Senators Protest Rules on Cuba Food Sales

WASHINGTON – The Treasury Department (search) made clear Tuesday that Cuba must make cash payments before the shipment of U.S. agriculture and medical products to the island. The ruling drew quick criticism from farm-state senators, with one threatening to block nominees to Treasury posts.

"I'm outraged at this attempt by Treasury Department bureaucrats to choke off U.S. agriculture sales to Cuba," said Sen. Max Baucus of Montana, top Democrat on the Senate Finance Committee.

"When I first heard of the proposed change, I threatened to block consideration of significant Treasury nominees," Baucus said in a statement. "Now that the change is made, I promise to be good to my word."

Baucus has also joined senior Republicans, including Intelligence Committee Chairman Pat Roberts of Kansas and Larry Craig of Idaho, in promoting legislation to remove what they say are the bureaucratic obstacles to farm trade being put up by the administration.

With the new rule, said Dan Whiting, Craig's spokesman, "it's clear that we need to have the bill to change the direction."

Congress in 2000 passed a law that allows cash sales of food and agricultural products to Cuba (search), an exception to the four-decade-old trade embargo (search) with the Fidel Castro (search) regime. Since then sales have shot up, with Cuba purchasing some $762.6 million in agriculture goods from 2001 to 2004, making it America's 25th largest export market.

But exporters and lawmakers say sales have been stymied by the lack of clarity over payment procedures. Up to now, they said, they could ship their products to Havana Bay, with the physical handover coming after a third-country bank transferred funds to a U.S. bank.

The new rule by Treasury's Office of Foreign Assets Control (OFAC), which will go into effect in 30 days, clarifies that payment of cash must be before shipment.

"Seldom has the use of food as a foreign policy weapon been successful," said Roberts. "The position taken by OFAC represents a policy decision that will harm both American producers and the Cuban people."

"All this ruling is designed to do is shut down U.S. farm sales to Cuba," said Sen. Byron Dorgan, D-N.D.

The department, in a statement, said this payment policy confirms to common understandings of international trade finance, and that it strikes a balance between administering sanctions against Cuba and ensuring that the island can continue to receive food and medicine shipments.

The office, it said, "is steadfast in effectively administering the Cuba sanctions program to hasten freedom to the Cuban people."

"It looks like they are determined to shut down our business there," said Chris Aberle, sales director of FC Stone, a major agriculture cooperative that has sold $80 million in grains and other American farm products to Cuba over the last few years.

"I've had angry shippers calling me all afternoon," said Aberle, who has traveled to Cuba numerous times to negotiate deals and oversee shipments of dried beans and other commodities. "I don't understand why we are doing this when we are in a serious agricultural trade deficit."