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U.S. Policy Towards Cuba and China

The new, “global world” is something the United States has helped create. It’s a world where every country is connected to another, politically, socially, technologically, and economically. Yet, as a matter of policy, the U.S. appears to be at a crossroads. There is a struggle afoot, between those in the government that want to hold on to foreign policies because they worked in the past, versus what policies will work best in this current and future global society. China and Cuba are two countries that highlight that struggle for the U.S.

Chinese-United States Relations
By Paul Dilger

United States and China’s relationship is multifaceted. While issues like human rights and individual liberties capture much of the public's attention, one of the most pressing issues in American-China relations is their continued economic partnership. Since 1973, the United States and China have had an increasingly growing interdependence in trade. U.S.-China trade rose quickly after the two nations established diplomatic relations (January 1979), agreed on a bilateral trade agreement (July 1979), and offered mutual most-favored-nation (MFN) treatment beginning in 1980. “Total trade between the two nations rose from $5 billion in 1980 to $231 billion in 2004” (Morrison). Over the past few years, U.S. trade with China has grown at a faster pace than that of any other major American trading partner.

Current United States Trade Policy with China

Developing trade with China is part of the overall U.S. strategy of active “engagement.” The basis behind “engagement” is that working with China through economic, diplomatic, informational, and military means helps the United States to achieve important national security goals such as preventing nuclear proliferation, defeating global terrorism, defusing regional conflicts, and developing global economic growth (The White House). The goals of “engagement” are aimed at achieving U.S. national interests of security and prosperity for all Americans in today’s globalized world.

“China is now the third-largest United States trading partner, its second-largest source of imports, and its fifth- largest export market” (Morrison). Along with this interdependence between the nations, there have been issues that have put strain on the relationship. These include a surging U.S. trade deficit with China ($256 billion in 2007), negligent protection of U.S. intellectual property rights, widespread trade barriers, and China’s pegged currency policy (Trade in Goods with China).

The U.S.-China economic positions are based off of the assumption that trade between the two superpowers will have both economic and political benefits. These include: Trade with China allows both sides to share and prosper off of available resources.China’s rapidly developing economy allows the United States businesses to become apart of a vast expanding market.

According to Mr. William Wei Li, a finance expert of the U.S. and China, “to sustain unemployment, welfare, and shelters, the U.S. needs to keep China’s trade.” He states that “China’s impact on U.S. economy comes in way of every day goods such as clothing and computer equipment. Without China producing these products the price of your goods in America would surge.”

Trade with the U.S. made China enter the World Trade Organization (WTO). This makes China comply with international trading rules and regulations.

Free Trade and China

Since WWII the U.S. government has become one of the most consistent supporters of reduced tariff barriers and free trade. The U.S. has helped establish the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). The U.S. policy of “engagement” towards China has been promoting free trade within China. After 13 years of negotiations, China entered the WTO, this was a huge step towards a free trade market. Recently in 2008, China negotiated a free trade agreement with New Zealand. This was the first time that China has agreed to a free trade pact with a developed country (China, New Zealand Sign FTA Pact).

Policy Reccomendations

America’s policy of “engagement” has a broad perspective that consists of strengthening national security and economy. While the United States and China’s trade relationship has many benefits, there has been one major issue that has been causing friction between the two nations; this is the American trade deficit. The United States and China share the most imbalanced bilateral trade relationship in the world. The United States imports more goods from China than it exports. In 2007 the trade deficit was $256 billion dollars. China alone accounts for nearly 26% of the United States' $725.8 billion trade deficit (Morrison). With the United States economy in a constant downward trend we must reduce the deficit amount. We propose a few recommendations to the current U.S. policy of “engagement.”

We must urge China to re-value the Yuan. According to many analysts, the current trade deficit has been partly due to China’s unwillingness to re-value the Yuan. An artificially strong dollar gives foreign businesses and consumers more purchasing power than they should have and makes Chinese goods even cheaper. By keeping the value of the Yuan low, Chinese wages are lower; this allows cheaper production and overall less expensive products that American businesses prefer for bigger profits. A more accurate value of the Yuan will take away the benefit of moving businesses from America to China causing more companies to stay in the U.S.

We must encourage U.S. based corporations not to relocate to China. This could be done through tax benefits if a company agrees to not relocate for “X” amount of years. The longer the commitment the greater the incentive. This will keep manufacturing plants within the United States causing a stable amount of jobs as well as keeping American dollars in American hands.

We must continue to use the World Trade Organization as a tool to regulate China’s trading policies. This allows for U.S. to condemn China for un-fair business practices through a multilateral organization.

