Stakeholders, House GOP Members, Endorse Easing Trade Restrictions with Cuba
Less restrictive U.S. policies and further normalization of trade relations with Cuba would likely lead to a boost to U.S. agricultural trade, said a trade expert, a Texas rice farmer, as well as most GOP members at a House hearing on March 15. During a hearing of the House Foreign Relations Subcommittee on Trade (here), supporters of loosening existing restrictions on trade with Cuba said a more relaxed bilateral policy would help boost U.S. agricultural exports to the country, which tumbled from a peak of $709 million in 2008 to $149 million last year. Jason Marczak, director of the Atlantic Council’s Latin America Economic Growth Initiative, along with Texas rice farmer and U.S. Rice Producers Association board member Ray Stoesser, encouraged subcommittee members to advance legislation that is hoped to stimulate the waning competition of U.S. agricultural exports in the Cuban marketplace. According to Stoesser’s submitted testimony (here), U.S. exports occupied 10 percent of all Cuban rice market share in 2015, and were topped by the market shares of rice imported from the EU, Brazil, and Argentina.
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The rice producers would like to see movement on HR-3238, the Cuba Trade Act of 2015 (here), and HR-3687, the Cuba Agricultural Exports Act (here), which are pending in multiple committees. Rep. Rick Crawford, R-Ark., during the hearing encouraged fellow subcommittee members “who favor a more incremental approach to Cuba trade” to consider the latter, which he introduced on Oct. 6. Notably, the bill would repeal provisions in the Trade Sanctions and Trade Enforcement Act of 2000 that ban U.S. financing of exports to Cuba, and that only exempt pre-transport cash payments or payments from third-party financial institutions. Furthermore, any exports under the market access program, the export credit guarantee program, and the foreign market development cooperator program would be exempted from further prohibitions against U.S. assistance to Cuba contained in that 2000 law.
The legislation would allow U.S. persons to invest in agricultural businesses in Cuba as long as the Agriculture and State departments approve. The U.S. is “missing out” on opportunities to export agricultural products to Cuba, said Crawford. “This bill simply allows our producers to sell food into the Cuban market, just like we’re able to do with virtually any other nation in the world,” he said.
Only Congress can change the financing restrictions on agricultural exports to Cuba, but that can be done “without a lot of political cost, specifically in the agricultural sector,” Marczak said. “Without the ability to provide financing for those agricultural products, our products are at an inherent disadvantage.” Subcommittee Chairman Ted Poe, R-Texas, said the U.S. government should lift the decades-old trade embargo with Cuba, cancel export financing restrictions, and let shippers assume credit risk for exports to the country that sits 90 miles south of Key West, Fla. Poe co-sponsored Crawford’s bill.
But proposals to further relax U.S. trade policy toward Cuba drew some more tepid and oppositional reactions from others during the hearing, including subcommittee Ranking Member Bill Keating, D-Mass., who said economic gains from stronger bilateral trade ties should accompany social gains, such as Cubans’ access to free media, and the ability for Cubans to express political opinions.
Rep. Scott Perry, R-Pa., disagreed over the need for greater trade normalization with Cuba, suggesting proponents might be “delusional” or simply favoring greater monetary profits at the price of dealing with a longtime U.S. deemed threat. “I hate to be the guy who doesn’t want to join the Cuba lovefest here,” Perry said. “You all might like to dance with the devil to make a couple bucks. …These folks in power have no interest at all in changing their ways, and they’re going to use us, and our foolishness, our generosity, to further their intentions.” Financing U.S. exports to Cuba would flow more money through the regime of Cuban President Raul Castro, as a state-owned enterprise handles all the country’s imports from the U.S., Cuba Democracy Advocates Executive Director Mauricio Claver-Carone said in submitted testimony (here), adding that this should raise U.S. concern.
So far, although many U.S. business executives and politicians have expressed interest in expanding U.S. trade with Cuba, Cuban leadership skeptical of the U.S. policy of regime change have taken a “go-it-slow” response to loosening applicable regulations for its own part, Marczak said in written testimony (here). But if both countries relax trade constraints, if Cuba’s economy opens more, and if strong tourism and remittances to Cuban citizens—mostly from relatives abroad—continue, then U.S. agricultural exports could reach $1.2 billion annually by 2021, Texas A&M agricultural economics professor Parr Rosson said in written testimony (here). Rosson added that normalized relations would present greater sales potential in the Cuban market for U.S.-origin frozen leg quarters, soybean meal, corn, pork, beef, prepared meats, condiments, dairy, rice, wheat, snack foods, frozen desserts, soups, gelatins, canned fruit and vegetables, raisins, nuts, fresh fruit and vegetables, gum, bottled water, wine, beer, and spirits.
The National Foreign Trade Council and USA Engage on March 15 welcomed that announcements from the Office of Foreign Assets Control and the Bureau of Industry and Security to further relax limits to trade between Cuba and the U.S. (see 1603150018). "By lifting restrictions in a number of areas – from allowing dollar transactions to putting in place measures to facilitate commerce, including new shipping and importation rules – the Administration is taking important steps to move the U.S.-Cuba relationship forward," USA Engage Vice President Richard Sawaya said. As part of those changes, the Treasury Department updated its list of frequently asked questions about doing business with Cuba (here).