Specifically, the administration’s new  policy called for establishing diplomatic relations with Cuba, adjusting regulations to more effectively empower the Cuban people,  facilitating an expansion of travel under general licenses for the 12  existing categories of travel to Cuba authorized by law,  facilitating remittances to Cuba by U.S. persons, authorizing expanded commercial sales/exports from the United  States of certain goods and services, authorizing U.S. citizens to import additional goods from Cuba,  facilitating authorized financial transactions between the United States  and Cuba,  initiating new efforts to increase Cubans’ access to communications  and their ability to communicate freely, updating the application of Cuba sanctions in third countries, pursuing discussions with the Cuban and Mexican governments to  discuss the unresolved maritime boundary in the Gulf of Mexico,  initiating a review of Cuba’s designation as a State Sponsor of  Terrorism, and addressing Cuba’s participation in the 2015 Summit of the Americas. The Cuban Private Sector Has Grown Rapidly Since 2008 but Remains Small Compared with Other Economies and Faces Various Constraints

The Cuban private sector has grown rapidly since 2008 but remains small  compared with other economies and faces various constraints. Cuban government data indicate that the  authorized private sector has grown rapidly, with 29 percent of the Cuban  labor force in the private sector in 2015 compared to 17 percent in 2008. Although the percentage of the Cuban workforce in the private sector has  grown, it is still smaller than in comparable countries, according to our  analysis of International Labour Organization (ILO) data. In addition, the  Cuban private sector is still highly constrained by the Cuban government  and faces challenges including a lack of access to needed inputs. The Cuban Private Sector Has Three Primary Components Authorized by the Cuban Government

The Cuban private sector currently includes three primary components  that are authorized by the Cuban government: (1) self-employed  entrepreneurs known as cuentapropistas, (2) agricultural cooperatives  and private farmers, and (3) nonagricultural cooperatives. U.S. Regulatory Changes Have Created Some New Opportunities in Cuba, but Economic Engagement Is Still Limited by the Embargo and Cuban Government Restrictions

U.S. regulatory changes have created some new opportunities in Cuba,  but economic engagement is still limited. The changes in regulations on travel and remittances are also expected  to benefit the Cuban private sector through increased remittances and  purchases from U.S. visitors, among other things. The U.S. Government Has Made a Series of Regulatory Changes since December 2014 to Ease Restrictions on Travel, Remittances, Financial Services, and Trade with Cuba

The U.S. government has made a series of regulatory changes to the  CACR and the EAR since the administration announced its new Cuba  policy in December 2014. The U.S. government has also reported that some other U.S. businesses  have taken steps to pursue new opportunities created by the regulatory  changes. Driven by declining agricultural  exports, U.S. trade with Cuba has decreased since the regulatory  changes. Agencies Have Conducted Activities to Support Economic Engagement with Cuba but Have Not Collected and Documented Key Information

U.S. agencies have conducted a range of activities to support U.S.  economic engagement with Cuba’s private sector but have limited  information on the effects of their efforts. While U.S. regulatory changes  have created opportunities for greater economic engagement with Cuba,  prohibitions on U.S. assistance, resource constraints, and Cuban  government priorities affect U.S. agencies’ ability to support U.S.  businesses or engage the Cuban private sector. Within these limitations,  a number of U.S. agencies have engaged with the Cuban government,  U.S. businesses, and the Cuban private sector to enhance understanding  of the regulatory changes and increase opportunities for economic  engagement. U.S. Without collecting and documenting information, U.S.  agencies risk being unable to monitor and assess changes in economic  engagement since the December 2014 policy change. After more than 50 years of  U.S. policy designed to isolate Cuba’s communist government, the  President called for a new strategy of engagement. Recommendation for Executive Action

To ensure that all relevant U.S. agencies have information on the effect of  changes in U.S. policy related to Cuba, we recommend that the Secretary  of State, in consultation with Commerce, Treasury, USDA, and other  relevant agencies, take steps to identify and begin to collect the  information that would allow them to monitor changes in economic  engagement, including with the Cuban private sector. Appendix I: Objectives, Scope, and Methodology

