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Posted November 16, 2005 by crp236 in Business In Cuba

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Nov. 15, 2005, 9:24PM

Republicans get steamed over rice trade with Cuba

Lawmakers split over the reversal of a Clinton-era deal, and Texas farmers lose a big customer


Copyright 2005 Houston Chronicle
Washington Bureau

WASHINGTON - With some Republican lawmakers from Texas taking opposite sides, a clause that could have revived sales of Texas rice to Cuba was abruptly removed from a spending bill Tuesday.

President Bush, whose administration is steadfastly opposed to expanding trade with the communist country and dictator Fidel Castro, had threatened to veto the measure if House and Senate negotiators let the clause remain.

U.S. Rep. Ted Poe, R-Humble, whose district includes most of the 41,500 acres of rice farms in Southeast Texas, said the removal of the provision was a mistake: “It doesn’t punish the communists in Cuba, it punishes the rice farmers in Texas.”

“It’s devastating,” said Ray Stoesser, a third-generation rice farmer who has 3,000 acres of the crop in Liberty County and is president of the Texas Rice Council. “We need that Cuban market and we need it bad.

“It was the second-best export market for rice behind Mexico in 2004, and we were growing,” he said. “It’s silly for us to be so close to people who want our rice, and our government won’t let us sell to them.”

DeLay, Cornyn opposed

Bush, Sugar Land Republican Rep. Tom DeLay and Sen. John Cornyn, R-Texas, said easing pressure on the Cuban government essentially lends support to Castro.

At issue is a 5-year-old rule signed by President Clinton that exempted food and medicine from the long-standing trade embargo with Cuba.

In the original interpretation of the regulation, Cuba could use a letter of credit from a foreign bank to purchase U.S. goods and take ownership of them after they entered Cuban territory.

The foreign bank would then transfer the payment to the U.S. exporter.

Competitive edge lost

But after questions from some banks, the Treasury Department’s Office of Foreign Assets Control decided in February, under a more literal interpretation, to require all Cuban payments before any goods could be shipped to the island.

The process requires more time and money, with the result that “U.S. products are not as competitive as they were,” said Parr Rosson, an extension economist and director of the Center for North American Studies at Texas A&M University.

The change meant that American policies toward trade with Cuba are more restrictive than the regulations on trade with Iraq and Iran.

This year, rice exports to Cuba are down 45 percent to $35 million, and total exports have fallen about 17 percent to $253 million, Rosson said.

Several lawmakers from Texas, as well as agriculture groups and other farm-state politicians, lobbied to reverse the rule change.

The House and Senate included wording in the Transportation and Treasury departments’ 2006 appropriations bill to withhold money from the Foreign Assets Control office to prevent it from enforcing the rule.

Veto threat thwarts move

But as lawmakers hashed out differences between versions of the spending bill, the administration’s veto threat apparently won out and led lawmakers to ditch the provision.

The move disappointed legislators such as Sen. Byron Dorgan, a Democrat from farm-rich North Dakota who had pushed to reverse the rule change.

“Bush has not vetoed anything, and it is unlikely that he would use his first veto over this issue.” Dorgan spokesman Barry Piatt said. “Now, we will have to start over next year.”

The trade embargo began in 1963 in response to Cuba’s alignment with the Soviet Union and its installation of Russian missiles.

The federal government now considers Cuba a state sponsor of terrorism.

But Republicans such as Poe and Sen. Kay Bailey Hutchison pushed the renewed trade.

“Forty years of isolation [of Cuba] have not worked,” Hutchison said. “We still have Castro. We have people living in poverty ... more information, more contact, more help for the people would work better than isolation.”

Poe said the Bush administration’s opposition to trade with Cuba runs counter to the president’s support for other free trade agreements, such as NAFTA.

“Let’s be consistent,” Poe said.

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