US-Cuba Thaw: Trade Relations Remain Under Tight Controls

The historic breakthrough in U.S.-Cuba relations announced Wednesday will allow more money to flow to the Caribbean island but keep trade and investment relations under tight controls, experts said.

After a trade embargo on Cuba for more than 50 years, the White House said it will expand how much money Americans can send to the impoverished country and open up the flow of U.S. tourists there.

But investment and trade will remain strictly controlled under laws passed by Congress and Cuba's own restrictions, holding off moves to enter the Cuban market by industries from U.S. hoteliers to oil companies and automakers.

Gary Hufbauer of the Peterson Institute for International Economics in Washington estimates that a full thaw in relations could open up $5 billion to $10 billion in investment into Cuba. 

But that will not start right away, he told AFP.

President Obama "has done virtually all he can without an act of Congress by announcing sweeping changes to the U.S. sanctions on Cuba," said Lawrence Ward, an international business lawyer with the Dorsey & Whitney law firm.

"Obama has squarely placed the ball in the Congress’s court to engage in serious discussion on fully lifting the 50-year embargo."

Hufbauer said there remain important hurdles to that happening.

"Both trade and investment depend on reciprocal liberalization with the United States, across a range of sectors and measures, and this will take time," he said.

"Also, Cuba needs to compensate for past expropriation," he added.

The Fidel Castro-led communists who took power in 1959 seized millions of dollars' worth of real estate and other property from American owners in the process.

Copyright Agence France-Presse, 2014