Cuba: U.S. Policy Changes Increased Engagement with Private Sector, but Agency Information Collection Is Limited
Fast Facts
View Spanish version of Highlights (PDF, 1 page).
In 2014, the President announced a shift in U.S. policy toward Cuba—restoring diplomatic relations, modifying the long-standing economic embargo, and increasing support for the Cuban people, including the nascent private sector.
Along with the import of cigars and rum, new U.S. regulations have fostered some travel and commerce with Cuba—but the embargo and Cuban government barriers still limit economic engagement.
Federal agencies have begun to engage with U.S. businesses and Cuban entrepreneurs, but with uncertain results.
We recommended agencies start collecting information necessary to monitor the economic impacts of the policy change.
Private Taxi in Havana, Cuba
Photo of a 1950s style car on a road. Graffiti and monument in the background.
Highlights
View Spanish version of Highlights (PDF, 1 page).
What GAO Found
The Cuban private sector has grown rapidly since 2008 but remains small compared with other economies and faces various constraints. The Cuban private sector includes (1) self-employed entrepreneurs, (2) agricultural cooperatives and other private farmers, and (3) nonagricultural cooperatives. Cuban government data indicate that the percentage of the Cuban workforce in the private sector has grown from 17 percent in 2008 to 29 percent in 2015. However, the Cuban private sector is smaller than in 16 comparable countries GAO analyzed. It is also still highly constrained by the Cuban government and faces challenges, including a lack of access to needed supplies and equipment.
Examples of a Cuban Private Sector Restaurant, Bookseller, and Auto Repair Shop
U.S. regulatory changes have created some new opportunities in Cuba, but economic engagement is still limited. The U.S. government has made six sets of regulatory changes since December 2014 to ease restrictions on travel, remittances, financial services, and trade with Cuba. For example, the Department of Commerce created a new export license exemption to facilitate U.S. exports that support the Cuban people, including the private sector. The regulatory changes have generated U.S. business interest; however, relatively few commercial deals have been completed. In addition, U.S. trade with Cuba has decreased, driven by declining agricultural exports, which have been legal since 2000. Changes in remittance and travel regulations are expected to benefit the Cuban private sector through increased capital and purchases from U.S. visitors. Although the regulatory changes have created some new opportunities for U.S. businesses and the Cuban private sector, embargo restrictions and Cuban government barriers continue to limit U.S.-Cuba economic engagement.
U.S. agencies have conducted a range of activities to support U.S. policy changes; however, embargo restrictions, resource constraints, and Cuban government priorities affect their ability to support U.S. businesses or engage the Cuban private sector. Within these limitations, the Department of State (State) and other U.S. agencies have engaged with the Cuban government, U.S. businesses, and the Cuban private sector. Among other things, they have established memoranda of understanding with the Cuban government, hosted events with Cuban entrepreneurs, and promoted training opportunities. However, U.S. agencies have not collected and documented key information on the Cuban economy, the effects of regulatory changes, and agency activities, in accordance with federal standards for internal control. Without collecting and documenting information, agencies risk being unable to monitor and assess changes over time in economic engagement with Cuba, including with the private sector.
Why GAO Did This Study
In the more than 50 years since it established an embargo on Cuba, the U.S. government has pursued a policy designed to isolate Cuba's communist regime. In December 2014, the President announced a significant change in U.S. policy. Since then, the U.S. government has restored diplomatic relations with Cuba and modified some aspects of the U.S. embargo. The Cuban government has also implemented economic reforms in recent years to allow for certain private sector activity. While much of Cuba's economy is still state-controlled and the U.S. embargo on Cuba remains in place, developments in recent years have created new opportunities for U.S. economic engagement with Cuba.
This report examines what is known about (1) the size and scope of the Cuban private sector, (2) the effect of changes to U.S. legal and regulatory restrictions on the Cuban private sector and U.S. businesses, and (3) the extent to which the U.S. government has planned and implemented activities to increase U.S. engagement with the Cuban private sector and expand U.S. economic opportunities in Cuba. GAO analyzed U.S. government and other assessments of the Cuban private sector, analyzed Cuban government data, interviewed U.S. federal and nonfederal Cuba experts, and conducted fieldwork in Cuba.
Recommendations
GAO recommends that State, in consultation with key agencies, take steps to identify and collect information to monitor changes in economic engagement resulting from the shift in U.S. policy. State concurred with the recommendation.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of State | To ensure that all relevant U.S. agencies have information on the effect of changes in U.S. policy related to Cuba, the Secretary of State, in consultation with the Department of Commerce, Department of the Treasury, U.S. Department of Agriculture, and other relevant agencies, should take steps to identify and begin to collect the information that would allow them to monitor changes in economic engagement, including with the Cuban private sector. |
In December 2016, GAO reported on U.S. government activities to support the Cuban private sector and facilitate U.S. businesses' economic engagement in Cuba. President Obama announced a major shift in U.S. policy toward Cuba in December 2014. GAO reported on a series of regulatory changes that U.S. agencies made to implement this policy and modify some aspects of the U.S. embargo on Cuba, which had been in place for more than 50 years. In addition, GAO reported on a number of other steps that U.S. agencies had taken to work with the Cuban government, U.S. businesses, and the Cuban private sector to enhance understanding of the regulatory changes and increase opportunities for economic engagement between the two countries. However, GAO also found that the Department of State (State) and other U.S. agencies had not taken steps to collect and document key information that would enable them to monitor changes in economic engagement with Cuba, including with the Cuban private sector, resulting from the Obama administration's policy. GAO found that State and other U.S. agencies had not collected or documented key information on (1) the Cuban economy, (2) the effects of U.S. regulatory changes, and (3) U.S. agencies' activities to support economic engagement with the Cuban private sector. To address this issue, GAO recommended that the Secretary of State, in consultation with the Departments of Commerce, Treasury, and Agriculture; as well as other relevant agencies; take steps to identify and begin to collect the information that would allow them to monitor changes in economic engagement with Cuba, including with the Cuban private sector. In its comments on GAO's report, State concurred with the recommendation and stated that it would work to secure the resources necessary to implement it. Since GAO issued its report, the Trump administration came into office and made a number of changes in U.S. policy toward Cuba, including increasing some restrictions on engagement with Cuba that had been previously loosened by the Obama administration. Although the focus of U.S. policy toward Cuba changed under the new administration, the U.S. government stated its continued desire to support the Cuban private sector. State took steps to address GAO's recommendation. Since June 2017, the U.S. Embassy in Havana wrote a series of cables that have reported to State headquarters and other U.S. agencies on U.S.-Cuban economic engagement, including with the Cuban private sector. This reporting documented key information about the Cuban private sector and helped U.S. government officials in various agencies better monitor the impact of U.S. policy toward Cuba.
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