Senate Bill Introduced to Ease Restrictions on Ag Exports to Cuba

May 20, 2009 07:00 PM
 

via a special arrangement with Informa Economics, Inc.

U.S. farmers hope it will be sooner rather than later for easier trading with country 90 miles from U.S. border


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


Senate Finance Chairman Max Baucus (D-Mont.) and a bipartisan group of 15 other senators introduced a bill Wednesday to ease restrictions on agricultural exports to Cuba and to allow all U.S. citizens to travel there. The bill was introduced on Cuban Independence Day and indicates the growing pressure from farm states to weaken the 47-year embargo and allow American farmers to expand the Cuban market for their products.

Background: U.S. farm products sold on a cash basis were exempted from the general trade embargo with Cuba in 2000, and the Bush administration in 2005 changed the "cash-in-advance" requirement for agricultural exports from payment before the goods arrived to payment when they left the U.S.

The Baucus bill would restore the pre-2005 definition of cash in advance and allow U.S. banks to receive payments directly from Cuban banks (for the bill's details, see box below). Since the 2005 U.S. Treasury rule, Cuba has not purchased any U.S. agricultural products on a cash basis, according to a press release Baucus issued. Cuban buyers paying for goods in U.S. ports risk having the goods seized to satisfy unrelated private claims against the Cuban government. The Baucus measure would address this issue by defining cash-in-advance as payment before the buyer receives title or physical control of the goods -- Under Cuban Assets Control Regulations, Cuban buyers must route cash payment for U.S. agricultural goods through third-country banks, which earn a commission from each sale. The measure would allow U.S. banks to receive payment directly from Cuban banks for agricultural transactions.

It would require USDA for the first time to promote agricultural exports to Cuba. The bill would impose an additional $1 tax on all international air travel to and from Cuba for five years. The revenue generated would be used to pay for USDA's agricultural export promotion activities, the bill's summary said.

The bill would also encourage the State Department to grant visas to Cuban officials who want to inspect U.S. food production facilities. Cuban trade and veterinary officials have expressed interest in visiting a number of U.S. states to inspect agricultural facilities and make purchases. The measure contains Sense of the Senate language that visas should be issued to Cuban trade officials and inspectors if they have a full itinerary of related activities.

The International Trade Commission (ITC) has found that removing U.S. export restrictions could increase the annual U.S. share of Cuba's agriculture imports to nearly 65 percent. This represents an annual boost of over $450 million in U.S. agriculture sales, according to the press release. Exports of U.S. crops, meat and farm products to Cuba totaled $707 million in 2008, according to ITC.

"It's time for us to face the facts regarding Cuba," Baucus said in a statement. “It's a fact that Cuba is one of our closest export markets. It's a fact that our current trade and travel sanctions aren't working. And it's a fact that our farmers and ranchers in Montana — and across the U.S. — need help selling their high quality products in Cuba. This bill faces the facts, and it opens the Cuban market to world class American agricultural goods.”
The Obama administration has already eased limits on family travel to Cuba and allowed U.S. telecommunications companies to operate on the island. But President Obama said the trade embargo should stay in place for now to press for democratic reforms. Current law allows travel to Cuba for Cuban-Americans visiting family in Cuba and for other U.S. citizens and legal residents who are licensed by the Treasury Department.

The measure would also repeal Section 211 of the Fiscal Year 1999 Omnibus Appropriations Act and bring the U.S. into compliance with its international intellectual property obligations. Section 211 bars U.S. courts from hearing claims by foreign nationals asserting rights to trademarks associated with expropriated property. Section 211 also bars the U.S. Patent and Trademark Office from renewing such trademark registrations. In 2001, however, the World Trade Organization found that Section 211 runs counter to WTO rules because it only applies to foreign nationals. Section 211 also violates the Inter-American Convention on reciprocal trademark protections, the press release said. The original dispute stemmed from a battle between two major spirits producers, Bermuda-based Bacardi and France-based Pernod Ricard, over ownership of the U.S. trademark for the “Havana Club” brand of rum.

