Cuba Questions U.S. Commitment to Trade

Treasury Department's actions raising red flags for important U.S. export market. Jacqui Fatka

Published on: Feb 2, 2005

State and national agricultural groups have been up in arms regarding the Treasury Department's threat to change the payment policy for shipments of U.S. goods to Cuba. Several agricultural groups in Washington received a letter from Pedro Alvarez Borrego, the Chairman of Alimport in Cuba, regarding the impacts of payment policies for shipments of US goods to Cuba last week.

The letter gives specific examples of how policies set out by the Treasury Department’s Office of Foreign Asset Control (OFAC) are having tangible detrimental impacts on exporters shipping goods from the United States. The letter says although no formal opinion or clarification has been issued on Cuba trade, OFAC in recent weeks has "withheld most of our payments to US exporters for three working days in order to, as has been claimed, check the correctness and lawfulness of the transaction involved."

Borrego's letter outlined several instances where Cuba-bound cargoes have sat in Cuban container terminals or onboard their ships for several days, with consequent demurrage and storage costs being incurred by the Cuban buyer, and causing a shortfall of food supply for the local population.

Agricultural organizations have been working for months, asking that the OFAC policy be fixed so that the excessive demurrage costs can be avoided, trade restored, and the reputation of the United States as a reliable exporter be preserved.

"It is our hope that an Administration which has adopted such an aggressive trade agenda will not allow one agency within the government to thwart that agenda with onerous payment rules for sales to Cuba." Daren Coppock, CEO of the National Association of Wheat Growers (NAWG) says, "What concerns us is this whole ordeal makes us an unreliable, higher-cost provider. We can't afford to be in that situation."

Coppock says the letter from Alimport puts pressure on U.S. exporters to get the situation fixed. Alimport will require U.S. exporters to pay the incremental costs attributable to the period required by OFAC to conduct its transaction check. The letter says this "gives rise to uncertainty of supply and erodes the reliability the U.S. exporters have professionally and seriously built with their Cuban customers."