Wednesday, May 29, 2019

Exporting Agriculture to Cuba

It's well known, or at least should be, that U.S. farmers sell a lot of food to Cuba. Many of these farmers are in red states, so Republican state lawmakers have taken countless trips to the island. Marc Frank at Reuters has a good summary of how those transactions work, but more importantly how Trump's activation of Title III of Helms-Burton--which allows lawsuits for nationalized properties--imperils that trade.

Under the current system of imports to Cuba, a U.S. exporter contracts food sales with Alimport, the state-run food importer, which then issues a letter of credit from a third-country bank. When the U.S. company receives the Cuban payment through the bank, it releases the food to Alimport. 
A western banker, who like other businessmen and diplomats interviewed for this story requested anonymity, said that lawyers for financial institutions were increasingly wary of approving transactions in Cuba, even if their clients were not contravening sanctions. 

This is what the administration wants from this policy, and it's the same logic as always. Squeeze Cuba as hard as possible. These days the goal is not just regime change, but also trying to compel Cuba to bring all its personnel home from Venezuela.

One thing to note, however, is that this trade has decreased over time. From the American Farm Bureau:
The continuing restrictions on trade financing, such as no export credit, inhibit sales growth. Cuba has not purchased any U.S. wheat since 2011, buying instead from Canada and the European Union. They have not purchased any U.S. rice since 2008, buying instead from Brazil and Vietnam. The added costs of using third-party banks and requiring that transactions be made in cash only make the U.S. less competitive in export sales.
So this might hurt a bit, but Cuba has other options.

Incidentally, Republicans in farm states even sponsor legislation to allow more exports. There is bipartisan support and it's been there for years. But it has not been a high enough priority to go against the powerful Florida contingent.


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