Other sponsors are Sens. Mike Crapo (R-Idaho), Maria Cantwell (D-Wash.), Pat Roberts (R-Kan.), Mary Landrieu (D-La.), Jeff Bingaman (D-N.M.), Blanche Lincoln (D-Ark.), Tom Harkin (D-Iowa), Patty Murray (D-Wash.), Mark Pryor (D-Ark.), Kit Bond (R-Mo.), Tim Johnson (D-S.D.), Byron Dorgan (D-N.D.), Ron Wyden (D-Ore.), Dick Lugar (R-Ind.) and Claire McCaskill (D-Mo.).

Details of Promoting American Agricultural and Medical Exports to Cuba Act of 2009


-- Facilitation of Agricultural Exports. The bill facilitates cash-in-advance agricultural sales to Cuba, which Congress authorized in 2000 through the Trade Sanctions Reform and Export Enhancement Act (TSREEA). From 2001 until early 2005, under TSREEA, Cuban buyers wired cash payments for U.S. agricultural goods after the goods shipped from a U.S. port, but before receiving title or physical control of the goods. In 2005, however, the Treasury Department issued a rule requiring payment before the goods shipped from a U.S. port, which undermined the intent of TSREEA. If Cuban buyers pay for goods in U.S. ports, the goods could be subject to seizure to satisfy unrelated private claims against the Cuban government. As a result, Cuba has not purchased any U.S. agricultural products on a cash basis since the 2005 rule. Section 2 of this Act restores Congressional intent by defining cash-in-advance as payment before the buyer receives title or physical control of the goods.

-- Authorization of Direct Transfers Between U.S. & Cuban Banks for Agricultural Exports. In accordance with the Cuban Assets Control Regulations, Cuban buyers must route cash payment for U.S. agricultural goods through third-country banks, which make a commission off of each sale. Section 3 of this Act allows U.S. banks to receive payment directly from Cuban banks for TSREEA-authorized agricultural transactions.
Promotion of Agricultural Exports. Section 4 of this Act requires USDA to promote U.S. agricultural exports to Cuba and to offer technical assistance to U.S. entities interested in these transactions. Section 5 assesses an additional $1 tax on all international air travel to and from Cuba for five years, which would be used to pay for USDA’s agricultural export promotion activities.

-- Issuance of U.S. Visas Related to Agricultural Exports. Cuban trade and veterinary officials have expressed interest in visiting a number of our states to inspect agricultural facilities and make purchases. These visits are important for smaller producers unable to travel to Cuba to market and sell their goods. But the State Department has rejected many of the visas that have been requested by Cuban officials. Section 6 of this Act expresses the Sense of the Senate that visas should be issued to Cuban trade officials and inspectors if they have a full itinerary of TSREEA-related activities.

-- Removal of Impediments to Medical Exports. The 1992 Cuban Democracy Act authorized medicine sales to Cuba, but required U.S. sellers to conduct onsite verification of the Cuban buyer’s receipt of the goods. This requirement made medical exports much more costly and difficult, particularly for small exporters. Section 7 of this Act eliminates the onsite verification requirement.

-- Removal of Travel Ban for U.S. Citizens & Legal Residents. Current law permits travel to Cuba for Cuban-Americans visiting family in Cuba and for other U.S. citizens and legal residents who are licensed to travel by the Treasury Department. But licensing can take months in many cases, which disrupts the legitimate travel of religious, academic, cultural, humanitarian and other groups to Cuba. Section 8 of this Act lifts all travel restrictions to Cuba by U.S. citizens and legal residents.

-- Adherence to International Intellectual Property Agreements. Section 211 of the FY 1999 Omnibus Appropriations Act bars U.S. courts from hearing claims by foreign nationals asserting rights to trademarks associated with expropriated property. It also bars the U.S. Patent and Trademark Office from renewing such trademark registrations. In 2001, however, the World Trade Organization (WTO) found that Section 211 violates WTO rules because it applies only to foreign nationals, not to U.S. citizens. Section 211 also violates the Inter-American Convention on reciprocal trademark protections. Section 9 of this Act repeals Section 211 and brings the United States into compliance with its international intellectual property obligations.


Comments: If the Obama administration follows through on its time-for-change mantra, this is one topic which certainly qualifies -- without the still sticky stipulations to avoid at least ag trade from being facilitated. I am working on my first-ever trip to Cuba -- a country I have always wanted to visit for a variety of reasons. If I go to the island just 90 miles from our border, I hope to find out whether there is any substantial "give" on the part of Cuba in order to get the trade policy change ball back into the hands of the Obama administration.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 

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