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Reading the Tea Leaves of Pretextual Protectionism

January 26, 2017

READING THE TEA LEAVES OF PRETEXTUAL PROTECTIONISM: THE FUTURE OF THE U.S.-CUBA RELATIONSHIP

By: Charles Barrera Moore, Volume 101 Lead Online Editor

In the wake of the death of Cuban dictator Fidel Castro, both President Obama and President Trump acknowledged that the United States is faced with a crucial moment in its relationship with the Cuban government.[1] As the decades-long embargo of the island nation relaxes, many hope that such concessions will come hand-in-hand with improved human rights and standards of living for Cubans. President Trump stated as much in a Tweet, commenting on the United States’ relationship with Cuba going forward: “If Cuba is unwilling to make a better deal for the Cuban people, the Cuban/American people and the U.S. as a whole, I will terminate the deal.”[2] Indeed, as President Obama demonstrated in the last two years of his administration, the President does have a great deal of power to influence both the course of diplomatic relations as well as economic opportunities in Cuba.[3] However, poor human rights conditions could also give the United States a convenient opt-out of furthering relations with the Cuban government, if the government decided to change course. For a President who has preached protecting domestic industries at home,[4] it would be prudent to question whether Trump is truly dedicated to opening up new foreign markets to compete within the borders of the United States. In fact, liberalizing trade with Cuba may put U.S. industries, particularly the sugar industry, at risk by offering another competitor from a neighbor with cheap labor. Therefore, in reading the tea leaves on what direction the U.S.-Cuba relationship may go under the Trump administration, it would be wise to look to the production of the U.S. sugar industry to offer clues. The Trump administration may very well rein in the thawing of U.S.-Cuba relations as a means of protecting U.S. industries while pointing to Cuba’s substandard human rights record as justification.

Although it may seem reasonable at first glance to demand that a country such as Cuba comply with certain human rights standards in order for the U.S. to open trade, such a requirement is not only unreasonable but also works counter to the goal of improved human rights. Rather, there is evidence within the academic literature that a more pragmatic approach would require engagement in trade so as to promote human rights (instead of demanding that those norms arise as a precondition to trade).

President Trump creates a false dichotomy by suggesting that (a) certain human rights standards must be met before (b) the U.S. opens trade with Cuba. In reality, the two cannot be separated; they work in tandem with one another.[5] Only with a stronger economy can a country like Cuba be empowered to achieve these higher human rights standards.[6] More trade with the U.S. would lead to a higher level of welfare for the Cuban people, which is a prerequisite for a good human rights record.[7] Alan O. Sykes, likely the leading scholar on the intersection of law and economics (particularly in the realm of international economics), posits that countries with weak economies may not be able to finance a domestic human rights project.[8] Professor Sykes has identified at least two reasons why this is so: (1) protecting human rights can be a costly endeavor to governments in that they are required to monitor and enforce certain norms, through a court system for example and (2) society itself must also pay for a certain baseline of human rights through, among other things, higher wages, access to healthcare, and environmental standards.[9] Additionally, not only does foreign investment increase living standards domestically,[10] but liberalized trade can increase access to certain goods, such as medicine, that will dramatically increase the standard of living which may not be available in the national marketplace.[11] With foreign investment from the U.S., Cuba will be given an opportunity to create a self-sustaining domestic economy that ultimately may afford the protection of human rights.[12]

Of course, if a repressive state such as Cuba acts in a manner that offends U.S. democratic principles, there will be a temptation to impose sanctions. However, there is evidence that such measures do not achieve their intended goal of coercing compliance with human rights norms. Professor Sykes suggests that states that are isolated are more likely to commit human rights abuses.[13] Sykes’s empirical findings on the topic “strongly suggest that policies which promote real income growth will also tend to promote human rights across a broad range of concerns.”[14] His approach would advocate “narrowly tailored” solutions in lieu of the broad-reaching embargo currently in place.[15]

As the Cuban government has displayed, it is open to instituting liberal reforms in hopes of creating a better relationship with the U.S. while also improving the at-home conditions for its citizens.[16] Therefore, a rational U.S. policy would encourage engagement in trade with Cuba, thus improving the economy and, hopefully eventually, the economic and political rights for Cuban citizens.[17]

Any threat to cut off relations with the Cuban government runs counter to these principles. While President Trump may have a different philosophy on how best to achieve better human rights on the ground in Cuba, his protectionist agenda[18] suggests there may be other motives driving any potential policy with Cuba.