The United States and China’s trade relationship is walking a very thin line. The U.S. economy cannot sustain an increasing trade deficit for long. China cannot continue to defer the re-valuing of Yuan without WTO interference. While we can only guess how long it would take for the next phase of U.S.-China trade to come, one thing is certain, when two of the world's most powerful economies are walking such a tight line, every economy in the world shares a stake in the outcome.

Cuban-United States Relations
By Matthew Craffey

Like most Latin American countries in the first half of the 20th Century, Cuba was run by military generals who came to power often through coups or crooked elections. Fulgencio Batista was no exception. Batista was president of Cuba from 1940 to 1944, and only served one term a the Cuban Constitution dictates, but staged a coup on March 10, 1952, to keep the U.S. backed candidate, Col. Ramon Barquin, from assuming power (From Batista to Castro, Wikipedia). Bloody, civil wars were a product of too much freedom, Batista believed, and any threats to peace and prosperity in Cuba, were grounds for imprisonment. This might have kept Batista in power, and popular with his people if it were applied across the board. Unfortunately, Batista, who positioned himself as a communist, but close ally of the United States, allowed mobsters, gamblers, and businesses from the U.S. to have free reign in his country. While the economy prospered with Batista, so did corruption, and public resentment. Throughout the rest of the 1950’s, attacks, attempted coups, and protests ensued against the Batista government. While the attacks were never fully successful, they weakened the government politically, militarily, and economically. Attacks were led by anyone from students, members of the Catholic Church, to pro-democracy military members, to Fidel Castro. Because of mounting political pressure, Batista released Castro, who was sentenced to 20 years in prison, after serving only two years. Batista would later regret that decision. Castro fled to Mexico, where he began building his own guerilla force.

As the 1950’s were coming to a close, the U.S. grew impatient with the increasingly unpopular Batista government. Instead of accepting a 1958 request from the Cuban government for new weapons to better defend themselves from the various attacks the government was experiencing, the U.S. placed and arms embargo on the country. Eventually, Batista lost support of every constituency from his country, rich and poor, and Castro’s ideas of true democracy, and returning the country to the people began to resonate. On January 8, 1959, Castro’s Cuban Revolution took control of Havana, and Batista went into exile (From Castro to Batista, Wikipedia).

Castro’s immediate nationalization of public utilities, eviction of many Americans living in Cuba, expropriation of private property, crackdown on free press, and assassination of thousands believed to be loyal to the former Batista government, made U.S. relations rocky from the start. After President Eisenhower’s public snub in 1959, and later, economic sanctions against Cuba, Castro decided to cast his lot with the Soviet Union. Throughout the Cold War, the U.S. viewed Cuba as a Soviet Satellite, a small country doing an empire’s bidding uncomfortably close off the Florida coast. The Cuban Missile Crisis, and proxy wars in Latin America, led by Che,Guevara and other Cuban generals, solidified America’s mistrust of the Cuban government. The Bay of Pigs Incident, in which the CIA attempted to overthrow the Castro government, and bombing of Air Cubana flight 455 by a Cuban American, helped cement Castro’s mistrust of the U.S. (Marxist-Leninist Cuba, Wikipedia).

Many believed the fall of the Soviet Union, would have economically forced Cuba to liberalize, and it has to an extent, but it’s mostly related to its economy, similarly to China, only on a much smaller scale. Investment in hotels and property by foreign investors, mostly from Europe, has sustained Cuba’s economy since the Soviet era, but this investment has done little to change its policies. Cuba to this day, remains mostly poor, communist, and devoid of free speech. Much to the consternation of the rest of the world, especially Latin America, and Europe, the U.S. is the only powerful nation to still have economic, diplomatic, and travel sanctions placed against Cuba.

Why doesn’t Cuba extend an olive branch to the U.S.? Cuba believes as long it has other countries are supporting it, it can survive, and can retain its pride in knowing has survived the regime change tactics of its much larger, richer, and stronger enemy, the United States. According to Felix Martin, assistant professor at Florida International University’s Cuban Research Institute. Castro has been an inspiration for Latin American leftists such as Venezuelan President Hugo Chavez and Bolivian President Evo Morales, who have challenged U.S. policy in the region (U.S.-Cuba Relations, Council on Foreign Relations). Cuba also views the U.S. as an imperialistic country, whose former relationship with U.S. never benefited Cuba, only the U.S. Lastly, Cuba believes foreign governments should mind their own business, and respect their sovereignty. Guantanamo Bay, rightly or wrongly, has played into that negative perception of the United States as a country that does what it wants, and has little respect for others. Sticking some of the most dangerous terrorists in the world in a prison in a country we have no relations with, appears heavily symbolic.

