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Corn+Soybean Digest

U.S./Cuba Policy Change Prompts Reactions

The recent loosening of several trade and travel sanctions against Cuba (see Delta Farm Press) has not produced a consensus of opinion for the Obama administration. While U.S. agriculture interests – happy at the growing possibility of opening trade with Cuba in the near future – have been supportive of the move, some Obama supporters have knocked the new Cuba policy as too timid. Others have derided the U.S. move as a reward to a despotic, Castro-led Cuban government.

As a result of the policy changes, those living in the U.S. with relatives in Cuba are now allowed to visit them regularly. Also in a switch from the Bush administration, care packages and unlimited money transfers between family members in the two nations are allowed. U.S. telecommunication companies will also have greater access to the island nation.

Prior to the recent policy shift, an executive order by President Bush had limited travel to Cuba to once every three years and held remittances to family members to $300 annually.

“This is a good first step, but we can and should do more,” says Montana Sen. Max Baucus, Senate Finance Committee chairman. “I urge the President to relax restrictions on the sale of U.S. agriculture products to Cuba. We need to make it easier for America’s farmers and ranchers to sell their high-quality products, including Montana’s world‐class wheat and barley, to one of our closest markets.”

During the last session of Congress, Baucus introduced legislation to ease trade and travel restrictions for U.S. farmers and ranchers. He plans to introduce similar legislation in the coming weeks.

Baucus says an independent International Trade Commission study found that removing U.S. export restrictions would increase the annual U.S. share of Cuba’s agriculture imports to nearly 70%. If true, that would mean an annual boost of over $300 million in U.S. agriculture sales.

The USA Rice Federation is also promoting more trade with Cuba and “has supported such action for many years,” says Jamie Warshaw, federation president. “But we prefer to see the trade embargo on Cuba lifted altogether in the long run and a return by the Treasury Department’s Office of Foreign Assets Control (OFAC) to the intent of Congress regarding payments for agricultural shipments in the near term. Another significant near-term step for the U.S. would be to allow direct payments from Cuban banks to U.S. financial institutions for agricultural sales.

“Allowing U.S. telecommunications companies into Cuba is a good thing, but OFAC should not deviate from congressional intent in its enforcement of agricultural trade rules, so that our industry may resume the rice trade that had been developing briskly until the end of 2004.”
Prior to the establishment of a trade embargo, Cuba – potentially a 400,000-600,000 metric ton (mt) market for Southern long-grain rice producers, according to the federation – was the largest export market for U.S. rice. Trade resumed in 2002 after Congress passed the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREEA). However, with the Treasury Department’s reinterpretation in 2005 of TSREEA– requiring payment through third-party banks in advance of shipment – U.S. rice exports declined from 176,631.9 mt in 2004 to less than 13,000 mt in 2008.

“Vietnam and China were the chief beneficiaries of the OFAC reinterpretation,” Warshaw says. “This embargo has cost the U.S. rice industry more than $3 billion in lost sales, and may have cost rural communities thousands of jobs.”

U.S. agricultural sales to Cuba have averaged $400 million annually since 2000, says Bob Stallman, American Farm Bureau Federation president. Top commodity sales include poultry, wheat, soybeans, rice and dairy. With expanded trade to the country, the AFBF expect agriculture sales to increase to more than $1 billion annually.

“Current language in the omnibus appropriations bill aids U.S. agriculture by allowing travel on a general license for those making agricultural sales to Cuba rather than the specific license currently needed,” says Stallman. “This would ease delays that significantly impact the ability to transact commercial sales with Cuba, which in some cases, have been lost to U.S. competitors because of the restriction.

“Other priorities for AFBF in regard to Cuba include commercially defining ‘cash payments in advance’ as intended by Congress in the 2000 Trade Sanctions and Reform Act; allowing the country to directly wire payment to U.S. banks instead of going through a third-country bank as it does now; and issuing visas for Cuban inspectors to travel to the U.S. to meet with suppliers, inspect facilities and verify procedures and standards associated with the sale of U.S. food and agricultural exports to Cuba.”

Florida polls respond
Once a staunch opponent of Obama’s Cuba policy shift, Florida Sen. Mel Martinez has softened his rhetoric in recent days. While still deriding Cuba’s leadership, Martinez now says the move “is good news for Cuban families separated by the lack of freedom in Cuba. Likewise the change in remittances should provide help to families in need. Given these changes will benefit the regime in Havana, it would be wise in the implementation to place some reasonable limits on this type of travel and the amounts that can be sent to Cuba.”

Both Florida Rep. Lincoln Diaz-Balart and Rep. Mario Diaz-Balart weren’t so accommodating of the Obama position.“Despite the Cuban dictatorship increasing its repression of pro-democracy activists, torturing countless prisoners of conscience and refusing to allow human rights activists and observers into the country, President Obama has (unilaterally granted) a concession to the dictatorship which will provide it with hundreds of millions of dollars annually,” they said in a statement. “Unilateral concessions to the dictatorship embolden it to further isolate, imprison and brutalize pro-democracy activists, to continue to dictate which Cubans and Cuban-Americans are able to enter the island, and this unilateral concession provides the dictatorship with critical financial support.”

Another Florida politician, Rep. Kathy Castor, has been a longtime proponent of easing the sanctions. “The restrictions have proven ineffective in altering the political situation and interfere with fundamental family relations and human rights,” Castor wrote in a letter to Obama that also referenced the effects of last summer’s devastating Hurricane Gustav on Cuba. At the time, Cuban-Americans were unable to provide direct humanitarian assistance.

Under the new rules, “Cuban-Americans will be able to more directly and effectively help their loved ones in Cuba. These changes are well overdue and I am pleased President Obama is rejecting the former Bush Administration’s hard line and taking steps in the right direction to help our Cuban-American families.”

For more on U.S./Cuba trade, see Delta Farm Press.

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