Treasury Dept. Clarifies Cuba Rule

Goods may again be shipped to Cuba once payment is received by a third country bank acting as a seller's agent. Compiled by staff

Published on: Aug 1, 2005

U.S. farm sales to Cuba got a boost Friday with a clarification of how goods are paid to the communist-nation.

The Treasury Department issued a rule in February that required cash payment in advance for agricultural products sold to Cuba before they shipped from a U.S. port. Under the clarification, goods may be shipped to Cuba once payment is received by a third country bank acting as the seller’s agent, thereby preventing seizure of the goods before leaving the United States.

"Prior to this clarification, direct payment from Cuba was required prior to shipment of any U.S. goods," says American Farm Bureau Federation President Bob Stallman. "That interpretation made those goods vulnerable to seizure for unrelated claims before they could actually leave the U.S. port. It's little wonder Cuba had no interest in buying our goods under that circumstance."

Stallman explains that Cuba has been a growing market for U.S. food exports, but sales have dropped due to Treasury’s initial rule change in February. "This clarification should help facilitate trade with Cuba, however, this does not fully resolve the overarching issue," he warns. "This is a good interim move that should provide some relief to U.S. producers, but the underlying issue of cash payments from Cuba remains, and AFBF will continue to work with Congress to legislatively overturn the Feb. 22 rule."

"We are hopeful that this clarification will create an avenue for the resumption of trade volumes with Cuba as those we have experienced in previous years," says U.S. Grains Council President and CEO Ken Hobbie.

Sen. Max Baucus, ranking democrat on the Senate Finance Committee, has blocked Treasury nominations since February. The Montana senator has cosponsored legislation with Sen. Larry Craig, R-Idaho, and twenty-eight other farm state senators from both sides of the aisle that would overturn the Treasury rule altogether. There also is legislation pending in both the House and Senate that would block enforcement of the February rule.