By Doug Palmer | Reuters
The Bush administration will soon issue new guidelines governing sales of U.S. food to Cuba under an exemption to the four-decade-old embargo, a U.S. Treasury Department spokeswoman said on Wednesday.
U.S. wheat and other farm industry groups worry the new guidelines could hamper, or possibly kill, further food sales to the $400-million export market by requiring cash payment before ships carrying the goods leave U.S. shores.
The new rules could appear within three weeks or so, industry sources said. It was not clear how stringent they would be. A requirement for payment before shipment could result in cargo-laden ships sitting idle in harbor, driving up costs, while exporters wait for a check to arrive.
The expected new guidelines come after the Treasury Department’s Office of Foreign Assets Control (OFAC) has instructed U.S. banks to delay some Cuban payments to
exporters because of concern about possible violations of
the strict no-credit terms of 2000 legislation allowing the food sales, sources said.
“OFAC at this point is working directly with the exporters to issue ... specific licenses to unblock their payments. At the same time, Treasury will be issuing guidance shortly on the payment policy itself,” a Treasury spokeswoman said,
speaking on condition she not be identified.
The Trade Sanctions Reform and Export Enhancement Act of 2000 (TSREEA) and OFAC regulations require “payment of cash
in advance” for sales of U.S. farm goods to Cuba.
The practice has been for Cuban buyers to direct a third-country bank to make payment to the U.S. bank account
of an exporter once a ship has been loaded and begun its 2-3 day trip to the island.
John Kavulich of the U.S.-Cuba Trade and Economic Council, which monitors trade, said OFAC interceded in these payments “without any announcements. They just seized money.”
Exporters “are livid because of the sneaky way this was done,” he added.
The same objections applied to Treasury’s work behind closed doors on new guidelines for sales, Kavulich said. “If you’re going to make changes ... give notice to people.
It’s how government is supposed to behave.”
Word of the new rules ended weeks of speculation that the administration, with the November elections out of the way,
would seek new ways to inconvenience Cuba. “Both governments are doing almost everything possible to end what commercial activity exists,” said Kavulich.
Farm groups, who lobbied hard for the crack in the trade embargo, fear OFAC is now trying to close it.
The U.S. Wheat Associates, which represents the export arm of the wheat industry, warns in an upcoming newsletter that a prepayment requirement “may stop all U.S. sales of wheat and other agricultural commodities to Cuba.”
In a letter last week to U.S. Treasury Secretary John Snow, eight Democrats and seven Republicans from the U.S. House
of Representatives said there were “no legitimate grounds” to consider current payment practices a credit extension.
They warned requiring prepayment would discourage Cuban purchases by creating the possibility that shipments could be seized before they left the United States.
“Such a clarification creates a condition whereby Cuban-owned goods would be located at a U.S. port. Cuban goods on U.S. property are subject to court-owned seizures that could result from legal claims against Cuba,” the lawmakers said.