CUBA: Payment Restrictions Drive Down Food Imports from US

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Jun 24 2005 (IPS) - A measure that forces Cuba to make full payment for its food imports from the United States before the shipments leave port mainly affects small and medium U.S. food industry companies.

The restriction, announced in February by an office of the U.S. Treasury Department, prompted Havana to reroute 300 million dollars, which were to go towards purchases from the United States, to buying goods from other markets.

The regulations "drive up the cost of U.S. products, make it impossible for them to compete, and yield ground to neighbouring countries of the European Union," said Pedro Alvarez, the director of Cuba’s state-run food import company, Alimport.

Cuba was prepared to make a "significant leap" this year in its purchases from the United States, said Alvarez. But of an original 700 to 800 million dollars earmarked to food imports from the U.S., the amount of purchases will end up being similar to last year’s total: 474 million dollars.

Alvarez and members of a U.S. business delegation visiting Havana told a news briefing Thursday that the restrictions largely hurt small and medium-sized U.S. firms.

The U.S. trade mission includes representatives of the Office of Economic Development from the state of Louisiana, the U.S. Rice Producers Association and the U.S.-Cuba Trade Association.

The U.S. Congress authorised cash-only sales of agricultural and food products to Cuba in late 2000, as an exemption to Washington’s four-decade trade embargo against the socialist island nation.

But early this year, the requirement was adopted forcing Cuba to make payment in full before the cargo is shipped to the island.

Havana made its first food imports under the new exemption in late 2001, and in 2002 purchased a total of 175.8 million dollars in agricultural goods from the United States, 343.9 million in 2003 and 474 million in 2004, according to official sources.

In just three years, this Caribbean island nation of 11.2 million became the 25th biggest buyer of U.S. farm products.

Around 145 food producing and processing companies, ports and firms from other sectors in 37 U.S. states have benefited since 2002 from exports of around 300 different products, for a total of roughly one billion dollars.

However, the transactions plunged 26 percent between January and April of this year with respect to the same period in 2004, according to the U.S. Department of Agriculture. That included a 52 percent drop in rice purchases.

A total of 263.8 million dollars in goods have been imported so far this year, a sum that includes shipping costs, according to Alimport figures.

Rice imports originally programmed to come from the United States were purchased instead from two of Cuba’s traditional suppliers, China and Vietnam.

Kirby Jones, president of the U.S.-Cuba Trade Association (USCTA), complained that the Cuban market is important to some U.S. rice farmers, who are now losing a major client.

The USCTA, created in April, groups 45 U.S. associations, ports and agriculture offices, as well as small, medium and large businesses from 20 states.

This is the first time that U.S. companies have come together in an umbrella group to work towards the normalisation of trade relations with Cuba and back the efforts of U.S. lawmakers in that direction.

A letter sent by the USTCA Monday to a group of legislators in favour of easing the embargo against Cuba warns that sales will continue to fall over the coming year if the payment restrictions are not modified.

The statement says the U.S. food industry is suffering losses from the drop in sales to Cuba of products like rice, soybean oil, corn, tomatoes, apples and other fruit, and powdered milk.

Prior to 2001 there was no trade, and no reason to fight for what U.S. businesses did not have, but now there is an agribusiness community that feels for the first time that it is losing something, said Jones.