Cuba-U.S.: Wedge in Embargo Widens Over Agricultural Trade

By Dalia Acosta

HAVANA, Dec. 19, 2005 (IPS/GIN) — In spite of the pessimistic forecasts and turbulent political relations, trade between Cuba and the United States actually increased this year, and projections for next year are favorable.

Information from Alimport, the Cuban state body in charge of foreign trade transactions, indicates that up to mid-December, purchases of agribusiness products from the U.S. amounted to $493.1 million.

“We will easily surpass the $500 million mark in the next few days,” Pedro Alvarez, president of Alimport, recently told the press. If that turns out to be the case, by the end of the year, imports will have grown by more than 5.4 percent over 2004.

But the trade news coincided with the announcement that Washington has banned the Cuban baseball team from participating in the first World Baseball Classic, to be held in March in the United States, Japan and Puerto Rico. (A Cuban soccer team, however, just completed a U.S. tour, playing Seattle and Foxborough, Mass. in the Concacaf Gold Cup)

“Cuba continues to give priority to buying food from the United States, as a way of opening a breach in the (economic) blockade put into effect by Washington more than 40 years ago,” an economist told IPS on condition of anonymity.

“It’s an economic operation, but also a political one,” he added.

The rise in imports was confirmed on Dec. 14 with the signature of a letter of intent between Alimport and U.S. Wheat Associates for the purchase of 500,000 tons of wheat from U.S. producers in 2006.

At the same time, representatives of the government of the mid- Atlantic U.S. state of Virginia signed an agreement worth $30 million, half of which will go toward buying 60,000 tons of soy flour.

Three days earlier, John Baldacci, governor of the northeastern state of Maine, signed a contract in Havana for $20 million, to include sales of apples, seed potatoes, wood, paper and livestock.

Baldacci is the sixth U.S. governor to visit this socialist Caribbean island nation since 2001, when the U.S. Congress authorized food sales as an exception to the embargo imposed shortly after Fidel Castro seized power.

“All want to do business and build better relations with Cuba,” said Baldacci, who expressed confidence in a gradual rapprochement between the two countries.

But in February the signs pointed to a collapse in the newfound trade ties, after the approval of new restrictions by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).

Under the new restrictions, Cuba has to pay for imports before they are loaded onto ships in U.S. ports. The effect was an immediate drop in transactions, which fell by 26 percent by April.

Hardest-hit were sales in rice, which dropped by more than half as U.S. rice farmers were forced to forgo the sale of 200,000 tons.

Rice is a staple food product in this Caribbean nation of 11.2 million, and domestic output, an estimated 260,000 tons a year, is insufficient to meet demand.

“We have rice growers for whom the Cuban market is important, and they are losing it,” said Kirby Jones, president of the U.S.-Cuba Trade Association.

The embargo against Cuba is estimated to have caused the loss of about $3.1 billion in foregone sales of U.S. rice over the last four decades.

Pressure from a group of senators headed by Max Baucus, of the opposition Democratic Party, led in July to authorization by the U.S. Congress for Cuba’s payments to be deposited in banks of third countries — a move that slightly eased tensions.

However, those in favor of a more open relationship with Havana faced a new setback in November, when the U.S. Senate withdrew an amendment which would have prevented OFAC from using federal funds to enforce restrictions against Cuba.

“It shows huge hypocrisy,” Rep. Jo Ann Emerson, a Missouri Republican, said of the White House position. “They say ‘we want open markets,’ but on the other hand they allow rules to go into effect that prevent the opening of markets.”

Said Baucus: “Instead of growing a promising new market, American farmers are paying the price for a shortsighted, ineffective approach on Cuba.”

Also in November, the Havana International Fair, FIHAV 2005, confirmed the interest of U.S. businesses in the Cuban market.

Representatives of more than 170 U.S. firms traveled to the Cuban capital to sign agreements and letters of intent for the sale of products like grains, milk, apples and frozen chicken.

The central state of Nebraska alone, whose governor Dave Heineman attended the fair, negotiated with Alimport delivery in 2006 of the state’s total production of beef liver, in addition to tens of thousands of tons of wheat and soybean flour, for a total value of over $30 million.

In just four years, Cuba has risen to 26th place on the list of markets for U.S. agricultural products, up from 225th prior to 2001.

Since December 2001, Cuba has signed contracts to buy 6.6 million tons of food and agricultural and livestock sector inputs from U.S. businesses to a value of $1.75 billion. Thirty-seven states and 157 companies in the United States have benefited.

Figures from the Cuban Ministry of Foreign Trade indicate that the United States is now the fourth biggest exporter to Cuba, accounting for 6 percent of this country’s imports.

“I think buying from the Americans (the United States) has been beneficial for the people, especially the rice and chicken,” Esteban Martinez, a mechanical engineer, commented to IPS. Martinez received a box of more than 15 kilos of chicken “made in USA” as an end-of- year bonus.

In the view of the Cuban authorities, repealing all restrictions on bilateral trade would boost commerce between the two countries to some $20 billion a year within the first five years.