Easing Sanctions on Cuba Could Be Boon for Texas

The White House’s decision to ease sanctions on Cuba and improve America’s relationship with the Castro regime could reignite Texas’ once-flourishing economic ties with the island nation, foreign-policy experts say.

Texas was once a leading exporter to Cuba in a quiet partnership that helped produce hundreds of jobs and millions in revenue for the Lone Star State. The relationship didn’t end with the U.S. embargo decades ago, but thrived until just a few years ago, even as Republicans dominated the Texas political landscape.

Trading with Cuba is legal under the provisions of the Trade Sanctions Reform and Export Enhancement Act of 2000, which allows U.S. businesses to ship a limited amount of products to Cuba for profit.

In 2009, $85 million in agricultural products bound for Cuba left from Texas ports, second only to Louisiana's $241 million, according to Parr Rosson, director of Texas A&M’s Center for North American Studies. In 2008, about $143 million in food and agricultural goods — including wheat, poultry and corn — left from Texas ports. About $45 million of those products were grown and processed here.

The volume of Cuba-bound goods has since tapered off due to changes made by the American and Cuban governments. But the White House’s new Cuban policy announced Wednesday includes allowing people living in America to send more money to people in Cuba, which Rosson said would drive up demand for Texas goods.

“From the economic standing, it’s encouraging. It’s going to do a number of things that will boost demand for food products,” Rosson said. “It’s pretty positive for Texas exporters, and I believe this will create an additional demand for our products there and increase our exports.”

Data on Texas goods shipped to Cuba is no longer tracked due to budget cuts, but Rosson estimates volume has dropped by at least 50 percent.

In 2008, about 91 cents in additional business activity was created for every dollar worth of goods exported. That figure should hold today, he said. Trade with Cuba also created more than 750 jobs in Texas in 2008.

The drop was caused, in part, by the layers of red tape Cubans must sift through to do business with American exporters, said Cynthia Thomas, director of Dallas-based TriDimension Strategies and founder of the Texas-Cuba Trade Alliance. Cubans must secure letters of credit — guarantees from banks that they will pay for the costs of goods if a buyer cannot — to receive several goods, she said. They must also wire money through a third-party country. That policy will likely change after Wednesday's announcement. 

The current policy has affected cotton exports the most, she said. (Texas is the country’s top cotton-producing state, according to the National Cotton Council of America.)

“We went from $4 million worth of cotton sales to zero in 2013,” she said.

Texas will be in a prime position to profit from thawed relations between the countries, Thomas said.

“Houston, or any of those ports — Freeport, Beaumont — are ideally located for just-in-time deliveries,” she said. “We’ve got several companies in Texas that are grocery suppliers in the Houston and San Antonio areas that are ideally situated to take advantage of that once that starts happening. It’s down the road, but everybody is gearing [up] for that type of thinking.”

Expanding trade with Cuba will likely meet some resistance as Republicans, including U.S. Sen. Ted Cruz, R-Texas, and Gov. Rick Perry have already expressed their dismay with President Obama’s shift in policy.

“The idea that we would strengthen a regime that is a state sponsor of terrorism that is exporting communism throughout Latin America, and is working to undermine America, that only undermines our national security interest,” Cruz said in a statement.

Thomas predicts that common sense will ultimately prevail. She noted that in 2001, Texas was the first state to pass a bipartisan resolution calling for Congress to ease sanctions against the Castro regime. She applauded Wednesday’s announcement as a step toward modernizing the country.

“The federal government put on the adult pants and said it’s time to start doing policy that helps the Cuban people rather than keeps them on a treadmill reliving the early 1960s,” she said.