Obama officials see agriculture potential in Cuba
April 24, 2015
In the administration's first testimony on Capitol Hill on the potential for increasing U.S. agricultural and food sales to Cuba if the embargo is lifted, White House officials said today they believe sales could increase substantially but that at the present time the executive branch is prohibited from promoting sales to Cuba.
Senate Agriculture Committee Chairman Pat Roberts, R-Kan., opened the hearing by noting, "Some are concerned about human rights, others about socioeconomic ideology. But those concerns are not what this committee will focus on this morning. Today we are here to discuss the role of agriculture – opportunities and challenges – in Cuba."
Senate Agriculture ranking member Debbie Stabenow, D-Mich., said that on her trip to Cuba in January she saw "the eagerness of Cubans who want to develop a more effective relationship with the United States."
Ag sales to Cuba, Stabenow said, are "a way to rebuild trust between the two countries."
Sen. Patrick Leahy, D-Vt., said he has traveled to Cuba many times, but that on his most recent trip he saw American flags in the stores.
"We are not going to have an immediate commercial windfall for American agriculture," Leahy said. He added that Cuba has used the embargo for its own purposes and that repealing it would allow the development of a more efficient economic relationship.
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Agriculture Undersecretary for Farm and Foreign Agricultural Services Michael Scuse said the United States can become a major exporter to Cuba, but at the present time the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), which allowed U.S. agricultural sales to Cuba, prohibits the Agriculture Department from offering credit or guarantees to Cuba and cannot "use a single dollar of trade promotion funding for our trade with Cuba.
The restrictions, he added, apply not only to the Market Access program and the Foreign Market Development program but also the federal government checkoff programs that are funded with producer dollars.
Sen. Heidi Heitkamp, D-N.D, told Scuse she believes the TSRA restriction may be being too "broadly interpreted," and Scuse said he would take a second look at it. But he said that state government -managed checkoff dollars could be used for sales promotions in Cuba.
Also responding to Heitkamp, Scuse said that USDA cannot place employees permanently in Cuba but could send individual employees there on short-term assignments to deal with problems of regulations.
Scuse said USDA does not have any employees in Cuba at the present time and that he does not see the need for them "until trade is opened."
But Heitkamp said she wants to make sure that that American farmers can avail themselves of opportunities "as soon as possible."
Scuse also said he did not want to minimize the obstacles to increasing sales to Cuba. He noted that Cuba is a country with limited foreign exchange, that U.S. companies are behind foreign competitors in market development, and that all imports must be channeled through Alimport, the Cuban agency that buys food.
Commerce Deputy Assistant Secretary in the Bureau of Industry and Security Matthew Borman said that Commerce has eased the regulatory process for business but that TSRA also prevents Commerce from using any of its trade promotion programs in Cuba.
Commerce works with the State Department to issue license exceptions for exports of agricultural commodities under TSRA within 12 days. In 2014, Commerce issued 56 licenses for the export of agricultural commodities valued at $2.4 billion. The fact that the Cubans bought only $287 million showed the unrealized potential of the Cuban market, Borman said.
John Smith, the acting director of the Office of Foreign Assets Control, noted that OFAC has changed the definition of "cash in advance" and has authorized banks to establish correspondent accounts in Cuba and credit card companies to allow use of U.S. credit cards in Cuba.
Smith said that no U.S. financial institutions have opened correspondent relationships because they have been concerned about doing business with a country the State Department has listed as a state sponsor of terrorism.
Obama has announced his intention to delist Cuba, and Smith said that change could create more interest among the banks. The question is what "risk appetite" bank risk officers have for establishing those relationships, he said.
Smith said that credit card companies have begun negotiations over using U.S. credit cards in Cuba.
Sen. John Hoeven, R-N.D., said he wants to use agricultural trade to change Cuba's policy on human rights and wants to make sure the food gets to the Cuban people.
U.S. officials testified that the new Obama policies have improved the Cuban people's lives by allowing Americans to send bigger remittances to family members in Cuba. Private sector officials also testified on a second panel that in addition to providing food to the Cuban people, the provision of tools and feed to Cuban farmers has helped them.
–The Hagstrom Report