Congress Moving to Improve Trade With Cuba

New measures regarding credit would make it easier to export agricultural products.

Congress has been moving swiftly on rule changes that could provide American producers of agricultural products greater access to Cuba by removing barriers to credit.

Legislation was introduced last week by Sen. Heidi Heitkamp, D-N.D., andSen. John Boozman, D-Ark., aiming to ease agricultural trade.

“The biggest obstacle in that effort involves private companies and banks not being able to provide credit to export agricultural commodities to Cuba, where these crops are in high demand,” Heitkamp said.
Until recently, under the Trade Sanctions Reform and Export Enhancement Act of 2000, exports of certain goods were allowed to go to Cuban markets only if cash payments were made before the goods were shipped. While third-party financing is available, U.S. banks are not able to finance exports to Cuba. In January, OFAC revised interpretation of the statutory term “cash-in-advance” to make it essentially “cash-on-delivery” — though they did not change the phrasing itself. It also authorized U.S. banks to establish correspondent accounts at Cuban banks.

Still, critics say this practice prevents U.S. farmers from competing effectively against other international exporters.

“The reason for the most loss in our market share there was our inability to extend credit, as our competitors, the EU and Brazil and others are doing,” said Michael T. Scuse, undersecretary of the Department of Agriculture, at a Senate hearing on Tuesday, citing a study by University of Florida. “So the playing field right now is not level.”

President Barack Obama announced at the end of last year the re-establishment of diplomatic relations with Cuba and a series of actions aimed at easing trade restrictions.

In February, a bipartisan group of senators introduced The Freedom to Export to Cuba Act, which would allow U.S. companies to export products to Cuba directly, remove financial restrictions on business transactions and allow U.S. banks to extend credit to Cubans for the purchase of American goods.

Most types of trade with Cuba is still prohibited.

U.S. agricultural exports to Cuba reached a peak of $658 million by 2008. However, they had fallen by more than half, to $300 million by the end of last year. Global agricultural exports to Cuba have doubled over the past decade to $1.7 billion.

According to World Food Program data, Cuba imports about 80 percent of its food, mainly from China, Brazil and the European Union.

Half of American exports to Cuba are poultry products, and Scuse said there is a potential to gain greater market share for U.S. producers of corn, rice and dairy, since Cuba is less than 100 miles away from the U.S.

For their part, farmers are ready to begin selling to Cuba.

“I would suggest that Congress carefully consider whether there is a compelling, practical reason to restrict the freedom of Americans to engage in commerce, especially for those who are just trying to sell wholesome, American-grown food,” Doug Keesling, owner of Keesling Farms in Kansas, told the Senate Committee on Agriculture, Nutrition and Forest last week.

By Xiaolan Tang, U.S. News

April 27, 2015

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