Despite White House opening, exports to Cuba continue to drop

Despite White House opening, exports to Cuba continue to drop

New monthly data shows value of food, agricultural shipments at just
$2.3 million
Farm groups eager for more trade with island nation 90 miles from U.S.
Expert: Cuba engaged in 'a political game of chicken'
BY CHRIS ADAMS
cadams@mcclatchydc.com

WASHINGTON
U.S. agricultural and food exports to Cuba continued dropping in recent
months, despite this being the year the United States is working to
substantially open trade with the island nation.

In August, exports of food and agricultural products authorized under a
2000 trade law dropped to $2.3 million, according to new data from the
U.S.-Cuba Trade and Economic Council.

That's off substantially from the start of the year – despite the much
ballyhooed thawing of trade and diplomatic relations with Cuba.
Announced in December by President Barack Obama, the opening aims to
undo a decades-old policy the White House considers outdated and
ineffective. It already has led to renewed diplomatic relations with
Cuba, and American farmers are particularly excited about the potential
for a thriving market with 11 million people just 90 miles from U.S. shores.

So far this year, however, food and agriculture exports to Cuba are
going down, not up.

$14.4 million Value of food, agriculture exports to Cuba in August 2014.
$2.3 million Value of those exports in August 2015.
In December 2014, the month Obama announced the first initiatives,
exports to Cuba were $25.2 million, according to the trade council's
data. They dropped to $3.3 million this past July and then $2.3 million
in August.

A year ago, in August 2014, exports were $14.4 million.

John S. Kavulich, president of the trade council, said that some
short-term issues explain part of the drop. Poultry shipments, for
example, dropped due to avian flu issues but are expected to rise in
October.

It's also unclear what an additional round of changes announced in
September will have on shipments to Cuba. Those changes include giving
U.S. firms the ability to maintain physical operations in Cuba, a
significant help for firms looking to boost business ties with the island.

But to Kavulich and other experts, the Cuban government – which controls
the purchases of such food and agricultural products – is slowing its
activity with U.S. firms as a way to exert leverage on the U.S.
political process, hoping for even greater concessions.

THEY'RE PLAYING A POLITICAL GAME OF CHICKEN, HOPING CONGRESS WILL EASE
SANCTIONS.
Jason Poblete, regulatory lawyer, on Cuba's actions

While the trade embargo on Cuba is still in place, the changes announced
by the Obama administration have chipped away at it. But significant
restrictions remain – particularly one that prohibits U.S. growers from
selling to Cuba on credit. Getting that restriction lifted is a goal for
both the Cuban government and many U.S. farm groups.

"The concessions made by the president were significant – and yet you
don't see any evidence of Cuba reforming their economy or addressing
U.S. concerns such as certified claims or human rights," said Jason
Poblete, an international regulatory lawyer with Poblete Tamargo LLP.
"My sense is that nothing that has happened this year is going to move
the needle in any appreciable way. They're playing a political game of
chicken, hoping Congress will ease sanctions, especially the credit
prohibitions."

There are bills in Congress to ease the embargo, and they do have
bipartisan support. But they also have strong opposition and face stiff
odds of moving this year.

"It's obvious that we're interested in normalizing the relationship, but
it's also becoming more and more apparent that the Cubans are slowing
this down and tapping on the brakes," said Carl Meacham, Americas
Program Director at the Center for Strategic and International Studies,
a Washington think tank.

Chris Adams: 202-383-6071, @CAdamsMcClatchy

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