Strict payment policy could hinder trade with Cuba

By MONETTE TAYLOR | South Central Texas Edition

Cynthia Thomas, president of the Texas Cuba Trade Alliance, talks with a producer at a recent seminar. Thomas outlined the tasks involved with traveling to Cuba to even discuss trade. -- Staff photo by Taylor

April 7, 2005 - "It is extremely difficult for us to understand why the U.S. government intends to force U.S. companies to forego export opportunities," said Rich Lewis, chief operating officer of Dairy America, concerning the latest ruling by the U.S. Treasury Department.

While Texas and other states have been pursuing strengthening agricultural products and commodities trade with Cuba, the latest ruling will have a negative effect on ag trade with Cuba, say several U.S. dairy groups, among others.

The newest twist will "impose strict payment policy for food purchased by Cuba," and could "derail" the sale of U.S. dairy products and other commodities. According to the latest ruling out of the Treasury's Office of Foreign Assets Controls (OFAC), they have changed the meaning of "cash in advance" that's governed payments for U.S. ag sales to Cuba since 2000. With the new ruling, U.S. producers must have received cash payment from Cuba before the shipment can be made.

Although many products will be affected, the U.S. Dairy Export Council (USDEC) reported that Dairy America has contracted to provide 8,000 metric tons (17.6 million pounds) of skim milk to Cuba by Sept. 30, 2005. The contract was made prior to the new ruling with "complicated payment arrangements" that was to take affect after March 24.

Obviously, ag producers are concerned that Cuba may take their business to other countries without such stringent rules.

And, there are those in the U.S. Legislature who have concerns, too. In the Senate, there is SB 328, and in the House, HR 719, which were written to increase imports to Cuba by simplifying licensing processes for ag export sales by authorizing legal sales to Cuba under the Trade Sanctions Reform and Export Enhancement Act (TSREEA) passed in 2000.

With a meeting of the World Trade Organization (WTO) scheduled for June 1-3 in New Orleans, officials are eager for any help they can get to expedite the exports to Cuba.

According to Dr. Parr Rosson, Texas Cooperative Extension economist and director of the Center for North American Studies, "... international institutions and events are going to have a more important role in shaping U.S. farm policy than ever before."

With a new Farm Bill in the near future, ag producers will be watching all entities that may affect business. Many have expressed dissatisfaction with President Bush's budget deficit and proposed reductions in the U.S. farm program.

Earlier this year, at a seminar in Victoria, Texas, concerning U.S. sales to Cuba, Cynthia Thomas, president of the Texas Cuba Trade Alliance offered information concerning "conducting trade with Cuba and getting paid."

Through July 2004, U.S. ag trade to Cuba was shown to be at $316.1 million. At that time, although the United States required a cash payment from Cuba, it was reported that Canada, Spain, Canada and other European countries offered credit to Cuba.

With tourism in Cuba reported to be over 2 million in 2004, U.S. ag products such as meal/oil, poultry, corn, wheat, rice and soybeans were high on Cuban import lists.

Doing business with Cuba is not simple, according to information noted at the Victoria seminar. There are special requirements for travel, exports, and payments, and no licenses are issued overnight.

Thomas explained that the OFAC regulates travel to Cuba. Producers wanting to do business need to have a full work schedule on each trip and explain the business and products that qualify for export. As far as money ... federal law requires that each person keep a daily log of all expenses while in Cuba, and there is a spending limit of $158 per day to cover hotel, food and transportation, except for an $85 limit for a Havana hotel. Visitors must carry cash, as you cannot use credit cards or ATM cards. Actually getting to Cuba can be accomplished on either American or Continental airlines who offer flights, daily, from Miami. Travel agents can secure a Cuban visa, which costs $50.

All trading is done through a central purchaser in Cuba, Alimport, which was established in the early 1960s. Thomas noted Alimport representatives are "very knowledgeable buyers," and all speak English.

While there are many more rules and regulations to trade with Cuba, it remains to be seen what happens with the new ruling on payments and how it will affect trade with the United States.

(For more information, contact the Licensing Division of OFAC at: www.treas.gov/ofac or www.agr.state.tx.us.)