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Groups say Treasury rulings threaten U.S. rice markets

Recent U.S. Treasury Department rulings threaten a growing U.S. market for rice and other committees, a representative of the U.S. Rice Producers Association and USA Rice Federation told members of Congress.

“Cuba has grown to be among our top five largest single-country export markets for U.S. rice,” said Dennis DeLaughter, a rice producer from Edna, Texas, who testified at a hearing held by the House Agriculture Committee.

“Since December 2001, $1 billion of agricultural goods have already been delivered and paid for by Cuba, he said. “These purchases included shipments of nearly 320,000 tons of U.S. rice worth a reported $81 million. In 2004, the Cubans bought $64 million worth of U.S. rice — more than their purchases of any other commodity.”

DeLaughter noted the growth of the export market in Cuba has been possible because of the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000, which exempted sales of food and medicine from the exercise of any economic embargo against Cuba.

On Feb. 22, the Department of Treasury's Office of Foreign Assets Control issued a final rule revising the regulations governing the payment terms permitted for the sale of licensed agricultural products to Cuba. The rule requires that Cuba pay for shipments of agricultural commodities before they leave U.S. ports.

“The final rule is not consistent with the 2000 act and will negatively impact export sales and the livelihoods of U.S. farmers,” DeLaughter said. “The final rule sends the wrong message that American agriculture is not a reliable supplier.

While DeLaughter and other commodity organization members were testifying before the House Ag Committee, Sen. Saxby Chambliss, R-Ga., introduced legislation that would amend the TSREEA to clarify allowable payment terms for sales of agricultural commodities and products to Cuba.

“TSREEA was meant to expand access for agricultural producers to the Cuban market,” Chambliss said in a speech on the Senate floor. “By taking into consideration the unique nature of agriculture trade with Cuba, my legislation intends to overturn OFAC's new definition of ‘cash in advance.’ We should not be making it harder to export agricultural products when the United States is experiencing a massive trade deficit.”

In DeLaughter's testimony, the U.S. rice industry asked Congress to help address this issue in one of following ways:

  • Reverse the OFAC final rule
  • Allow all existing contracts to be honored
  • Reiterate and clarify the existing law by implementing H.R. 719, the Agricultural Export Facilitation Act of 2005
  • Insist on strict future compliance with the 2000 Export Enhancement Act provision that prohibits the imposition of new trade restrictions or conditions without prior approval by Congress.

“We are particularly concerned that we risk losing a potential $100 million market that is so close to our own shores,” DeLaughter said. “The loss of this market would be especially acute because there are so many other markets that are already unavailable to us because of tariff and non-tariff barriers, or by other unilateral sanctions imposed by our own government.”

“All we are asking is that the law be allowed to operate as Congress intended, and that the U.S. industry have an opportunity to compete for this very promising market, without undue restriction from our own government,” DeLaughter said.

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