Why has U.S. policy remained the same towards Cuba for almost 50 years now? Since 1961, U.S. policy has been economic embargo, and diplomatic isolation. Only in recent years, has congress allowed U.S. farmers to send agricultural exports to Cuba, totaling $336 million in 2006. On the flip side, the U.S. has reduced the amount of money a U.S. tourist can bring with them to Cuba from $3,000 to $300 since 2004 (U.S. Cuba Relations, Council on Foreign Relations). The U.S. believes several things need to change before relations between the two countries can normalize. First off, as long as a Castro is in power in Cuba, the U.S. policy is highly unlikely to change, at least under the current administration. The bitter history between the Castro’s, and the U.S., make it very difficult for either country to change its rhetoric. Julie Sweig, Senior Fellow for Latin American Studies for the Council on Foreign Relations says, “We don’t use that language [normalization] anymore because the relationship is so toxic” (U.S.-Cuba Relations, Council on Foreign Relations).

Always a concern for the U.S. is Cuba’s human rights record, and its lack of political and social freedoms. The U.S. believes that if it normalizes relations before there are political and social reforms, it only legitimizes and strengthens the Castro regime, and gives them no incentive for change. This is also a viewpoint shared by a majority of the more than 1.3 million Cuban-American’s living in the U.S., who make up a very powerful voting block and political lobby. They expect the U.S. government to take a hard-line approach towards relations with Cuba (Cuban Exile Community, Wikipedia).

Elena Muguire, a 45 year old resident of Chicago, Illinois, is one such advocate. She grew up in Santa Clara, Cuba, and came to the United States in 1976 when Castro allowed some Cubans to leave the country. When asked what it was like to live in Cuba under Castro, she answered “The first word that comes to mind is fear. Fear of being expelled from school because I attended church on Sunday, fear of not seeing my father come back from the country ever Saturday because he could’ve been arrested for buying milk and eggs on the black market, fear of yet another search in my house. It happened often and unexpectedly, and it was very disturbing and scary.” Elena supports the current U.S. policy towards Cuba, and believes it should go even further in order to isolate Castro and his government. “I believe there should be stricter sanctions, and the U.S. should seek an international embargo that will restrict international financing of the Castro regime. I think that the more we corner Castro, it will help promote the interests of the Cuban people there, and it will help to fill their hunger for freedom. I believe lifting the embargo now, would help legitimize Raul Castro, and extend their half-century hold on power.” She fears the later action will happen, if Senator Obama becomes president, and believes, if anything, the Cuban-American lobby should have more of a voice than it currently does over U.S. policy towards Cuba.

Given the brutality and deception perpetrated by the Castro government for 50 years, it is difficult to map out a foreign policy that is respectful to those who have suffered so much at the hands of Fidel and Raul, and yet also recognizes the reality that the current generation of Cubans, and Americans, are much less likely feel the same animosity towards Castro that older generations do. In addition, America must not only face the reality that our current policy is no longer working, much in part because of the rest of the world’s economic, and political support for Cuba, but also because a country’s foreign policy must be guided by consistency and fairness. We no longer have the credibility or power to force the new, global world to not trade or have relations with Cuba, and given that that’s the case, we must find an alternate solution. We also must acknowledge that other countries have similarly dismal human right’s records, and yet we still manage to have relations with them. China massacred as many as 10,000 people in Tiananmen Square in 1989, and yet there were no repercussions for U.S./Chinese relations. Libya sponsored terrorism, and was responsible for the bombing of Pan Am Flight 103, and yet today is an ally on the War on Terror. In Saudi Arabia, women have little, if no rights, and no house of worship other than a mosque is permitted on the grounds of the entire country. Yet, we have close relationship with the Royal Family. It’s the reality of a new global world, and the U.S. must realize that if we don’t fill a relationship void, someone else will. Old Cold War strategies of change through isolation no longer work. Our best chance of changing Cuba in our current global environment is to at least attempt to engage them. This does not mean an immediate removal of sanctions is in order. This only means, that we come to the table and offer the benefits of relations with us, in exchange for reform and liberalization on their part. If they want to boost their economy by trading with their former number one trading partner, they will need to open up their market to our goods, and services as well. If they want greater legitimacy through improved diplomatic relations with the U.S., then as part of that agreement, they will need to slowly start recognizing, and abiding by the U.N.’s Declaration of Human Rights. If our attempts to normalize relations are met by inaction on the part of the Cuban government, at least we are on record as attempting to resolve the situation. At this point, the U.S. is viewed by the vast majority of the world as simply being stubborn, and as having a hypocritical policy towards Cuba. If Cuba is on record as rejecting any efforts by the U.S. to negotiate or come to the table, then responsibility shifts to them to ante-up and work towards an agreement. This effort puts us on the offensive and also makes it easier for our allies to unite with us to subtly push Cuba to liberalize.

