Monday, March 30, 2009

Cash in Advance for Ag Sales

What is ‘cash in advance’?
Jerry Hagstrom, Agweek
Published: 03/23/2009

WASHINGTON — Sen. Byron Dorgan, D-N.D., thought he had found a way to force the Treasury Department to go to back to the more liberal Clinton-era rules on how Cuba pays for its U.S. agricultural imports when he put a provision in the fiscal year 2009 omnibus appropriations bill to force Treasury to use the Clinton rules, but Treasury Secretary Tim Geithner says the Dorgan provision isn’t enough for him to change the regulations.

Now Dorgan and other senators and House members are protesting Geithner’s unwillingness to change the Cuba provisions.

Defining ‘advance’

At issue is whether the term “cash in advance” requires payment before goods are received or shipped.

The Trade Sanctions Reform and Export Enhancement Act of 2000 authorized the sale of agricultural products to Cuba but required that Cuba make payment “cash in advance” through a third-country bank. Under rules developed by the Clinton administration and in effect until 2005, Treasury’s Office of Foreign Assets Control allowed Cuba to pay for farm products in advance of arrival. But in 2005, the Bush administration changed the rule to require payment before shipping.

The normal commercial definition of “payment in advance” means that goods often are shipped and payment is made before they arrive in the port of the purchaser. Farm groups have charged that the Bush rule discourages Cuba from buying U.S. agricultural products. There have been several attempts in Congress to change the rule, but either Republicans in Congress or the Bush administration stopped it.

This year, Dorgan and other advocates of trade with Cuba thought they had fixed the problem when they inserted a provision in the omnibus appropriations bill that said Treasury could not spend any money to enforce the Bush rules. But some Cuban Americans still oppose any dealings with the Castro regime in Cuba. In reaction to protests from the Cuban American communities in New Jersey and Florida, Sens. Robert Menendez, D-N.J., and Bill Nelson, D-Fla., threatened not to vote for the omnibus because of the Cuba language. The Obama administration wanted the omnibus bill passed, and Geithner wrote them that he thought the 2000 law that allowed agricultural sales to Cuba required payment in advance of shipping.

Geither stands firm

After the omnibus bill passed March 11, Geithner issued a notice that he would not change the payment rules because the omnibus provision only stopped implementation of the Bush rule for one year and did not amend TSREEA.

Dorgan and other senators and House members did not protest Geithner’s interpretation before the omnibus passed, but have since written Geithner that they do not agree with his interpretation.

On March 11, Dorgan wrote Geithner, “Your interpretation of these provisions appears to undermine the intent of Congress” and demanded a briefing on the issue.

On March 13, House Agriculture Appropriations Subcommittee Chairman Rosa DeLauro, D-Conn., and a bipartisan group of House members in the Cuba Working Group also wrote Geithner asking for a meeting to discuss his actions on Cuba. DeLauro said they want to discuss how Geithner will implement provisions in the omnibus requiring Treasury to liberalize rules on travel to Cuba.

And on March 16, a bipartisan group of 15 senators led by Senate Finance Chairman Max Baucus, D-Mont., wrote Geithner that they are disturbed by his plans not to take steps to make agricultural sales to Cuba easier.

“I’m dismayed that the spirit and intent of the law has been disregarded by Treasury, but I fully expect that Secretary Geithner will revisit this issue to get U.S.-Cuba relations back on track and get our Cuba policy right for America’s farmers and ranchers,” Baucus said. “In these difficult economic times we have an opportunity in Cuba as a growing and loyal trading partner with the U.S. I’ve worked to build ties and open Cuba to U.S. products, including world-class Montana wheat and peas, and I will continue to press Treasury on this until the issue gets resolved.”

Senators joining Baucus on his letter included Senate Foreign Relations Committee ranking member Richard Lugar, R-Ind.; Senate Agriculture Committee Chairman Tom Harkin, D-Iowa; Sen. Pat Roberts, R-Kan.; Sen. Blanche Lincoln, D-Ark.; Sen. Tim Johnson, D-S.D.; and Sen. Jon Tester, D-Mont.

