CASE NUMBER: 87

CASE MNEMONIC: CUBA

CASE NAME: Cuba Tourism

• IDENTIFICATION
• LEGAL CLUSTERS
• GEOGRAPHIC CLUSTERS
• TRADE CLUSTERS
• ENVIRONMENT CLUSTERS
• OTHER FACTORS

I. Identification

1. The Issue

2. Description

Cuban officials have great hopes for the island's tourism sector. Hundreds of thousands of tourists from Canada, Europe, Mexico, and other Latin American countries now visit Cuba annually. Notably, most of the reported 76 joint ventures in1991 and 1992 are in the tourism sector. In November, 1992,Carlos Lage, Secretary for the Cuban Council of Ministers, stated that Cuba's gross tourism revenues would be $400 million and that at the beginning of 1993 Cuba would have 20,800 rooms available for international tourists. An industry expert noted that, with capital and expertise from Spanish, Mexican,Jamaican, German and other foreign hoteliers. Cuba will increase its number of hotel rooms to as many as 23,000 by next year from 13,357 in 1991. Ernest Preeg, in a 1993 publication from the Center for Strategic and International Studies, puts forth more conservative estimates. He calculates that Cuba's convertible currency earnings from the tourism sector amounted to only $350 million in 1992 and that by the end of 1992 only 13,000 rooms were available.

No matter which estimate is employed, it is clear that earnings from this sector recently have increased significantly. The World Tourism Organization estimates that in 1989 this sector generated $240 million for the Cuban economy. Using the more conservative estimate for 1992, this sector has grown 46 percent in the past three years. This growth is more significant given the overall decline in earnings currently faced by other Caribbean countries. Cuban officials remain optimistic for the prospects of this sector and as a recent Cuban American National Foundation (CANF)report points out, "Cuba is ideally situated to capture asignificant share of the $7 billion tourist trade in the Caribbean region."

Statutory law restricts U.S. tourist expenditures in Cuba. In July, 1963 the Secretary of the Treasury issued the Cuban Assets Control Regulations ("CAN Regulations") under the authority of Section 5(b) of the Trading With the Enemy Act of 1917 (TEA). The CAN Regulations imposed a complete embargo on any direct or indirect financial or commercial transaction with Cuba or Cuban nationals. Easing the U.S. travel restrictions likely will significantly increase the number of tourists visiting the island. Ernest Preeg estimates that in the fifth year of a post-Castro Cuba, four million tourists will visit the island.

The 500,000-600,000 tourists visiting Cuba last year may already be straining Cuba's environment. While information on tourism's impact on the Cuban ecology is not readily available, Cuban scientists note that on the north coast, the government is pushing to build beach front hotels in prime habitat regions for dozens of unique birds, rodents and iguanas. Biologists from the natural history museum in Havana can sometimes persuade the regime to delay or even halt construction for the benefit of wildlife, but the island's need for hard currency isso pressing that the scientists' efforts often fail.

Data from neighboring islands on the tourism industry's impact on the environment show that the effects can be significant. As a direct result from the stains of tourism, Cuba's neighbors have endured environmental effects ranging from damage to coral reefs to depletion of water tables (see BERMUDA and JAMTOUR and CORAL cases).

Barbados, which has no major rivers, depends heavily on underground water supplies. Environmentalists are pressuring the government to rescind its permission for construction of a golf course. They argue that the facility will place severestrains on the water supply and that the chemicals used on the grass will contaminate the underground water, but the government intends to make Barbados the golfing capital of the Caribbean. In the U.S. Virgin Islands, the island of St. John, famous for its national park and coral reefs, is suffering from regular assaults of tourists. Up to one million tourists visit the 52 sq. km island each year and contribute significantly to the destruction of the coral reefs. An article published inJuly 1993 lists Cuba as one of several countries worldwide with severely damaged coral reefs. Increased numbers of visitors to Cuba likely will damage the reefs further.

3. Related Cases

JAMTOUR case

BERMUDA case

TOBAGO case

CANCUN case

VENICE case

MEDIT case

GUANTAN case

Keyword Clusters

(1): Trade Product = Tourism

(2): Bio-geography = Caribbean Islands

(3): Environmental Problem = Habitat Loss

4. Author: Brian W. Hill

II. Legal Clusters

Legal Clusters

5. Discourse and Status:

6. Forum and Scope:

7. Decision Breadth:

8. Legal Standing:

C. Geographic Cluster

9. Geographic Locations

a. Geographic Domain: North America [NAMER]

b. Geographic Conflict Site: Caribbean

c. Geographic Impact Area: CUBA

10. Sub-National Factors:

11. Type of Habitat:

IV. Trade Clusters

12. Type of Measure:

13. Direct vs. Indirect Impacts:

14. Relation of Trade Measure to Environmental Impact

a. Directly Related: Yes

b. Indirectly Related: No

c. Not Related: No

d. Process Related: Yes

15. Trade Product Identification:

16. Economic Data

Cuba's tourist industry earned $530 million in grossrevenue for 1993 with employment of 60,000 direct employees.

17. Impact of Measure on Trade Competitiveness:

18. Industry Sector:

19. Exporters and Importers:

Most tourists to Cuba come from Spain, Germany, Canada,and other countries in Latin America.

V. Environment Clusters

20. Environmental Problem Type:

21. Name, Type, and Diversity of Species

Cuba's coral reefs may be most at risk from increased tourism. Coral reefs are among the most biologically diverse ecosystems on Earth. Globally, coral reefs are thought to besecond only to tropical rain forests in terms of numbers of species they contain. Causes of reef degradation include sedimentation, oil spills, shipping, tourism, and other factors.

22. Resource Impact and Effect:

23. Urgency of Problem:

Cuba is rapidly developing areas for the island's tourist industry. The number of tourists visiting Cuba has more than doubled in recent the past five years. Some experts estimate that the number of tourists visiting the island annually will increase from the current 500,000-600,000 to four million five years after a post-Castro Cuba. Last year Cuba expanded its airport facilities and opened several new hotels adding some 3,000 rooms.

24. Substitutes:

VI. Other Factors