Excitement for Cuban trade dampened

By MONETTE TAYLOR | South Central Texas Edition

Dr. Parr Rosson, Extension economist, detailed the cash-only trade demand set by the TSREEA. -- Staff photo by Taylor

March 10, 2005 - Just as Texans and other U.S. producers start getting excited about more trade with Cuba, recent U.S. Treasury Department rulings that try to "clarify" what the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000 "really" means has put a damper on the latest excitement.

On Feb. 22, the Treasury Department's Office of Foreign Assets Control issued the "clarification" that would demand payment of cash, prior to products being shipped outside of the United States to Cuba. This has not made many in the U.S. Congress too happy, and organizations ... such as the American Farm Bureau Federation ... do not support this new "clarification."

Dr. Parr Rosson, professor and Extension economist from Texas A&M University (TAMU) in College Station addressed a full room at the University of Houston in Victoria, last month. The meeting was held before the recent "clarification" was issued, but much of the information Rosson presented has not changed.

Rosson explained that before an embargo was placed on Cuba in the early 1960s, "U.S. owners held 25 percent of all arable land in Cuba, producing sugar, citrus fruits, vegetables and cattle ranches."

The TSREEA allowed U.S. firms to export agricultural products and food to Cuba, but no U.S. financing was allowed. Agricultural machinery sales have not been allowed, and the sales had to be in cash, and in U.S. dollars.

Rosson noted that in order to enter the Cuban food market, the United States required three licenses from the U.S. Treasury/Commerce: one for the producer/seller, one for the product to be sold, and one for transportation. Third Country bank financing was allowed, and United States Department of Agriculture (USDA) certificates were accepted for sanitation/phytosanitary.

Cuban requirements were simpler: all trade must be done with the Alimport, the Cuban government food import agency, and the seller must use a licensed Cuban customs broker.

Obviously, with the distance from Texas ports to Cuba being much shorter than from Asian countries that produce rice, it would make sense for Texas to be able to sell its rice to Cuba, and Cuban citizens have voiced the opinion that they prefer the quality of U.S. rice over all others.

The Cuban market has continued to expand, explained Rosson, with 11.3 million people and increased tourism since Sept. 11 ... from other countries ... has greatly increased. Latest figures showed that over $826 million of food imports were purchased by Cuba in 2002. At least $545 million came from the import of food and ag products.

Between 2002 and November 2004, the major exports to Cuba from the United States included dairy products, blended flour, weed/pulp/paper, dry beans, other oil cake, cotton and protein concentrates. Other products exported included eggs in shells, apples, pork, vegetable oils, sauces, confections, pasta, tomatoes and grapes. Still others include corn, frozen broilers, wheat, whole soybeans and rice.

According to Rosson, the increased tourism has caused a demand on special food products, and the Cuban government seems to want to improve its children's diets. He sees a big future in U.S. export potential ... if the U.S. government will allow it to happen. Rosson estimated the United States could profit between $450 million to $1.2 billion, annually, with Texas' cut being $50-$60 million a year.

Products Rosson is considering would include corn, sorghum, wheat, rice, oilseeds, meats (poultry and beef), cattle and genetics. Also considered would be flour, cotton, logs/lumber, fertilizer, seeds, herbicides and machinery.

Tourism in Cuba saw around 2 million, foreign visitors, with about $100 million being spent each year in Cuban hotels and restaurants. Major suppliers of foods to Cuba, now, include Canada, Spain, Italy and Mexico. Advantages held by the United States include quality, response time, price, USDA inspections and lower import duties on foods.

As Rosson said, Texans are eager to do business with Cuba, but until the smoke settles in Washington, there will ... according to some experts ... be a slow-down, if not a halt, in exports from the United States. Watch for the results from Senate Bill 328, which is said to carry "bipartisan support" and may make a difference in the end.