Cuba may halt food purchases from the US

Campaign News | Thursday, 24 February 2005

Bush demands payment before food sails for Cuba

HAVANA Feb. 23 - Cuba is considering halting purchases of American farm products worth $400 million a year because of new Bush administration rules demanding payment before shipment to the island, Cuban officials said on Wednesday.

One official said the payment rules announced by the U.S. Treasury's Office of Foreign Assets Control on Tuesday made Cuban shipments vulnerable to confiscation by Cuban exiles with legal claims against President Fidel Castro's government.

The new rules, opposed by farm-state legislators, take effect in one month. They will oblige Havana to pay for goods before shipment from U.S. ports instead of on delivery in Cuba.

"If they manage to obstruct trade, Cuba will find alternative suppliers," the president of Cuba's National Assembly or legislature, Ricardo Alarcon, told Reuters.

He said the measure would hurt U.S. agricultural producers, who have sold $790 million in food -- chiefly rice, corn, chicken, wheat, soybeans and dry milk-- to communist-ruled Cuba since December 2001 under an exception to trade sanctions dating from 1963.

"They are shooting themselves in the foot," Alarcon said.

Pedro Alvarez, head of the Cuban food import agency Alimport, said Cuba would honor its commitments with American suppliers, though trade will inevitably decline if conditions become more difficult.

Cuba can buy food from the United States, but on a cash-only basis, and payments must be made through a third country due to the absence of financial ties with the United States. U.S. exporters currently ship their cargo and await payment before handing it over to Alimport in Cuba.

Cuban officials saw the new payment procedures as part of President Bush's policy of tightening sanctions to undermine Castro's government.

"Of course, we are not going to continue buying. The shipments could be seized once Cuba has paid for them," said one Cuban official who asked not to be named.

The official said anti-Castro exiles in Miami who have won legal claims in U.S. courts against the Cuban government, could attempt to have cargoes impounded.

WASHINGTON Feb 22 - The Bush administration on Tuesday tightened the US blocakde of Cuba still further when it demanded that Cuba pay cash for US food items before they are shipped to the island -- a change farm state lawmakers said could choke off lucrative food sales.

Congress authorized cash sales of food to Cuba in 2000, a notable exception to the overall US trade blocakde in place since the 1960s. Backers, including some Republican lawmakers, say Cuba is a natural market for US farm goods and that trade will encourage democratic reforms.

Cuba bought about $392 million in U.S. farm exports last year, chiefly rice, corn, chicken, wheat, soybeans and dry milk. It has spent $792 million on U.S. food since sales began.

"I'm outraged at this attempt by Treasury Department bureaucrats to choke off U.S. agricultural sales to Cuba," Sen. Max Baucus said in a statement. The Montana Democrat said he would try to block Senate approval of future Treasury Department nominees in retaliation.

Senate Finance Committee chairman Charles Grassley, an Iowa Republican, also said he was considering a response to the new rule.

"Treasury's final rule will likely lead to a reduction in U.S. agricultural exports... to Cuba. That seems to run counter to the intent of Congress in passing the Trade Sanctions Reform Act of 2000. I can't see any legitimate reason for reinterpreting the law this way," Grassley said in a statement.

The Bush administration has toughened rules on trade and travel to Cuba following a Cuban crackdown on pro-democracy activists. But some skeptics say the administration goal simply is to inconvenience Havana and force Cuba to spend more of its scarce foreign exchange.

Farm and business groups have warned since early December that changes were in store on how the U.S. government defined cash payment in advance. They said a requirement of payment before shipment was "contrary to the norms of international trade" and more restrictive than the usual cash sale.

In its announcement, the Treasury Department said it would allow a 30-day transition period from the current system, in which exporters commonly dispatch cargo and await payment before handing it over to Alimport, Cuba's food importer. Exporters say that system cuts freight costs.

"I wrote the law that they are now misinterpreting. It does not require the wrong-headed action they are taking today," said Sen. Byron Dorgan, a North Dakota Democrat.

Export sources and a New York-based group that monitors U.S.-Cuba trade said the future of American food sales to Havana was in the hands of Cuban President Fidel Castro. Cuba might respond to the new terms by halting U.S. purchases.

"Right now, the greatest leverage to seek change ... lies in Havana," said John Kavulich, head of the U.S.-Cuba Trade and Economic Council.

If Cuba stops U.S. food purchases, it could spur Congress to approve a bipartisan Senate bill making it easier for agribusiness travel to Cuba and allowing direct transactions between U.S. and Cuban banks on food sales.

At present, cash sales of U.S. food must be made through third-country banks.

| top | back | home |
Share on FacebookTweet this