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In one sense virtually all trade is restricted. At the very least buyers and/or sellers are required to tell governments about their transactions, even at the level of individual travelers. Think of those customs forms that are the concluding ritual of international flights. But, of course, some trade is more restricted than others.
We tend to think of the restrictions as a number line from 0 to 10, where "0" is an embargo with almost no trade, and 10 is the platonic ideal of free trade with no restrictions whatsoever - sort of like this chart. (The pure free trade line is purely imaginary.)
 Figure 1 - Blue: Embargo, Orange: Column 2, Gray: Preferential, and Yellow: Column 1 or MFN.(The values represented here are completely notional. We don't know the volumes of U.S. imports that belong in each of these groups. We wish we did.)
If you think of U.S. imports in terms of a line or lines like these, Cuba's problem is obvious. She is now in the blue, embargo group where almost everything is banned. If Congress were to make trade legal - nothing more, just legal - then imports from Cuba would be subject to the so-called Column 2 rates. These are the high rates of the Tariff Act of 1930 - the Smoot-Hawley tariffs, which are associated with cutting off the oxygen of trade in the midst of the depression. As John Magnus put it, "Don't expect a lot of volume" at those rates.
As for the Column 1 rates, those are the MFN or Most Favored Nation rates, and they are rates paid on imports from China, Japan, and most other WTO members. Cuba is the exception, because although both Cuba and the United States are members of the WTO, the rules of the WTO do not apply between those two countries.
That being the case, getting Cuba to the more breathable economic air of Column 1 on a permanent basis would require a heavy lift for Congress, namely legislation granting Cuba PNTR or Permanent Normal Trade Relations.
Yet, from the perspective of some, even MFN or Column 1 rates would not be enough to give Cuba and Cuban producers a fair shot at the American market. That is because the products of many of Cuba's competitors enjoy duty-free access in the United States under the Caribbean Basin Initiative, CBI, and other preference programs.
John Magnus covered all of these tariff-rate points and more, and he did so in the middle of his presentation. There was a reason for that, and the reason is the large number of obstacles that need to be overcome first if Cuba is to get out of the blue embargo box. Those up-front obstacles are what Mr. Magnus talked about first. Here are some of them.
U.S. CUBA TRADE - SELECTED IMEDIMENTS
Section 620(a) of the Foreign Assistance Act of 1961, which includes the statement: "...the President is authorized to establish and maintain a total embargo upon all trade between the United States and Cuba.... ." Mr. Magnus characterized this one as having a "charming directness."
The Cuban Democracy Act of 1992, which among other things, "statutorily precluded the issuance of licenses for various kinds of transactions that could previously be licensed."
The Cuban Liberty and Democratic Solidarity Act of 1996, also known as the Helms-Burton Act, which is widely understood as having further codified the embargo as well instituting sanctions against certain third-country transactions with Cuba.
The Trade Sanctions Reform and Export Enhancement Act of 2000.
The Internal Revenue Code of 1986. "We need to amend section 901(j)(2) to restore the foreign tax credit with respect to Cuba." Mr. Magnus said.
The Food Security Act of 1985. Here Mr. Magnus said, "We need to repeal section 902(c) so that Cuba can be included in the quota allocations under our Sugar Program."
Trading with the Enemy Act of 1917, "needs to be amended," Mr. Magnus said with respect to certain authorities.
In the same series of comments Mr. Magnus also mentioned:
The Export Administration Act of 1979,
The International Emergency Economic Powers Act , and
Section 211 of the Department of Commerce and Related Agencies Appropriations Act.
As we have said, this was a rich presentation. We have of necessity left out important elements, and so, again, you will want to read it for yourself.
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In these entries, we try to fill in such blanks as we can, but where there are important open questions, well, we take note. One such question emerged during the Question-and-Answer session at the September 10 event. Specifically, that question touched on the relationship between the Trading with the Enemy Act, TWEA, as it applies to Cuba and the Cuba specific legislation mentioned above. More broadly, it had to do, on the one hand, with the actions Congress would need to take for the U.S. is to have a new, more liberal trading relationship with Cuba and, on the other hand, with how much the President can do on his own. Mr. Magnus was asked to talk about the first of these, the relationship between the Trading with the Enemy Act and other Cuba statutes. This is what he said:
"So, that might be a way of framing the question about to what extent has the embargo actually been enshrined in statute, and sort of made permanent and automatic legislatively? You know, I think a lot of people have been surprised by what they've been observing in terms of the answer to that, because, lo and behold, the President has asserted, and nobody seems to have figured out that there is a gap in his logic, that he does have the authority to green light and bless certain categories of imports, despite all of this legislation being on the books.
"And that's even in a situation where he has, at the most recent opportunity, renewed the TWEA. So, would he have broader authority if he didn't renew it? Maybe. Would he use it? Don't know. Would it instantly provoke some sort of an effort on the Hill to try to paper over the gap that that might highlight? Probably.
"I've spent a little bit of time talking to practitioners, sanctions practitioners, about this, and I think everybody was a little bit surprised to learn that ... the conventional wisdom, which is that Congress had taken the embargo and enacted it so that it was stuck there independently of what the Executive might wish to do, ... doesn't turn out to be completely true.
"And that may have some implications for what happens at least in the near term during the remainder of this presidency. If this administration concludes that ... the challenge it's thrown down to the Congress to go ahead and start doing legislative work isn't going to be taken up, and they want to move the needle further before they leave office, then this will become very relevant."
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