And on March 18, a spokesman for House Ways and Means Chairman Charles Rangel, D-N.Y., said Rangel has introduced three bills to liberalize U.S. relations with Cuba. One Rangel bill would end the U.S. embargo on trade with Cuba, a second would liberalize travel to Cuba, and a third would expedite trade, including making the provision in the omnibus into permanent law. Rangel’s bill presumably would amend TSREEA, but the Rangel spokesman noted that Rangel also introduced these bills last year and that Rangel did not introduce them in response to the conflict between members of the appropriations committees and Geithner.

Administration and Congress Moving on Travel

Momentum Grows for Relaxing Cuba Policy
Senate Measure Would Eliminate Travel Ban

By Shailagh Murray and Karen DeYoung
Washington Post Staff Writers
Monday, March 30, 2009; Page A01

Roughly a year after Fidel Castro stepped aside and handed much of the responsibility for leading Cuba to his brother Raúl, there is new momentum in Washington for eliminating the ban on most U.S. travel to the island nation and for reexamining the severe limitations on U.S.-Cuban economic exchanges.

At a Capitol Hill news conference scheduled for tomorrow, a wide array of senators and interest groups -- including Senate Democratic Policy Committee Chairman Byron L. Dorgan (N.D.); Banking Committee Chairman Christopher J. Dodd (D-Conn.); Richard G. Lugar (Ind.), the top Republican on the Senate Foreign Relations Committee; the U.S. Chamber of Commerce; and Human Rights Watch -- will rally around a potentially historic bill to lift the travel ban.

President Obama called repeatedly during the campaign last year for a "new strategy" toward Cuba, and this month he lifted severe Bush-era restrictions on travel and remittances to the island by Cuban Americans with relatives there, after the 2009 spending measure banned using taxpayer money to enforce them. The Treasury Department also said it would ease licensing requirements for trade-related travel by U.S. citizens.

Although the decision is not yet final, Obama is expected to further loosen remaining travel restrictions for all Americans by the time he goes to the April 17-19 Summit of the Americas in Trinidad and Tobago, senior administration officials said. Such restrictions were first imposed in 1961 and have been progressively tightened since then. Removing all sanctions requires congressional action, but one senior official said that Treasury has wide leeway to ease the licensing requirements that limit travel.

A bipartisan majority in Congress, including farm-state Republicans looking for new agricultural markets, has long advocated lifting the sanctions to some degree. Provisions to ease the restrictions on travel and agricultural sales were repeatedly attached to legislation passed during the Bush administration, only to be abandoned in closed-door reconciliation conferences as the threat of a presidential veto loomed.

The new bill was first proposed two years ago, dying in committee, but this time it has gained 18 co-sponsors, including eight Democratic committee chairmen. Meanwhile, new legislation was offered in the House last week to further loosen trade restrictions for agricultural products.

The handful of Cuban Americans in Congress, most of them Republicans, have long been in the vanguard that advocated stricter restrictions and opposed a new outreach toward Cuba. But none has been more stalwart than Sen. Robert Menendez (D-N.J.).

The son of Cuban immigrants, Menendez has risked the goodwill of the White House and his standing within the party to press the continuation of sanctions and travel restrictions against Havana's totalitarian regime. He riled many of his colleagues this month by blocking two of Obama's science nominees and by holding up the 2009 spending measure to protest the Cuba provisions it included.

The bill to be unveiled tomorrow in the Senate goes well beyond the measure Menendez just protested by removing legal barriers to all travel to Cuba, as opposed to just family-related visits.

Lugar released a report in late February that calls for a dramatic overhaul of U.S.-Cuba policy. "Economic sanctions are a legitimate tool of U.S. foreign policy and they have sometimes achieved their aims, as in the case of apartheid in South Africa," he wrote in a letter accompanying the report. "After 47 years, however, the unilateral embargo on Cuba has failed to achieve its stated purpose of 'bringing democracy to the Cuban people,' while it may have been used as a foil by the regime to demand further sacrifices from Cuba's impoverished population."

In a lengthy speech from the Senate floor this month, Menendez shot back at Lugar: "Over the years, millions of Europeans, Canadians, Mexicans, South and Central Americans, among others, have visited Cuba, invested in Cuba, spent billions of dollars, signed trade agreements and engaged politically. And what has been the result of all of that money and all of that engagement? The regime has not opened up; on the contrary, it has used resources to become more oppressive."

