-to-people contacts will promote the transition to democracy and 

to full civil liberties. 

We very much hope to see an end to the embargo. Absent a full 

end to the embargo, there are some steps that can be taken, for example, removing the restrictions on financing, allowing the ability 

to travel for the purpose of establishing commercial relationships, 

allowing visits from Cuban officials to confer with U.S. suppliers, 

inspect facilities and discuss sanitary and phytosanitary issues. All 

of these would have a positive effect. 

Mr. THALE. Similarly, I don’t expect that the process of political 

opening in Cuba is going to be a tit-for-tat series of movements by 

the United States and the Cuban Government back and forth. 

My view is, we will see political change there and political openings to relaxation as the U.S. moves forward in its relationship. I 

think we ought to move forward pursuing our own interests which 

have to do with maintaining human rights as a concern of ours and 

being very clear and public about that; pursuing some common interests around migration, drug cooperation and environmental concerns; and moving forward in pursuit of our economic interests. 

And I think in that process, we will see change beginning in 

Cuba. But I don’t think we will see a back-and-forth, tit-for-tat 

kind of process. 

Mr. JONES. Can I just add a couple of comments? 

If there are preconditions, if we are going to say to Cuba, we’re 

not going to do this until you do that, that means two things. That 

means, one, we have put into Cuba’s hands how we conduct our 

foreign policy, because we’re letting them set the conditions. 

Secondly, it’s a nonstarter. Cuba will not respond to any preconditions and has said so repeatedly. President Obama did someVerDate Mar 15 2010 04:32 May 08, 2012 Jkt 072881 PO 00000 Frm 00089 Fmt 6633 Sfmt 6633 E:\HR\OC\A881.XXX A881

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thing that no other President since John Kennedy has done, which 

is to say publicly that the policy over 50 years has been a failure. 

In response to that, Raul Castro said everything is on the table, 

something that no Cuban President has said for 50 years. Raul 

Castro is President of Cuba; he has an older brother who has no 

official office in managing the government. 

I think it would be a mistake to take an editorial or a column— 

and grandma—and interpret that as being the final word on Cuban 

Government policy. I think we ought to take them up on their 

word. I think there’s a way to begin in terms of talking about resurrecting the bilateral talks that the previous administration 

stopped on immigration and drug interdiction, on the environment, 

all to our interest; and we ought to begin the process of talking in 

the same way that Ronald Reagan, in calling the Soviet Union the 

‘‘Evil Empire,’’ still kept on talking. 

Ms. CASTOR. Thank you. 

Mr. RUSH. The gentlelady’s time is up. 

The chairman now recognizes the gentleman from Georgia, Dr. 

Gingrey, for 5 minutes. 

Dr. GINGREY. Mr. Chairman, thank you. And I want to thank all 

the witnesses of this second panel. 

I happen to disagree with Ms. Rothkopf, Mr. Thale and Mr. 

Jones, and do completely agree with Ambassador Cason. But that’s 

the way life is; you have your opinion and you feel very strongly 

about it, and we have to go on. 

I do want to commend Ambassador Cason for 38 years’ experience in the Foreign Service, mostly in Latin America, and some 

time in Cuba as Chief of Mission from 2003 to 2006. I think that 

gives him a pretty darn good insight into what’s going on, I think— 

his comments about labor and the problem in regard to labor violations in Cuba. 

I made the analogy in regard to why we didn’t ratify the free 

trade agreement, bilateral trade agreement with Colombia. And 

that’s the Democratic majority, Mr. Chairman; it keeps blocking 

that just mainly over labor issues. So it seems a little disingenuous 

that we would be wanting to open up trade with Cuba when their 

labor record is deplorable, abhorrent. 

I want to specifically ask Ambassador Cason, though: What do 

you think the current creditworthiness of Cuba is and what is on 

the horizon that will give us faith that Cuba can afford to pay its 

debts? 

If you could quickly, in about 30 seconds, answer that, I would 

appreciate it. 

Mr. CASON. I think the credit rating is terrible, it couldn’t get 

lower, and I don’t think there is anything on the horizon that is 

going to bring the big bucks that will allow us to have Cuba the 

natural trading partner that some day it will be when Cuba is free 

and has the right economic policies that allow for growth and 

human ingenuity and entrepreneurs that are repressed there. 

