US demands Cuba pre-pay for food

Washington has demanded that Cuba pay cash for US food items before they are shipped to the island, stoking fears it could choke off lucrative food sales.

    The Cuban leader can hit back by halting US purchases

    The US Congress authorised cash sales of food to Cuba in 2000, a notable exception to the overall US trade embargo in place since the 1960s.

    Backers, including some Republican lawmakers, say Cuba is a natural market for US farm goods and that trade will encourage democratic reforms.

    Cuba bought about $392 million in US farm exports last year, chiefly rice, corn, chicken, wheat, soya beans and dry milk. It has spent $792 million on US food since sales began.

    "I am outraged at this attempt by Treasury Department bureaucrats to choke off US agricultural sales to Cuba," Senator Max Baucus said in a statement.

    The Montana Democrat said he would try to block Senate approval of future Treasury Department nominees in retaliation.

    Toughening rules

    The Bush administration has toughened rules on trade and travel to Cuba following a Cuban crackdown on pro-democracy activists.

    But some sceptics say the administration's goal is simply to inconvenience Havana and force Cuba to spend more of its scarce foreign exchange.


    Cuba bought about $392 million
    in US farm exports last year 

    Farm and business groups have warned since early December that changes were in store on how the US government defined cash payment in advance.

    They said a requirement of payment before shipment was "contrary to the norms of international trade" and more restrictive than the usual cash sale.
    In its announcement, the Treasury Department said it would allow a 30-day transition period from the current system, in which exporters commonly dispatch cargo and await payment before handing it over to Alimport, Cuba's food importer. Exporters say that system cuts freight costs. 

    "I wrote the law that they are now misinterpreting. It does not require the wrong-headed action they are taking today," said Senator Byron Dorgan, a North Dakota Democrat. 

    Possible impact
    Export sources and a New York-based group that monitors US-Cuba trade said the future of American food sales to Havana was in the hands of Cuban President Fidel Castro. Cuba might respond to the new terms by halting US purchases.
    "Right now, the greatest leverage to seek change ... lies in Havana," said John Kavulich, head of the US-Cuba Trade and Economic Council.
    If Cuba stops US food purchases, it could spur Congress to approve a bipartisan Senate bill making it easier for agribusiness travel to Cuba and allowing direct transactions between US and Cuban banks on food sales.
    At present, cash sales of US food must be made through third-country banks.

    SOURCE: Agencies


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