Could Cuba become an economic threat?

DOMINICAN REPUBLIC - In Brief 29 Dec 2014 by Pavel Isa

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The simultaneous announcement by the governments of Cuba and the United States to restore diplomatic relations and normalize economic ties received a very warm welcome in all Latin America. Nonetheless, in the Caribbean and in the Dominican Republic it has also been received with some concern due to fears associated with the potentially negative impact on trade and tourism. In our view, however, generalized fears are not well grounded although some sectors could be negatively affected. Firstly, because it will take a long time before economic relations can be normalized. At the moment, it's a political dialogue and although some of the restrictions on trade and travel could be eased by President Obama, the bulk of barriers between the two countries will stand because they are in the hands of the US Congress where it is unclear the balance between those who support and those who resist to abandon the policy that hinder Cuban trade with the US and the rest of the world. The dispute is likely to be lengthy and intense. Secondly, because judging by the current export baskets, Cuba competes against the Dominican Republic in a reduced number of products: sugar, cigars and rum. On average, between 2011 and 2013, sugar exports accounted for 15% of Cuban total exports of goods, cigars for 8.6% and rum for less than 5%. During that period, in the Dominican Republic, sugar accounted for only 2.3% of total exports and rum for 1.2% rum. Of those three, cigars is by far the most important and where the potential threat is more credible because they accounted for 7.2% of total exports. The rest of Cuban exports (medicines, nickel, products of iron and steel, and frozen seafood) have ...