But right now there’s nothing. And so I think that it’s wishful 

thinking that the money will just appear, and we will all get paid. 

I would like to say that I used to run trade promotion for the 

U.S. Government in southern Europe. I worked for 3 years as the 


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head of trade promotion, so I’m all in favor of businesses making 

a buck. 

I’m also interested in them getting paid and not giving up 

human rights in the process just to make a buck on a market that’s 

extremely small, is shrinking and is not going to grow other than 

by some miracle that I don’t know where that’s going to come from. 

Dr. GINGREY. Absolutely. 

Well, let me just say this too. I think the other three witnesses 

are talking about that—basically, what it sounds like to me is, the 

end justifies the means and that sanctions haven’t worked. And I 

would suggest to them that sanctions do work when they’re implied 

across the board. And maybe the people that are out of step are 

the other people of the Western Hemisphere and Europe that were 

not willing, did not have the intestinal fortitude to apply the sanctions. 

Mr. Jones, you referenced John Fitzgerald Kennedy. You and I 

are probably about the same age. We were probably in our early 

20s when Fidel Castro allowed Nikita Krushchev to put those ballistic missiles on that island 90 miles from our shore and aiming 

right at us. So I think the courage was, of course, on the part of 

President Kennedy, who is probably spinning in his grave today listening to some of this testimony. 

I’m not specifically asking you a question, but if you want to respond in just a second, I will let you. Let me go on to Mr. Thale, 

though. 

There is something in your testimony, Mr. Thale, that really, 

really bothered me. You said a reference in a United States State 

Department human rights report. In your written testimony, it 

says, ‘‘Although that report criticizes Cuba’s treatment of prisoners, 

the State Department human rights report does not allege that the 

Cuban Government engages in torture,’’ and then in parentheses 

you have, ‘‘an issue with which we are grappling here in the United 

States.’’ 

And in your verbal testimony—and if you don’t recall it, we can, 

Mr. Chairman, have the transcriber read it back to us—you reference Guantanamo Bay. 

Were you suggesting, Mr. Thale, that in the previous administration, that President Bush or anybody a part of that was endorsing 

torture, that we were torturing people? Is that what you were suggesting? 

Mr. THALE. Well, I was suggesting, Mr. Gingrey, that there is a 

debate going on in the United States about the documents that 

have just been released. There is the whole Abu Ghraib debate, 

and this is an issue that is clearly under discussion in the United 

States. 

I think the general thrust of my testimony was that, if you look 

at the human rights situation in Cuba, you see a set of serious 

problems which have to do, as I said, with freedom of association, 

freedom of the press, free expression, political prisoners, but that 

there is a set of—in the universe of human rights issues that are 

under debate in the world today, there are some—— 

Dr. GINGREY. Well, reclaiming my time, I just want to say in conclusion, Mr. Chairman, that I’m getting a little weary of people 

that represent this government going around the country talking 


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about what we do and how we are guilty of human rights violations 

and apologizing for the previous administration. I think it is entirely inappropriate. 

And I yield back. 

Mr. RUSH. Would the gentleman yield? 

Dr. GINGREY. Of course I will yield to the chairman. 

Mr. RUSH. Dr. Gingrey, you’re a good friend of mine, but I just 

want to bring your attention to a matter in my home State of Illinois where there is a fellow by the name of John Burge, who is a 

former police commander. And he has recently been indicted after 

about 30 years for torturing American citizens and forcing them to 

confess to crimes. And some have served for many years on death 

row. 

Your friend, a Republican governor, George Ryan, who is also 

convicted now, is a friend of mine. But one of the things that he 

did that I really admired him for it, he freed all the prisoners on 

death row, because a lot of them were there because of torture. 

So this does occur in all countries and so—and even in our own 

country. And right now there is a current real issue in my own 

State of Illinois, the city of Chicago. You’re probably not mindful 

of that, but I just for the record wanted to reflect that. 

Thank you so much. I yield back. 

The time of the gentleman has expired, and now we will recognize the gentleman who just joined us, Mr. Scalise, who has joined 

us from Louisiana. 

Mr. Scalise, you are recognized for 5 minutes for questioning. 

