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US loosens payment rules for food sales to Cuba

Published: 9:08PM Wednesday March 10, 2010 Source: Reuters

The United States is easing rules for cash payments of agricultural sales to Cuba through September 2010, according to a document posted on the US Treasury Department's website.

The move is at least a temporary victory for US farmers whose trade with Cuba was complicated by payment rules issued by Treasury's Office of Foreign Asset Control (OFAC) during the administration of President George Bush.

The loosening was approved by Congress in December in a provision added to a spending bill funding federal agencies for the rest of the 2010 fiscal year.

It will disappoint those in Congress who oppose any easing of trade sanctions against Cuba's communist government and see the move as ill-timed after the recent death of political prisoner Orlando Zapata Tamayo from a hunger strike.

The rule change can be found on OFAC's website at and is labeled a final rule, although the effective date is not given.

Farm sales were exempted in 2000 from the long-standing US embargo on Cuba so long as Havana pays in advance for the goods and the money is handled by a third-country bank.

The Bush administration interpreted payment of cash in advance to mean Cuban buyers had to pay for the US farm goods before they left port for Cuba.

OFAC's new regulations, which it said only covered the remainder of fiscal 2010, reinterprets payment of cash in advance to mean before title and control of the farm goods are transferred to the Cuban buyer.

That would allow Cuban buyers to pay for the goods just before they are unloaded in Cuba, lowering the financial cost of the transactions that are paid through third-country banks.

John Kavulich, a senior policy advisor at the US-Cuban Trade and Economic Council, said he doubted the rule change would lead to a big increase in US farm exports to Cuba.

"From a strictly commercial viewpoint, it's going to have very little benefit for Cuba," Kavulich said.

Even though Cuba decried the rule change in 2005, they continued to buy US farm goods with purchases reaching a record $710 million in 2008.

Purchases fell in 2009 to $528 million, but the decline reflected Cuba's dire economic situation much more than the OFAC rule, Kavulich said.

The House of Representatives Agriculture Committee has scheduled a hearing on Thursday on farm trade with Cuba.

Committee Chairman Collin Peterson, a Republican from Minnesota, has offered legislation to further ease food sales by allowing direct payments between US and Cuban banks and lifting restrictions on travel to Cuba by US citizens.

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