The objectives of this review were to examine what is known about (1) the  size and scope of the Cuban private sector, (2) the effect of changes to  U.S. legal and regulatory restrictions related to Cuba on the Cuban  private sector and U.S. businesses, and (3) the extent to which the U.S.  government planned and implemented activities designed to increase  U.S. engagement with the Cuban private sector and expand U.S.  economic opportunities in Cuba.
Why GAO Did This Study

In the more than 50 years since it established an embargo on Cuba, the U.S. government has pursued a policy designed to isolate Cuba's communist regime. In December 2014, the President announced a significant change in U.S. policy. Since then, the U.S. government has restored diplomatic relations with Cuba and modified some aspects of the U.S. embargo. The Cuban government has also implemented economic reforms in recent years to allow for certain private sector activity. While much of Cuba's economy is still state-controlled and the U.S. embargo on Cuba remains in place, developments in recent years have created new opportunities for U.S. economic engagement with Cuba.
This report examines what is known about (1) the size and scope of the Cuban private sector, (2) the effect of changes to U.S. legal and regulatory restrictions on the Cuban private sector and U.S. businesses, and (3) the extent to which the U.S. government has planned and implemented activities to increase U.S. engagement with the Cuban private sector and expand U.S. economic opportunities in Cuba. GAO analyzed U.S. government and other assessments of the Cuban private sector, analyzed Cuban government data, interviewed U.S. federal and nonfederal Cuba experts, and conducted fieldwork in Cuba.

What GAO Found

The Cuban private sector has grown rapidly since 2008 but remains small compared with other economies and faces various constraints. The Cuban private sector includes (1) self-employed entrepreneurs, (2) agricultural cooperatives and other private farmers, and (3) nonagricultural cooperatives. Cuban government data indicate that the percentage of the Cuban workforce in the private sector has grown from 17 percent in 2008 to 29 percent in 2015. However, the Cuban private sector is smaller than in 16 comparable countries GAO analyzed. It is also still highly constrained by the Cuban government and faces challenges, including a lack of access to needed supplies and equipment.
U.S. regulatory changes have created some new opportunities in Cuba, but economic engagement is still limited. The U.S. government has made six sets of regulatory changes since December 2014 to ease restrictions on travel, remittances, financial services, and trade with Cuba. For example, the Department of Commerce created a new export license exemption to facilitate U.S. exports that support the Cuban people, including the private sector. The regulatory changes have generated U.S. business interest; however, relatively few commercial deals have been completed. In addition, U.S. trade with Cuba has decreased, driven by declining agricultural exports, which have been legal since 2000. Changes in remittance and travel regulations are expected to benefit the Cuban private sector through increased capital and purchases from U.S. visitors. Although the regulatory changes have created some new opportunities for U.S. businesses and the Cuban private sector, embargo restrictions and Cuban government barriers continue to limit U.S.-Cuba economic engagement.
U.S. agencies have conducted a range of activities to support U.S. policy changes; however, embargo restrictions, resource constraints, and Cuban government priorities affect their ability to support U.S. businesses or engage the Cuban private sector. Within these limitations, the Department of State (State) and other U.S. agencies have engaged with the Cuban government, U.S. businesses, and the Cuban private sector. Among other things, they have established memoranda of understanding with the Cuban government, hosted events with Cuban entrepreneurs, and promoted training opportunities. However, U.S. agencies have not collected and documented key information on the Cuban economy, the effects of regulatory changes, and agency activities, in accordance with federal standards for internal control. Without collecting and documenting information, agencies risk being unable to monitor and assess changes over time in economic engagement with Cuba, including with the private sector.

What GAO Recommends

GAO recommends that State, in consultation with key agencies, take steps to identify and collect information to monitor changes in economic engagement resulting from the shift in U.S. policy. State concurred with the recommendation.