Mr. SCALISE. Thank you, Mr. Chairman. 

I would first ask—the comment that Mr. Jones made a few minutes ago about who is calling the shots, I guess, in Cuba. Do you 

really suggest that Fidel Castro is not in some way in control of 

the Government of Cuba? 

Mr. JONES. I am suggesting that he remains as head of the Communist Party but he is not President of Cuba. There has been a 

whole new wave of people brought in. Does that mean Raul Castro 

does not consult his older brother? Absolutely, I’m sure he does. 

But I think it would be a mistake to take his writings in Granma 

as necessarily reflecting the absolute position of the Cuban Government. 

And I think, just as President Obama did not take the statements of Mr. Gibbs and Mr. Restrepo, which were fairly hardline, 

but he put forth a different view of what his view was in terms of 

the relationship with Cuba, and I think we should wait, the U.S. 

Government should wait for the official response from Raul Castro 

or his ministers in terms of how they want to proceed. 

Mr. SCALISE. You know, I would still doubt that Fidel is removed 

from giving orders or having a direct say in how the government 

is running. But I do think, as we look at and debate this proposal 

to change U.S. policy, a policy that has been in effect for decades, 

I think we need to look at a broad range of issues, not just the economic issues but the political issues, and also the impact it would 

have on Americans who live here today who were literally run out 

of Cuba, who still have very vivid memories of their property being 

taken, their families being threatened, in some cases detained, and 

in all of the things that they escaped and what this would mean 


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to them, the people that are contributing to our economy, who are 

active citizens in their communities, who are business owners, and 

who have taken offense and many have expressed very publicly the 

offense they would have to assisting this Castro government. 

Whether it is Fidel or Raul, it is still the Castro government that 

is running and keeping the reins over the citizens there. 

I don’t know if any of you all have consulted the different CubanAmerican communities throughout our country to—— 

Mr. JONES. The only thing we know, the only thing those people 

know—— 

Mr. SCALISE. Which people? Which people? 

Mr. JONES. The people who are concerned about their property 

being confiscated and families and the problems of the early ’60s. 

The only thing we know, after 50 years almost, is that none of 

those problems have been solved with the current policy. 

The confiscation of property, for example: First, not a single 

trademark has been confiscated. There are 5,000 registered trademarks of U.S. brands in Cuba that are maintained today. And I 

have taken companies down to the Cuban Chamber of Commerce 

and other places—— 

Mr. SCALISE. I apologize to cut you off. My time is running out. 

Ambassador Cason has had his hand up. 

Did you have something you—— 

Mr. CASON. Yes, I think the embargo was put in place, of course, 

originally because of confiscation of U.S. properties. Mr. Jones mentioned nickel. That was one of the properties that was seized from 

the American Government at the time. 

I would like to make the point that nobody’s policies have been 

able to budge Fidel Castro from the course that he has been on. 

For 50 years, the rest of the world, except us, has pursued a policy 

of engagement in trade and tourism. My question is, where is the 

beef? They’ve been doing this for 50 years; we are the only ones 

that haven’t. And people say, now, we should do something different, and Castro will change. We don’t have magic pixie dust to 

make that happen. It’s because this is the nature of this guy. 

It’s too bad that nobody’s policy has worked. But I think when 

they are gone, what is left of the embargo will be a leverage on the 

military, because it is a military dictatorship. Those guys will see 

their vested interest in moving the country in the right direction 

so that we can liberate the hordes of American tourists that we 

would like to see go there. 

Mr. SCALISE. And for Mr. Thale and Ms. Rothkopf, I know China, 

Venezuela, other countries are doing business in Cuba today. We’ve 

heard testimony about the average per capita income. If you can 

address that, as well, and what types of consumers are in the country that we could even be doing business with if we went down that 

road. 

What types of products do China, Venezuela, other countries provide that aren’t available, or what are they not providing where 

there even would be a role for America to play? And then, what 

type of consumer base is out there? 

Ms. ROTHKOPF. I think the first thing that we have to think 

about, in terms of what the U.S. can provide that isn’t being provided by other countries, is to think about our proximity. And in 


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my testimony I identified a number of areas, including agriculture, 

for example. Cuba has the potential to be the top foreign market 

for U.S. rice, for example. We’ve discussed tourism, machinery, oil. 