Donald Trump’s threats to curtail the thawing of the U.S.-Cuba relationship may in fact be based more on his desire to protect the U.S. sugar industry. Opening trade with Cuba would expose the U.S. sugar industry to additional competition from a country whose main export is raw sugar.[19] The U.S. sugar industry is one that the government has traditionally sought to safeguard, which has led to increased domestic prices (and thus better business) charged by U.S. sugar manufacturers.[20] In fact, in the past, the U.S. has made, and later sought to renegotiate, deals with foreign states in an effort to curtail sugar imports.[21]

Ultimately, it seems more likely that a Trump administration would slow the process of normalizing relations with Cuba based on protecting industries in the U.S. rather than on the basis of Cuba’s human rights record. Of course, it is not unique that a country would engage in certain disputes selectively; however, there is a legitimate concern that placing the interests of the U.S. sugar industry, for example, over the rights of Cuban nationals would lessen, not improve, Cuba’s human rights standards.[22] Thus, any observer looking for a predictor of, and, quite possibly, a motivation behind, President Trump’s policies toward Cuba can look to the U.S. domestic market, particularly the sugar industry.

  1. Julie Hirschfeld Davis, Fate of U.S.-Cuba Thaw Is Less Certain Under Trump, N.Y. Times (Nov. 26, 2016), http://www.nytimes.com/2016/11/26/us/politics/us-cuba-relations-fidel-castro-donald-trump.html (“The statements from the president and the president-elect were remarkable both for their differences and their similarities. While Mr. Obama steered clear of disparaging Mr. Castro, in keeping with his efforts to essentially defang a long-nursed mutual grudge, Mr. Trump condemned him. But both also described Mr. Castro’s death as a potential turning point for Cuba, and both appeared to accept as fact that its prospects for freedom and prosperity are bound up with that of the United States.”). ↑
  2. Donald J. Trump (@realDonaldTrump), Twitter (Nov. 28, 2016, 6:02 AM), https://twitter.com/realDonaldTrump/status/803237535178772481. Even before Castro’s death, Trump had indicated that he would “reverse Obama’s Executive Orders and concessions towards Cuba until freedoms are restored.” Donald J. Trump (@realDonaldTrump), Twitter (Oct. 12, 2016 12:20 PM), https://twitter.com/realdonaldtrump/status/786285509668696065. ↑
  3. See Ted Piccone, On Cuba, Obama Looks Beyond 2016, Brookings Inst. (Oct. 14, 2016), https://www.brookings.edu/blog/order-from-chaos/2016/10/14/on-cuba-obama-looks-beyond-2016 (“Since the decision nearly two years ago to begin a process of normalization, major progress has been made toward that goal. The list of new activities is long and diverse: the restoration of diplomatic relations and reopening of embassies in each country’s capital; the launch of direct commercial flights serving multiple cities; the 75 percent increase in U.S. travelers to the island in 2015 alone; and the entry of U.S. companies like General Electric, Airbnb, Google, and Starwood Hotels into Cuba’s market, among others. Bilateral cooperation is moving into new realms that serve both nations’ interests: biomedical research including on cancer and diabetes treatments; protection of marine environments; disaster relief and public health assistance to confront Ebola in West Africa and cholera in Haiti; and on security issues like counterterrorism, counternarcotics, and combating illegal trafficking.”). ↑
  4. See George F. Will, A Plan to Make America 1953 Again, Wash. Post (Dec. 28, 2016), https://www.washingtonpost.com/opinions/a-plan-to-make-america-1953-again/2016/12/28/7f3e6a54-cc4c-11e6-a87f-b917067331bb_story.html?utm_term=.162a97ea417c (describing the recent “revival of protectionism” and arguing that such an ideology may not be supported by the numbers); Paul Krugman, And the Trade War Came, N.Y. Times (Dec. 26, 2016), http://www.nytimes.com/2016/12/26/opinion/and-the-trade-war-came.html?_r=0 (“[P]rotectionism was a central theme of the Trump campaign.”). Rather than focusing on American consumers, Trump’s “vision” on trade indicates that his focus would be on “creat[ing] American jobs, increase[ing] American wages, and reduc[ing] America’s trade deficit,” all fairly unveiled references to protectionism of domestic industries. Trade, Donald J. Trump for President, https://www.donaldjtrump.com/policies/trade (last visited Jan. 26, 2017). ↑
  5. Robert Wai, Countering, Branding, Dealing: Using Economic and Social Rights in and Around the International Trade Regime, 14 European J. Int’l L. 35, 43 (2003) (“[A]ny strong isolation of human rights concerns from economic considerations is untenable. As Philip Alston observes, the isolation of human rights concerns from trade issues risks confirming the implausible assumption that ‘human rights problems constitute political issues, whereas economic and other financial matters are technical or apolitical issues, and the separation between these two tracks should not be interfered with.’”). ↑