Fellow Democrats were surprised by the force of his defiant, public opposition to a provision that enjoys broad support in the party. Menendez also serves as chairman of the Democratic Senatorial Campaign Committee, a coveted leadership post that demands a degree of party loyalty.

Some liberal donors protested doing business with a man they thought was taking an outdated stance, and some of Menendez's fellow senators questioned whether they had picked the wrong person for the DSCC job. Dodd, for instance, is a top GOP target in 2010. He has called U.S.-Cuba policy "an abject failure." Some Democrats have wondered privately how hard Menendez would work to defend his colleague.

"Anyone who knows me knows my views are both heartfelt and principled," Menendez responded. "It should be of no surprise to anyone that I have used political capital in my many years in the House and the Senate on this issue."

Menendez said he would continue to use every available tool to preserve U.S. sanctions until political conditions change in Cuba, although he attributed much of his earlier ire to the fact that the provision had been inserted with no notice into an unrelated bill.

"If you want to change Cuba policy, fine, let's duke it out," Menendez said. "Let's duke it out on the floor and let's have our debate and let's have our amendments. Let's know who's for democracy and human rights and who wants to sell their stuff no matter how many people are in prison. That's fine. At least it will be an honest discussion."

Menendez and other proponents of the current restrictions warn that free-flowing trade and tourism would only enrich the Castro regime and defuse tensions within the Cuban population -- friction that is key, they argue, to fostering political change.

Dorgan, who is the lead author of the unrestricted travel measure, said Menendez and a small, bipartisan group of House hard-liners are fighting a losing battle. "It's sort of all over but the shouting, whether our country should maintain this embargo," Dorgan said.

Menendez "has a right to take a position and assert it very strongly," Dorgan said. But, he added, "it's pretty clear to everybody that this is a failed strategy and has been a failed strategy for a long time."

Although Obama last year proposed a new direction with Cuba, he has yet to indicate he favors lifting all economic sanctions. In remarks before the Cuban American National Foundation in Miami last May, he asserted, "It's time for more than tough talk that never yields results. It's time for a new strategy. There are no better ambassadors for freedom than Cuban Americans. That's why I will immediately allow unlimited family travel and remittances to the island."

But on a separate CANF questionnaire, Obama wrote that, while U.S.-Cuba policy "has failed," he would "maintain the embargo as an inducement for democratic change on the Island."

At a warm-up summit to this week's meeting of the Group of 20 major industrialized nations, Vice President Biden said in Chile this weekend that the United States had no plans to scrap the Cuban trade embargo. He said that the Obama administration thinks "Cuban people should determine their own fate and they should be able to live in freedom." But he added that a "transition" was needed in U.S.-Cuba relations.

Menendez said he was open to a debate on Cuba, provided his colleagues refrain from sneaking language into unrelated bills. "A full and open discussion of the real situation in Cuba is timely," he said on the Senate floor this month. "We should gather evidence, bring a wide range of voices to the table and make careful and thoughtful considerations of their implications."

Wednesday, March 18, 2009

Fifteen Senators Push Back on Ag Trade Interpretation

March 16, 2009

Secretary Timothy F. Geithner
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Dear Secretary Geithner,

We are concerned by a March 11 Office of Foreign Assets Control (OFAC) notice outlining its planned implementation of provisions passed in the Omnibus Appropriations Act of 2009. The intent of those provisions was to facilitate already legal agricultural trade with Cuba.

The Trade Sanctions Reform and Export Enhancement Act (TSRA) of 2000 authorized agricultural exports to Cuba by payment of cash in advance or third-country bank letters of credit. For several years, until early 2005, such cash-based sales were taking place and working well. After goods shipped from U.S. ports, the Cuban buyers initiated payments, routing them through third-country banks, as required by the law. There were no reported instances in which a Cuban buyer took possession of U.S. goods prior to completing payment to the U.S. seller, a fact acknowledged by the Treasury Department during the confirmation hearing of Deputy Secretary Kimmitt in July 2005.

Despite this fact, OFAC issued a rule in February 2005 that defined “payment of cash in advance” as payment prior to shipment of goods. The change in definition has brought all cash-based sales to a halt, rendering the cash in advance provision useless and undermining Congress’s intent to facilitate agriculture sales to Cuba. Your March 5, 2009 letter stated that OFAC will continue to use this definition. This is contrary to the intention of the provisions included in the Omnibus legislation to halt this use.

