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The mules are back: towards the privatization of commerce in Cuba?

'This time the Communist regime has acted according to economic logic, which is a rarity.'

 Travelers to Cuba.
Travelers to Cuba. Travelcubadeeper

Reeling from the widespread protests across the country, Wednesday's Round Table featured surprises as Prime Minister Marrero announced the Communist government's decision to introduce a new tariff policy on the importation of food, hygiene and medicines by individuals, constituting practically the full liberalization at the border of these products brought to the island by individuals. The mules will be back, and in a big way.

The formula that has been decided on goes beyond the Malmierca method for importing and exporting by private agents, as it will not be necessary to have a state intermediary to carry out the operations. The profits are entirely reaped by those who do the importing, which will increase their incentive to do so. Under such conditions, the Government has authorized —exceptionally and on a temporary basis— the importation, as passenger luggage, of food, cleaning products and medicines, without any limits on their quantities, or any tariffs. At this point it should be pointed out that the stores in Freely Convertible Currency were also presented in their day as a temporary and exceptional process, but they have been operating for almost two years.

Thus, as of Monday, July 19 until December 31 (for now, but the deadline will surely be extended), anyone who goes to Cuba from abroad can take with them —as far as the Government is concerned— all the food, cleaning products and medications they want.

The limit is not set by Cuba through Customs, but rather by the airline one which one travels, whose cargo holds will be overflowing once the new policy is up and running.

The Government wants the products being brought into the country to be distinguished in some way in one’s luggage. That is, Customs does not want them to be mixed with other belongings. "That won't be necessary. The cargo will be separated and in condition suitable for transport. It has happened before, and it will be the same again."

With this measure, the regime has conceded an obvious fact: it is unable to ensure supplies of food, hygiene products and medicines through state intervention, so it is transferring this function to the private sector. The Cubans who dedicate themselves to this activity will study the needs of their customers, have spaces for their goods' subsequent sale, travel abroad to stock up, and, on their return, sell them at a profit, to be able to make their  next trip. And they will do so knowing that, thanks to their work, many families can eat, wash themselves and take medicines that the state regime is unable to provide. All this, in addition to having a profit motive that will encourage them to carry out the operations again and again. This is a full-fledged defeat, undoubtedly an important one, for the Communist government, because the scale of the business (although no official data is available) is great, calls for frequent purchases, and the Government is now foregoing its cut.

Many Cubans know that, thanks to this measure, access to foods, personal hygiene products and - a novelty this time – medicines too will be greatly facilitated, with the current shortage disappearing. Placing trade in the hands of the private sector is an important decision, a step in the right direction that may greatly mitigate the economic collapse racking the island. There are many activities in the Cuban economy that could follow this same path to improve their efficiency and productivity.

In addition, contrary to what might be assumed, it does not seem that this measure came about as a balsam to avert further social protests like those seen on the 11th. It is important to take into account the close relationship between this measure and the one agreed to a few days ago prohibiting cash deposits in dollars at bank accounts. At the time it was indicated that this measure would trigger an increase in all types of goods and services on the black market, while the demand for dollars would be maintained. If these goods are not produced within the country, logically, they will be sought abroad. This time the Communist regime has actually acted according to economic logic, which is a rarity.

Furthermore, unable to replenish the balances of their accounts backing the cards, people would not be able to shop at Freely Convertible Currency stores, so they would have no choice but to turn to the underground market. The time finally came. Cubans leaving for Haiti, the Dominican Republic, Mérida and Panama will return to the island with enough goods to alleviate food, hygiene and medicine needs, offset the cost of their travel and their work, begin to sell them in those places where they used to carry out transactions using a self-employment license.

The Government should reflect on this important change for the Cuban economy and privatize commercial activity entirely. The next step should be foreign investment in Cuban private businesses, and opening the doors to franchises. Not to do so is to waste time in an absurd way, defending what has no future.

We can expect a significant boom in commercial activity thanks to these measures, and in a very short period of time, which will be accompanied by less demand for supplies at FCC stores, which will ease the regime's need for foreign currency to replenish stock at them.

Economic freedom and competition always bring prosperity and economic improvement, and this will be no exception. The regime has announced that the regulations established by the phytosanitary and veterinary authorities will be maintained for certain products that may involve the risk of introducing diseases affecting the health of people, animals or plants. It is also noted that the new tariff policy does not include travelers who arrive in the country through the Varadero or Cayo Coco airports, who will continue to be subject to the recently adopted Covid-19 control measures, and may only bring one suitcase with them, but the participation of mules on those flights, generally for tourists, has always been limited.

Save for this exception, the retail trade of goods in great demand, and that will account for a great percentage of total spending, now passes into private hands. Sales at retail grocery stores stood at 11.714 billion CUP in 2019. I would not be surprised if the regime is already thinking about how to obtain revenue for the State from this activity.

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