• Submitted by: admin
• United States
• Business and Economy
• 06 / 04 / 2010

When Gov. Sonny Perdue, a free-trade Republican, heads a Georgia agriculture trade delegation to Cuba next week, what should he expect to accomplish? Until Washington gets out of the way, probably not much.

The Cuba embargo and its intended target, Fidel Castro, have now survived 11 U.S. presidents. Though Barack Obama relaxed nearly all restrictions on travel and remittances for Cuban Americans last fall, he has so far done little for U.S. agriculture interests looking to expand the Cuban market.

In 2000, Congress authorized food and medicine sales to Cuba, and since then, U.S. exporters sold an average of $350 million a year in food to the island. U.S. food sales to Cuba peaked in 2008 at about $700 million.

But then they fell to $528 million in 2009, and fell another 60 percent in the first quarter of 2010.

This drop can largely be attributed to Cuba’s liquidity crunch during the worldwide economic downturn. But there are other important factors at play, and they emanate from Washington, not Havana.

The embargo prohibits U.S. government or private institutions from providing any credits for these food sales, and so Cuba must pay either by “cash in advance” or get a foreign bank letter of credit to transact payment.

The embargo also requires Cuban payments to be routed through a third country bank. In 2005, Washington made these strict conditions even tougher when they redefined “in advance” so narrowly as to kill all the cash-based sales.

Each of these restrictions makes U.S. exporters less competitive in what should be a natural market for the United States.

Just as the governor heads to Cuba, the House Agriculture Committee is expected to consider a bill to ease these restrictions, though it would not allow any credit for Cuba, and lift the broad restrictions still in place against most Americans’ travel to Cuba. While easing restrictions on agricultural exports is an easy sell in Congress, some have asked,

why do agriculture interests want to lift the Cuba travel ban?

As John Block, President Ronald Reagan’s secretary of agriculture, told Congress last month, travel will boost demand for U.S. food not just in tourism but also for average Cubans, as their income increases. And, naturally, it’s hard to expect your buyer to pay you in cash when you’re working to limit what cash they can have.

Texas A&M University estimates that lifting these restrictions would boost U.S. exports by $365 million, and spur an additional $1.1 billion in related economic activity. But if Congress fails to act, the U.S. will continue to lose market share to competitors in Brazil, Vietnam and elsewhere, who offer Cuba generous credit terms.

Supporters of America’s last travel ban — we can travel to Iran and North Korea — consider it a kind of leverage over the Castros that shouldn’t be relinquished without first extracting concessions from their regime.

After all, they argue, giving Americans their freedom to travel to Cuba would enrich a regime that is now, truly, finally on the edge of collapse. Except that it’s not.

Setting aside the obvious inappropriateness of bargaining American citizens’ rights with foreign countries, what leverage do we have over Cuba when 2 million other tourists from around the world already visit the island, and when our own government now allows nearly unlimited travel by hundreds of thousands of Cuban-Americans?

Source: www.ajc.com/