Regional Trade Agreements and Cuba: A New Path Toward Independence?

              Over the course of its fifty-year quest for political sovereignty and economic equality, Cuba has struggled to generate enough domestic capital to finance both economic development and ambitious social programs. The State’s current effort is geared toward participation in regional integration entities that seek economic growth as well as social and human development.   

            The Cuban government identifies itself as Marxist and seeks to escape the structural violence that is imposed on formerly colonized nations by the capitalist world economy. To emphasize the balance of trade deficit that characterized the pre-revolutionary economy, Fidel Castro noted that, “with the exception of a few food, lumber and textile industries, Cuba continues to be a producer of raw materials. We export sugar to import candy, we export hides to import shoes, we export iron to import plows. Everybody agrees that the need to industrialize the country is urgent....” (Castro 1953). Escaping dependence through economic diversification was considered to be a key revolutionary goal.

            This goal is shared by a cohort of new-leftist leaders in Latin America, including Hugo Chávez  (Venezuela), Luiz Inacio Lula da Silva (Brazil, 2002), and Evo Morales (Bolivia, 2005). As part of an effort to remediate the damage done to their societies and economies by neoliberal policies, these countries have intensified their engagement in various integration entities.  Some of these new and restructured entities are Alternativa Bolivariana de las Americas (ALBA), the Caribbean Community and Common Market (CARICOM), and the Latin American and Caribbean Community of Nations (CELAC) (Heine 2012: 215).  This cooperative strategy does not seek to create socialism, but, in the words of Hugo Chávez, it does seek to curb the “savage neoliberalism” imposed by hegemonic forces (Azieri: 105).

Two New-Left Regional Integration Entities: CELAC and ALBA

            ALBA entered into force on December 14, 2004 (Azieri: 107). Member countries include Cuba, Venezuela, Bolivia, Honduras, Dominica, St. Vincent and the Grenadines (Aponte-Garcia 2009: 491) As a “development project with social inclusion,” ALBA is intended to allow countries to make agreements based on their needs and what they have to offer (491). For example, if a country purchases oil from Venezuela’s oil company, PetroCaribe, through ALBA, they have 90 days to pay half of what is owed, and can pay through product exchanges if need be (492). Furthermore, the balance of the loan will be made under below-market rates, half of which will go into the Caribbean Fund, which is organized to carry out “social and economic projects within the importing country” (492). Thus, purchasing oil from PetroCaribe is similar to making an investment in one’s own country. In return, Cuba provides medical services in Venezuela, and provides treatments like eye surgeries for Venezuelans brought into Cuba (492).

            President Felipe Calderon of Mexico initiated CELAC in Feb 2010 in Cancun. It is described as an alternative to the Organization of American States, but it does not include the United States and Canada (Heine : 210; Venezuela Analysis 2013). CELAC has an extremely ambitious agenda; at the most recent meeting of CELAC in July 2013, the group put forward a fourteen-point proposal with objectives including the abolition of big agribusiness, an “end to the monopolization of the medicine industry by transnational pharmaceutical companies,” a democratization of land ownership, and “continental strategy to protect and store seeds,” (Venezuela Analysis 2013).

            Regional trade associations such as CELAC and ALBA represent important opportunities for Cuba to practice export-substitution. By facilitating the export of knowledge-based products such as medicine and education, these entities are enabling Cuba to diversify its range of export commodities beyond raw materials (Heine: 210). These groups allow Cuba to develop diverse trade relations within member countries while protecting it from the unforgiving wrath of the free market. 

            Cuba’s socialist project is about putting human beings, as opposed to capital, at the center of the economy. It has continued to do this in spite of nearly insurmountable odds and with no example of a socialist state after which to model itself. Economic performance has improved in this context; between 1993 and 1999, GDP grew at an average of 3.5% (Leogrande and Thomas 2002: 358). Dependence on the sugar industry was reduced, and trade with other Latin American countries and Western Europe increased from 15% to 75% of total trade (358).

            With its participation in regional trade entities, Cuba has been empowered to export its social programs to nearby countries, thus dramatically improving the quality of life for their respective citizens as well. These arrangements have allowed Cuba to employ an export substitution strategy, which is likely to have “backwards linkage” effects on the industrial base of the country, wherein product and service clusters developed for external markets encourage the expansion of the internal market, and therefore improve Cuba’s competitiveness in the world economy (Monreal 2002: 87).

            Cuba’s development strategies have often been unorthodox and have flown in the face of globally pervasive ideologies. Along with much of the rest of Latin America, Cuba has had to experiment with development methodologies under post-colonial conditions not historically faced by today’s “developed” nations. Closed regionalism offers an alternative that plays to Cuba’s strengths and protects it from its own weaknesses, as well as from conditions imposed by the global economy.  Recent improvements in the lives of Cuban nationals indicate that this strategy is working, but it will be several years before it is possible to see whether development trends hold.

Works Cited: 

Azieri, Max. 2009. The Castro-Chávez Alliance. Latin American Perspectives, Vol. 36, No. 1: Cuba: interpreting a Half Century of Revolution and Resistance, Part 1 (Jan 2009), pp. 99-110. 

Castro, Fidel. 1953. Speech “History Will Absolve Me.” 

Heine, Jorge. 2012. Regional Integration and Political Cooperation in Latin America. Latin American Research Review, Volume 47, No. 3 pp. 209-217.

Monreal, Pedro. 2002. Development as an Unfinished Affair: Cuba after the "Great Adjustment" of the 1990s. Latin American Perspectives, Vol. 29, No. 3, pp. 75-90.

Leogrande, William M. and Julie M. Thomas. 2002. Cuba’s Quest for Economic Independence. Journal of Latin American Studies, Vol. 34, No. 2, pp. 325-363. 

Venezuela Analysis 2012. “14-Point plan to end poverty in Venezuela.”

            Accessed August 26, 2013 at http://venezuelanalysis.com/news/9879.