By Laurie Goering, Tribune Foreign Correspondent.
Chicago Tribune. February 27, 2001
HAVANA -- Illinois farmers would love to sell their crops to Cuba, and Cuba,
under different circumstances, might love to buy them.
Whether any trade in fact is possible should become more evident this week
when the U.S. government releases new regulations on food and medicine sales to
the island.
In October, Congress for the first time approved humanitarian food and
medicine sales to Cuba's communist government, but with restrictions denying
public or private U.S. financing for the sales.
Cuban President Fidel Castro promptly responded that his cash-strapped
nation would not buy an aspirin or a grain of rice under such a deal.
But what may determine whether sales eventually take place, Cuban and U.S.
analysts say, are the regulations governing the sales, written largely under the
Clinton administration but revised by the Bush administration.
"The Cuban government policy on buying is still `no,' but depending on
the regulations, Cubans might change their minds," said Kirby Jones, the
head of Alamar Associates, a Washington-based consulting group on trade with
Cuba.
"It's a political rather than an economic decision right now," he
added.
Analysts in the United States and Cuba say three main issues stand in the
way of trade.
The first is whether exporters will be able to get long-term licenses for
multiple sales to Cuba, or will be required to seek a separate license for each
shipload.
Cuban officials say that buying under regulations that require individual
licenses for each shipment would be impossible, as it gives Bush administration
officials the power to cut off sales at any time, something that could leave the
island without staples such as rice and black beans.
Rather than face such risk, Cuba would prefer to continue buying its food
from suppliers in Canada, Brazil, Argentina, Vietnam, France and Spain, even if
U.S. crops are cheaper.
"To depend on the pen of a bureaucrat in Washington would be suicide
for us," said Dagoberto Rodriguez, the North American director in Cuba's
Foreign Ministry. "Licensing is a huge obstacle. It makes us very
vulnerable."
Secondly, under current U.S. law, any ship that docks in Cuba is barred from
coming to a U.S. port for six months. That makes the logistics of transporting
food to Cuba difficult, Rodriguez said.
Finally there's the problem of where to find the money to fund the trade.
The legislation Congress passed in October prohibits U.S. banks from issuing
letters of credit to Cuba to facilitate sales, the common procedure for such
sales elsewhere in the world.
U.S. individuals and companies also are barred from setting up private
financing for the sales.
That leaves financing only through third-nation banks, a relatively costly
and complicated proposition because of cash lost in currency exchanges.
Cuban officials say they are "profoundly offended" by the U.S.
financing restrictions, which group Cuba with the world's terrorist nations even
as some of those nations, including Iraq, get a better deal on trade.
"It's not that Cuba doesn't want to buy. But we have to be practical,"
Rodriguez said. "If the U.S. doesn't resolve these practical problems, it's
almost impossible for us."
Rodriguez said he has little faith that the new regulations issued by the
Bush administration will overcome the financing problem because "the
regulations can't overwrite the law."
Sen. Dick Durbin (D-Ill.) has co-sponsored legislation now before Congress
to lift the financing restrictions on food sales to Cuba, calling the financial
regulations "needless roadblocks in the way of American farmers."
But Bush administration officials have emphasized in recent weeks their
commitment to take action that they say will "keep containing" Castro
by maintaining U.S. sanctions and have shown no support for modifying the law.
Illinois agribusiness firms, including Decatur-based giant Archer Daniels
Midland Co., have lobbied hard for sufficiently flexible regulations to ease
sales. These companies remain hopeful they eventually could capture much of the
Cuban import market for wheat flour, soybeans, rice, vegetable oil and other
staples.
"The Cubans have said pretty emphatically they won't buy one grain of
rice. That's a position they have to take at this moment," said Tony DeLio,
a corporate vice president at ADM. "But I would think, and this is
speculation, that they're taking a stand to try to influence the regulations so
they're written as favorably as possible."
DeLio predicts that if the new regulations are sufficiently relaxed and
financing problems are overcome, Cuba could become an $800 million to $1 billion
a year market for U.S. food producers.
He believes ADM could win a large share of that business because "all
the products they want we're fundamental in."
Those figures are substantially larger than ones released earlier this month
in a report to Congress by the U.S. International Trade Commission.
That report suggested that losses to the U.S. market from the nearly
40-year-old economic embargo against Cuba have been minimal and that U.S.
agricultural sales to the island--if the embargo were not in place--probably
would reach around $284 million a year.
The $284 million is a relatively small amount when compared tototal U.S.
farm exports of $53 billion in 1999.
Farm bureau officials, however, have criticized the report's figures as
unrealistically conservative.
"We have all kinds of business in the Caribbean and Central America. We
literally have a boat that goes by Cuba every day," DeLio said. "How
easy would it be to pull into Cuba?
"The only ones who get hurt in this [Cuban] embargo are American
farmers and Cuban people," he added, contending that U.S. farmers could
make $30 million to $50 million in additional profit on $800 million worth of
annual sales to Cuba.
If the new regulations turn out to be flexible, some analysts believe U.S.
companies and Cuba's government will try to push through at least a limited
level of initial sales.
"Cuba will work to find something that allows them to claim victory but
also start importing," DeLio predicted. "If we can get a wedge in the
door I think other barriers will start falling a lot more rapidly. The best
thing these regulations can do for us is give us that wedge in the door."
Rodriguez said it was unlikely Cuba would make any kind of symbolic
agricultural purchase in an effort to support U.S. agribusiness in its growing
push to lift sanctions against Cuba.
Such a purchase, he said, might deny Cuba the leverage it needs to win more
favorable food and medicine sales regulations in the future.
U.S. Commerce Department officials said they expect the new regulations, due
120 days after passage of the bill, to be released by Wednesday. | 