I think we talked about biotechnology. 

There is a whole host of products that we can provide, including 

agricultural products and consumer products, simply because we 

are closer, which will give us a competitive edge over—— 

Mr. SCALISE. What is the average per capita income? 

Ms. ROTHKOPF. Was that in your testimony? It was not in mine. 

Mr. THALE. Mr. Scalise, the average—I believe the average per 

capita income is about one-fifth of that of the United States. So the 

per capital income of the United States is about $40,000, and that 

in Cuba is about $8,000, $8,500. 

So there is no question, consumer demand is not what’s going to 

drive trade between the United States and Cuba. What’s going to 

drive demand is infrastructure, wholesale commodities and so on. 

And the U.S. has—it’s less about filling holes. I think there are 

some holes, but it’s less about filling holes than it is about the comparative advantage we have because of the reduced shipping costs. 

And I think rice is the single most dramatic example that—— 

Mr. RUSH. The gentleman’s time has expired. 

Ms. ROTHKOPF. Right. And just to add to that, the additional 

tourist arrivals, just for example, from the increased tourist demand for food will boost domestic demand for U.S. products, as 

well. 

Mr. SCALISE. I yield back. 

Mr. RUSH. I thank the gentleman. 

If the witnesses will indulge us, we will go into a second round 

of questioning. And we will ask the members of the committee to 

restrict their questions to 2 minutes. 

And the Chair recognizes himself. 

Ambassador Cason, I see that you served in Venezuela and Bolivia during your career, outstanding public service. And have these 

two nations engaged in any form of nationalization of companies 

and other business entities? 

Mr. CASON. Yes, Bolivia most recently. 

Mr. RUSH. Would you suggest that we create a trade embargo 

around these two nations? 

Mr. CASON. No. I think that, you know, if you were starting 

today and said, would the trade embargo—if we were to launch it 

today, would it change Cuba’s behavior, I think the answer would 

be no. And I think we’ve seen—— 

Mr. RUSH. Why would you suggest that we continue the trade 

embargo against Cuba and—— 

Mr. CASON. Well, first of all—— 

Mr. RUSH. Let me ask the question, please. 

And, also, why wouldn’t we also have a similar practice as it relates to other countries that have significant human rights violations, extraordinary human rights violations in some instances? 

Mr. CASON. As I said originally, the embargo was originally designed as a reaction to confiscation of American properties in Cuba, 

and it has evolved over the years. I think if you were to say, with 

what we know about the embargo today, if you started it fresh, 

would it induce somebody like Fidel Castro to bring democracy, like 


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every other policy in the world of every variation that anybody else 

has tried, it hasn’t. 

So, to think that ending the embargo now would somehow induce 

Fidel Castro at this late stage in his life to become a democrat or 

do any of the things that we say are our endgame for Cuba, it is 

just not going to happen. 

Mr. RUSH. Thank you. The Chair’s time is up. 

The Chair now recognizes the ranking member, Mr. Radanovich, 

for 2 minutes. 

Mr. RADANOVICH. Thank you, Mr. Chairman. 

Mr. Jones, I do have a question for you. You testified that there 

are about 500 international companies represented in Cuba, with 

substantial investment there. But according to the State Department, the business environment is so unfriendly that the number 

of joint ventures dropped from 540 in 1982 to 287 in 2005. 

Because of the government’s recentralization efforts, it is estimated that one joint venture and two small cooperative production 

ventures have closed each week since the year 2000. And foreign 

direct investment dropped from $448 million in the year 2000 to 

$39 million in 2001 and to zero in the year 2002. 

Are these 500 international companies independently owned, or 

are they joint ventures? And if they are joint ventures, why the difference between the State Department figures and your testimony? 

Can you help bridge that? 

Mr. JONES. Yes, I will try. 

First, the joint ventures have actually fallen even further, down 

to about 237 now. And there is a reason for that. Cuba, when it 

started into the joint venture business, which was in ’94, ’95, they 

were in a learning process. There hadn’t been a single joint venture 

in Cuba between 1959 and 1994. They were learning how to do 

this. And things change over the times, and they learned what they 

wanted, what the country needed, which joint ventures contributed 

to national economy, which they wanted to do and didn’t do. And 

over the course of time, they began closing and not renewing and 

not entertaining small- to medium-sized joint ventures, with a concentration on larger joint ventures of a much more strategic and 

nationally important basis. For that reason, many were closed, 

many ended, and the people left. 

