Committee Reviews Agricultural Trade with Cuba

Mar 16, 2005

WASHINGTON, D.C. – Chairman Bob Goodlatte today chaired a House Committee on Agriculture hearing to review the final regulations issued by the Department of the Treasury’s Office of Foreign Asset Control (OFAC) concerning the term "payment of cash in advance" and the effect of the redefinition of the payment policy on U.S. agricultural trade with Cuba. The Committee heard from two panels of witnesses including Director of OFAC Robert W. Werner.


On February 22, 2005 OFAC published its final rule requiring U.S. agricultural exporters to receive payment from Cuba before shipping commodities. Several farm groups and Members of Congress have voiced opposition to this change noting that requiring cash payments before shipment will likely curtail Cuban interest in purchasing U.S. commodities.

“I find it disturbing that the Treasury Department’s Office of Foreign Asset Control is placing, with its February 22, 2005 regulations, what I see as unnecessary barriers regarding agricultural trade with Cuba. I am especially concerned about the impact these regulations may have on contracts already finalized. These contracts, including those with delivery dates after March 24, 2005, may have to be renegotiated to the disadvantage of United States exporters and ultimately United States farmers and ranchers,” said Chairman Goodlatte in his opening statement.

The U.S. Congress lifted unilateral trade sanctions on commercial sales of food, agricultural commodities, medicine and medical products to several sanctioned countries including Cuba under the Trade Sanctions Reform and Export Enhancement Act (TSRA) of 2000. Since that time, Cuba has purchased $774 million of U.S. farm commodities and food products.

“As I have said many times, agricultural trade is essential to the prosperity of American farmers and ranchers. United States agriculture depends on exports and a vibrant trade policy is important to United States farmers and ranchers and to all businesses related to agriculture. We want to seek greater opportunity for our agricultural products--and that includes agricultural exports to Cuba,” said Chairman Goodlatte.

Robert Wright, Executive Vice President of Sales and Marketing, raised concern over the potential loss of exports due to the redefinition of “payment of cash in advance” by OFAC. “Exports of poultry, like other farm products, to Cuba are now in jeopardy of being lost. Putting these exports at risk was not necessary. …How do U.S. poultry exporters explain to the Cuban buyer that the contracts signed in good faith can no longer be honored? Surely, OFAC could have opted to allow existing contracts for exports to Cuba to be valid. I hope someone can explain how setting this very unfortunate precedent is in the national interest of the United States,” Wright said in his testimony.

The Chairman pledged his commitment to closely monitor the effects of this new policy to ensure minimal disruption of U.S. trade with Cuba. “I do not want to see the United States government placing barriers in the way of agricultural exports. Nor do I want to see legitimate contracts, entered into willingly by a seller and a buyer, declared void because of a regulation issued without notice or comment,” said the Chairman.


Panel I

Mr. Robert W. Werner, Director, Office of Foreign Assets Control, Department of the Treasury, Washington, D.C.

Panel II

Mr. Robert Wright, Executive Vice President, Sales and Marketing, Pilgrim’s Pride Corporation, Pittsburg, Texas

Mr. Dennis R. DeLaughter, Rice Producer, Progressive Farm Management, Edna, Texas, on behalf of the US Rice Producers Association and the USA Rice Federation

Mr. Richard K. Lewis, Chief Operating Officer, DairyAmerica, Inc., Fresno, California

Mr. Charles E. Kruse, President, Missouri Farm Bureau, Dexter, Missouri, on behalf of the American Farm Bureau Federation