Committee: World Trade Organisation

Country: Cuba

Agenda: Discussing barriers and benefits of international trade and sustainable economies
between developed and developing countries.

World Trade Organisation (WTO) is a forum for governments to negotiate trade agreements. It is
a place for them to settle trade disputes. The purpose of the WTO is to ensure global
trade commences smoothly, freely and predictably. The WTO creates and embodies the ground
rules for global trade among member nations, offering a system for international commerce.
Cuba has been a member of WTO since 20 April 1995.

Cuba, a World Trade Organization (WTO) member, was marginalized from these organizations
following the installation of a communist regime by Fidel Castro in 1959. This was due largely
to the US embargo on trade and investment with Cuba beginning in 1960, but also because of
Cuba’s planned economy, based on centralization, state trading, heavy dependence on aid from
the Soviet Union (and later Venezuela) and barter arrangements with most its trading partners.
In the meantime, Cuba at first shunned GATT trade liberalization negotiations, but later joined
the Uruguay Round negotiations in 1986, when it saw an opportunity to benefit from
participation in a platform for developing country trade interests and opposition to the US-led
Quad. Since the founding of the WTO, Cuba has continued to follow this political strategy,
particularly in the Doha Round, but has rarely taken active part in WTO committee work or
dispute settlement. However, this may change if the US embargo ends and Cuban trade opens up
enough to warrant WTO scrutiny.

This paper sets out to identify the unique position of Cuba in the GATT/WTO system, in contrast
to other communist governments that have taken part in it. The analysis predicts that an end to
the US embargo, in itself, would only partially change the picture, since the Cuban government
still maintains tight control over most of its production, trade and investment, limiting its access
to foreign markets. Yet recent developments indicate that Cuba has been forced to introduce
economic reform measures in order to retain access to external credit markets. Continued WTO
membership thus represents a rational strategy for Cuba, since (most favored nation) MFN
market access and re-integration into the world economy may become necessary to sustain its
economy.
The combined value of exports and imports is equal to 31.6 percent of GDP. The average applied
tariff rate is 8.0 percent. As of June 30, 2018, according to the WTO, Cuba had 50 nontariff
measures in force. State-owned enterprises significantly distort the economy.

Cuba's average tariff rate is 10 percent. The country's planned economy deters foreign trade and
investment. The state maintains strict capital and exchange controls. In September 2019, EU
foreign policy chief Federica Mogherini stated during a three-day visit to Cuba that the European
Union is committed to helping Cuba develop its economy.

Sugar historically has been the country’s main export. In the early 21st century, Cuba also
benefited from a joint venture with Venezuela, which shipped petroleum to Cuba for refining and
export. In the process, refined fuels vied with sugar to be Cuba’s top export. Nickel and other
minerals, pharmaceutical products, tobacco (notably cigars), and beverages along with food and
food products (including fish and citrus fruits) are also important exports. Among the most
important imports are mineral fuels and lubricants, foods, machinery and transport equipment,
and chemicals. Cuba’s main trading partners include Venezuela, China, Spain, Canada,
Argentina, Brazil, and the Netherlands.

The relationship cultivated between Cuba and Venezuela in recent years resulted in agreements
in which Venezuela provides cheap oil in exchange for Cuban "missions" of doctors to bolster
the Venezuelan health care system. In nominal terms, the Venezuelan subsidy is higher than
whatever subsidy the Soviet Union gave to Cuba, with the Cuban state receiving cheap oil and
the Cuban economy receiving around $6 billion annually. According to Mesa-Lago, a Cuban-
born US economist. "If this help stops, industry is paralysed, transportation is paralysed and
you'll see the effects in everything from electricity to sugar mills," he said.

From an economic standpoint, Cuba relies much more on Venezuela than Venezuela does on
Cuba. As of 2012, Venezuela accounted for 20.8% of Cuba's GDP while Cuba only accounted
for roughly 4% of Venezuela's.

The Netherlands receives the largest share of Cuban exports (24%), 70 to 80% of which go
through Indiana Finance BV, a company owned by the Van't Wout family, who have close
personal ties with Fidel Castro. Currently, this trend can be seen in other colonial Caribbean
communities who have direct political ties with the global economy. Cuba's primary import
partner is Venezuela. The second largest trade partner is Canada, with a 22% share of the Cuban
export market.
References:

https://www.wto.org/

https://www.heritage.org/index/country/cuba

https://iaes.confex.com/iaes/82am/webprogram

https://en.wikipedia.org/wiki/Economy_of_Cuba