Those 500 companies—I haven’t got the breakdown as to which 

are representatives, which are sales agents, which are real estate 

partners. All I know is that there are offices there of non-U.S. Companies for a variety of business reasons. 

Mr. RADANOVICH. So you’re saying that Castro now permits wholly owned private international businesses to operate without taking 

a cut? 

Mr. JONES. Joint ventures are generally on a 50–50 basis. There 

have been some 100 percent foreign-owned joint ventures, particularly in the power generation area. 

Most of them, as I said, are 50-50, with a joint venture partner. 

And the Cuban enterprise with which it has a contract forms a 

board, develops a business plan, sets up a business, joint venture. 

The foreign partner can take its profits after taxes out of the country. And many, particularly in the oil, mining, and some of the 

areas that I mentioned earlier, are functioning very well. 


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Mr. RADANOVICH. Thank you, Mr. Chairman. 

Mr. RUSH. The gentleman’s time has expired. 

The Chair now recognizes the gentlelady from Florida, Ms. Castor, for 2 minutes. 

Ms. CASTOR. Thank you, Mr. Chairman. 

Mr. Thale, in your testimony, you state that some of the countries that currently trade with Cuba use their engagement to promote human rights. Provide an example for us, or a few examples, 

of what other countries that are currently trading with Cuba are 

doing to promote human rights in Cuba? 

Mr. THALE. Thank you for the question. 

The two most dramatic, I think, and most high-visibility examples are Brazil and Spain. 

And in the case of Brazil, the President of Brazil visited Cuba 

last January. He pledged a billion dollars in credit for trade and 

investment. And it is widely believed, including by U.S. Government officials, that he began a dialogue with the Cuban political 

leadership about the release of political prisoners and about longterm political relaxation in Cuba itself. And I think it is generally 

believed that President Lula has continued to raise those issues in 

all of his and his government’s subsequent interactions with Cuba. 

So, again, I don’t think Lula is expecting all 200 political prisoners 

to be released tomorrow. But I think that is an issue on the table 

for the Brazilians. 

It think Spain, as it’s led the European Union’s policy shift and 

re-engagement with Cuba, has had that issue on the table, as well. 

And I think it’s fairly clear that the release of political prisoners 

for Zapatero and the Spanish Government is an important question. Again, I don’t think they are going to have, sort of, ‘‘We’ll add 

a new trade deal; you’ll release four political prisoners’’ kind of 

thing, but I do think you’ve seen movement on this. 

And I think the historic example here, Congresswoman, is that 

if you look at the period in the year around the Pope’s visit to 

Cuba, when Vatican diplomacy focused on the political prisoner 

question, there was never any explicit deal made at all, but in that 

period, the number of political prisoners in prison in Cuba was reduced by about a third. 

Similarly, if you look at the period around when President Carter 

reopened the U.S. Interest Section in Havana, the number of 

Cuban political prisoners dropped significantly. 

So I think the evidence is that you do see movement on these 

kinds of issues when there is consistent engagement, when there 

is real interaction, and when you’re not looking for, sort of, a precondition or tit-for-tat kind of concessions. 

Ms. CASTOR. Thank you. 

Mr. RUSH. Thank you. 

Ambassador Cason and the other witnesses, I really appreciate 

your testimony. I must say that I spent 4 hours in meetings with 

President Raul Castro, an hour and a half at the home of Fidel 

Castro, and had some extensive conversations with him. And I 

must agree with your other witnesses, Ms. Rothkopf, Mr. Thale 

and Mr. Jones—I certainly disagree with you—about the mind of 

the Cuban people and the mind of Fidel Castro and the mind of 

Raul Castro as it relates to normalization. I want to just say that, 


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in conclusion, it was very informative for me, a first-time visitor to 

Cuba. 

With that, the hearing is now concluded. I want to thank the witnesses for your presence. Thank you for appearing before us. And 

this hearing is now adjourned. 

[Whereupon, at 4:26 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 


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