  6. Id. at 44 (“Economic development is central to providing the economic means for the realisation of human rights, as well as the conditions necessary for political pressure for higher social standards.”); Mark A. A. Warner, Globalization and Human Rights: An Economic Model, 25 Brook. J. Int’l L. 99, 107 (1999) (“[O]pen economic policies reinforce economic development, and therefore economic rights . . . . [and] over-time, in most cases open economic policies would support the evolution of political rights.”). ↑
  7. Thomas Cottier, Trade and Human Rights: A Relationship to Discover, 5 J. Int’l Econ. L. 111 (2002) (“Trade flows generally enhance overall welfare creation (GDP), and welfare is a critical ingredient to develop human rights in society at large.”). ↑
  8. Alan O. Sykes, International Trade and Human Rights: An Economic Perspective 3 (John M. Olin Program in Law and Econs., Working Paper No. 188, 2003), http://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1278&context=law_and_economics. ↑
  9. Id. ↑
  10. Id. at 2 (“Yet, there is at least one proposition on which virtually all economists agree—trade liberalization raises living standards in the aggregate.”). ↑
  11. Wai, supra note 5, at 45. ↑
  12. Id. (“Trade access to export markets is required to provide a foundation for viable domestic production, and access is needed to imports such as medicines that can serve social development needs, especially in smaller developing states.”). ↑
  13. Sykes, supra note 8, at 4; see also Wai, supra note 5, at 63 (“Sanctions often have a direct negative impact on such basic social rights as the right to food, health, education and work.”). ↑
  14. Sykes, supra note 8, at 8. ↑
  15. See id. at 14. ↑
  16. See Julia E. Sweig, Cuba After Communism: The Economic Reforms that Are Transforming the Island, Council on Foreign Relations (July/Aug. 2013), http://www.cfr.org/cuba/cuba-after-communism/p30991. ↑
  17. See Warner, supra note 6, at 107. ↑
  18. President Trump has already abandoned the Trans-Pacific Partnership (TPP) and, while on the campaign trail, promised to impose tariffs on companies that move jobs out of the U.S., renegotiate or withdraw from the North American Free Trade Agreement (NAFTA), and “balance” trade deficits with other countries. See Brian Naylor, Trump Signs 3 Executive Orders, Including Withdrawal From Pacific Trade Deal, NPR (Jan. 23, 2017), http://www.npr.org/2017/01/23/511200885/trump-signs-3-executive-orders-including-withdrawal-from-pacific-trade-deal; Mahita Gajanan, Donald Trump Warns of 35% Tariff for Companies that Move Abroad, Fortune (Dec. 4, 2016), http://fortune.com/2016/12/04/donald-trump-tariff-company-regulations; Katie Allen, Trump’s Economic Policies: Protectionism, Low Taxes and Coal Mines, The Guardian (Nov. 9, 2016), https://www.theguardian.com/us-news/2016/nov/09/trumps-economic-policies-protectionism-low-taxes-and-coal-mines; In Foreign Policy Address, Trump Blasts NAFTA, Pledges to “Balance” Trade Deficit with China, InsideTrade (Apr. 28, 2016), https://insidetrade.com/inside-us-trade/foreign-policy-address-trump-blasts-nafta-pledges-balance-trade-deficit-china. ↑
  19. In 2014, Cuba exported $392 million worth of raw sugar, accounting for about twenty-three percent of the country’s exports. Cuba Exports, Observatory of Econ. Complexity, http://atlas.media.mit.edu/en/profile/country/cub/#Exports (last visited Jan. 26, 2017). ↑
  20. See Bryan Riley, U.S. Trade Policy Gouges American Sugar Consumers, Heritage Found. (June 5, 2014), http://www.heritage.org/research/reports/2014/06/us-trade-policy-gouges-american-sugar-consumers (detailing the U.S. government’s efforts to protect the sugar industry since the 1920s, which has led to inflated prices for U.S. consumers, today approximately forty-three percent higher for raw sugar than global prices). Some have advocated lowering tariff barriers in order to create competition, thus reducing the price of domestic sugar and (hopefully) stalling the exportation of U.S. manufacturing jobs lost due to rising sugar prices. See, e.g., Michael Lucci, Trump Can Help Save Chicago Manufacturing Jobs by Taking on Sugar Tariffs, Ill. Policy (Dec. 4, 2016), https://www.illinoispolicy.org/trump-can-help-save-chicago-manufacturing-jobs-by-taking-on-sugar-tariffs. Trump will face directly conflicting protectionist options to either protect the U.S. sugar industry or help companies, such as cereal manufacturers, that are dependent on sugar in their production process. ↑
  21. See Chris Prentice, U.S. Says Mexico Sugar Trade Pact May Not Be Working, Reuters (Nov. 29, 2016), http://www.reuters.com/article/usa-sugar-mexico-idUSL1N1DU25R. ↑
  22. Wai, supra note 5, at 51 (describing the “dual motives in international relations,” stating, “[a]lthough the motivation for international human rights protection may be genuine moral concern for the interest of others in foreign jurisdictions, it is frequently a selective, and often self-serving, engagement with these problems. The main concern in bringing human rights into the international trade regime is the misuse of human rights for ‘selfish’ purposes such as protection of domestic producers.”); see also supra notes 5–15 (detailing the belief that trade liberalization, rather than isolation, is the preferred method by which the U.S. can improve human rights in Cuba). ↑
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