We are troubled to see OFAC continue this practice. Its March 11 notice mistakenly suggests that the “ordinary commercial meaning” of “cash in advance” requires payment prior to shipment of goods. Such an interpretation is legally inaccurate. The American Law Division of the Congressional Research Service has studied this issue in depth and concluded that, “[I]t would appear difficult to find legal support for OFAC’s interpretation that ‘payment of cash in advance’ requires payment be received prior to shipment. As a review of four traditional methods of payment indicates, it appears customary within the international trade and finance community to place the emphasis on the legal transfer of control, rather than on the date of shipment…OFAC’s interpretation appears to limit the available payment options to those that are considered risky, undesirable, and underutilized….”

In your Questions for the Record during consideration of your nomination earlier this year, you committed to “… taking great care to follow congressional intent and working closely with members of Congress to ensure that OFAC’s activities with regard to Cuba are achieving its important objectives without unnecessary hurdles or unreasonable administrative delays.” We urge you to stand by that pledge.

We look forward to working closely with you on this matter.


Senator Max Baucus
Senator Richard Lugar
Senator Jeff Bingaman
Senator Mike Enzi
Senator Tom Harkin
Senator Pat Roberts
Senator Blanche Lincoln
Senator Mike Crapo
Senator Jon Tester
Senator Kit Bond
Senator Patty Murray
Senator Mark Pryor
Senator Mary Landrieu
Senator Maria Cantwell
Senator Tim Johnson

Saturday, March 14, 2009

Cuban Americans Welcome Change

New U.S. travel rules queried
New rules easing travel to Cuba have prompted a wave of telephone calls and visits -- and lots of questions -- to those agencies authorized to issue travel licenses to the communist country.

The telephones rang nonstop Friday at Va Cuba, one of several licensed travel agencies in Miami where Cuban-Americans can arrange trips to their homeland.

The question posed most often by callers: Can I book a flight to Cuba under the Obama administration's new licensing rules?

The answer is yes. Under the new rules , Cuban-Americans can visit the island once a year and stay as long they wish.

Since 2004, Cubans were only permitted to travel once every three years and were only allowed to visit immediate relatives. The definition of family has been broadened.

The new policy has federally licensed companies, such as Va Cuba and Marazul Charters, scrambling to prepare for a sharp increase in demand.

Since the Treasury Department's announcement Wednesday, Va Cuba, Marazul Charters and other local agencies have received thousands of phone inquiries about President Barack Obama's policy along with a slow but steady stream of customers visiting offices to arrange travel.

''This is a step forward . . . towards the reunification of Cuban families in a legal way, instead of breaking the law to fulfill family needs,'' said Armando Garcia, president of Marazul Charters.

Garcia said the Bush administration's policy too narrowly defined family as immediate members and lacked exceptions.

''If you went to visit your mother a year before your father got sick, you could not travel. If your mother died, you couldn't go to the funeral,'' he said.

Licet Soler, 34, of Miami, said Friday that the restrictions will no longer force people to leap frog their way to the island by using the Bahamas, Grand Cayman or Mexico to avoid illegally taking direct flights.

She plans to visit her boyfriend, whom she had not seen since leaving the island in 2006. ''It's wonderful'' she whispered as she sat in Va Cuba's waiting area.

Diamara Martín, whose entire family lives in Guanajay in Cuba, was accompanied by her husband when she went to an agency Friday afternoon.


Martín expected some would criticize Obama and argue that his policy would help support Fidel Castro's government.

''For those who don't have family there, they don't understand,'' she said. ``Mother, father, sisters, uncles -- here, I have no one but my husband.''

She said her parents were ecstatic when they heard that the Obama administration had ordered the U.S. Treasury Department's Office of Foreign Assets Control to lift the restrictions.


Martín, Garcia and Soler hope the administration's action is the first in a series of steps leading to more normal relations between the United States and Cuba.

''This is not enough,'' Garcia said. ``President Obama promised he'd lift all travel restrictions, so I'm expecting him to lift other restrictions as well.''

Maritza Tamayo offered her thoughts as she left one agency and rushed in excitement to her car.

''If other people in the U.S. have the right to see family in other countries, why can't Cubans?'' she asked. ``God says we're all equal.''