I believe a good first step towards possible normalization of relations would be 3-way talks between representatives from Cuba, the United States, and Spain, since Spain is a Spanish speaking country that has a fairly good relationship with both Cuba and the U.S., and could mediate, and hold each side accountable if necessary. At this initial meeting, all issues of dispute should be laid out. The two issues that there is the most common ground on at the end of the first meeting should be moved to the top of the agenda for the next meeting. The same should be done for the top two issues of most importance for both Cuba and the U.S. From there, the U.S. Secretary of State, and his/her counterparts from Spain and Cuba, would meet to hammer out the details in resolving the issues discussed at the first meeting. If these initial few agreements are implemented and held up by both countries, then a meeting between the U.S. President, and Cuban President should take place, using the recent progress in resolving issues as a springboard for further agreements and normalization. Travel restrictions should be eased, and trade relations should slowly be normalized, with the caveat that Cuba be as open to U.S. businesses, as the U.S. is to buying Cuban exports. While the effects of economic relations on changing Cuba’s government should not be overstated (Mexico and Canada normalized trade with Cuba in 1975 in the hopes it would help reform the government, but it had no political impact), technology has changed so much since Cuba last had a government that was truly open to foreign influence, that the political impact could be significant. The recent example of thousands of people lining up, vying for cell phones now that they are legal, shows that as the people see what’s available to others outside of Cuba, they will be more likely to demand the government give them access to those things as well. Cultural, educational and economic exchanges should be highly encouraged. Temporary worker permits for Cubans to work in the U.S., and for U.S. business people to be able to work in Cuba, access for to go to universities in the United States, and access for Americans to go to Cuba’s medical schools would also help in this process. As part of Cuba opening up their medical schools to U.S. medical students, the U.S. could also offer to assist Cuba in renovating their colleges, and medical facilities, as well as provide them with more cutting edge medical technology. The more intertwined we are, the harder it will be for either side to not want the same things from our governments.

For the U.S. to maintain its role as a super-power, it must adjust its policy, tactics, and image for a changing world. The same old strategies don’t work in a world where everyone is now connected, and we will get left behind, if we refuse to adapt. If the U.S. once again acts, and perhaps more importantly, is viewed, as a consistent, fair, force for good in the world, and if it leads by example, rather than force others to go along, that will likely do more to encourage change and reform in modern day Cuba and China, than any military action, economic embargo, or political isolation ever will.

Bibliography

"China, New Zealand Sign FTA Pact." Window of China. 07 Apr. 2008. www.chinaview.cn. 25 Apr. 2008 http://news.xinhuanet.com/english/2008-04/07/content_7933330.htm>.
Morrison, Wayne M. China-U.S. Trade Issues. Foreign Affairs, Defense, and Trade Division. 23 Apr. 2008 http://209.85.173.104/search?q=cache:zl2k-hCxrKMJ:www.fas.org/sgp/crs/row/IB91121.pdf+U.S.+and+china+trade&hl=e&ct=clnk&cd=6&gl=us&client=firefox-a.
The White House, The National Security Strategy of the United States of America (March 2006), available at http://www.whitehouse.gov/nsc/nss/2006
Trade in Goods with China. U.S. Census Bureau. 24 Apr. 2008 http://www.census.gov/foreign-trade/balance/c5700.html#2008.
William Wei Li, Vice President of Finance, Class Presentation. 14 Apr. 2008.
From Batista to Castro. (N.D.) Retrieved April 25, 2008 from Wikipedia. http://en.wikipedia.org/wiki/Cuban_Revolution
Marxist-Leninist Cuba. (N.D.) Retrieved April 26, 2008 from Wikipedia. http://en.wikipedia.org/wiki/Cuba
Cuban Exile Community. (N.D.) Retrieved April 25, 2008 from Wikipedia. http://en.wikipedia.org/wiki/Cuban-American
Hanson, Stephanie. U.S.-Cuban Relations. Council on Foreign Relations. Feb. 21, 2008. http://www.cfr.org/publication/11113/uscuba_relations.html
Elena Muguire, 422 N. Northwest Hwy, Park Ridge, IL 60068, (847) 692-3010, helen@frimarkinsurance.com

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