Wednesday, March 11, 2009

Obama's Promises on Cuban American Travel vs. Sen. Nelson's Version

It is important we understand that when we have that full and fair and open debate in the sunshine, we remember what Candidate Obama said during the campaign. He said what he wanted to do was go back to the status quo ante on travel to Cuba by family members every year instead of once every 3 years and to have more remittances every quarter than was cut back a few years ago by the previous administration. That seems to be common sense and family value oriented. That is what the candidate who became our next President articulated.

--Sen. Bill Nelson (D, FL) during debate of Omnibus Appropriations Bill 3/10/09

Only that's not what candidate Barack Obama said. He promised many times in debates and speeches and in writing during the campaign, and the Democratic platform pledged, "unlimited travel and remittances" for Cuban Americans. Twice he used the less definitive term "loosening",twice specified a time frame of "immediate" and twice used "unrestricted" but never just a roll back to Clinton's formula of "annual".


Remarks of Senator Barack Obama: Renewing U.S. Leadership in the Americas at program organized by Cuban American National Foundation Miami, FL | May 23, 2008

It's time for more than tough talk that never yields results. It's time for a new strategy. There are no better ambassadors for freedom than Cuban Americans. That's why I will immediately allow unlimited family travel and remittances to the island. It's time to let Cuban Americans see their mothers and fathers, their sisters and brothers. It's time to let Cuban American money make their families less dependent upon the Castro regime.


Democratic Platform, page 37

We must turn the page on the arrogance in Washington and the anti-Americanism across the region that stands in the way of progress. We must work with close partners like Mexico, Brazil, and Colombia on issues like ending the drug trade, fighting poverty and inequality, and immigration. We must work with the Caribbean community to help restore stability and the rule of law to Haiti, to improve the lives of its people, and to strengthen its democracy. And we must build ties to the people of Cuba and help advance their liberty by allowing unlimited family visits and remittances to the island, while presenting the Cuban regime with a clear choice: if it takes significant steps toward democracy, beginning with the unconditional release of all political prisoners, we will be prepared to take steps to begin normalizing relations.


From Obama web site

Promote Democracy in Cuba and Throughout the Hemisphere: Barack Obama will support democracy that is strong and sustainable in the day to day lives of the people of the Americas. In the case of Cuba, he will empower our best ambassadors of freedom by allowing unlimited Cuban-American family travel and remittances to the island.


McCain, Obama trade fire over Cuba
Posted on Sat, Feb. 23, 2008 Kansas City Star

Obama didn't retreat Friday, saying in an e-mail that he'd call for an "immediate change in policy to allow for unlimited family travel and remittances to the island."


Austin Debate

One other thing that I’ve said, as a show of good faith that we’re interested in pursuing potentially a new relationship, what I’ve called for is a loosening of the restrictions on remittances from family members to the people of Cuba, as well as travel restrictions for family members who want to visit their family members in Cuba.


Answers to CANF questionnaire:

I believe U.S. policy has failed. That’s why I have called for a new policy that would permit unlimited family travel and cash remittances, but maintain the embargo as an inducement for democratic change on the Island...

As President, I will grant Cuban Americans unrestricted rights to visit family and send remittances to the island.


Brown and Black Forum, Des Moines, Iowa 12/01/07

there are two things we can do right now to prepare for that. And that is loosen travel restrictions for family members, Cuban Americans who want to visit and open up remittances


Op Ed in Miami Herald Posted on Tue, Aug. 21, 2007

Cuban-American connections to family in Cuba are not only a basic right in humanitarian terms, but also our best tool for helping to foster the beginnings of grass-roots democracy on the island. Accordingly, I will grant Cuban Americans unrestricted rights to visit family and send remittances to the island.


This is the only reference I have found to Obama on the other categories of non-tourist travel. He was one of seventeen Senators signing March 8, 2006 letter to Secretary of Treasury Snow

We are disturbed that OFAC appears to be defining what is and is not a religious organization -- in itself a precarious role for a U.S. Government agency -- and that its operating definition appears to be prejudiced against recognized, mainstream national religious institutions....

We understand the complicated political reality that exists between the United States and Cuban governments. However, we believe it is inappropriate and unacceptable for politics and government to serve as a hurdle and now as a barrier to faith-based connections between individuals.