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Dairy Facts 2016

The Hagstrom Report: Financial Regulations on Sales to Cuba to be Eased

Dec 17, 2014

This is an excerpt reprinted with permission from The Hagstrom Report, a news service providing original national and international agricultural news to its subscribers.

The Commerce Department’s Office of Foreign Assets Control will ease the financial regulations on U.S. agricultural sales to Cuba as part of a normalization of U.S.-Cuban relations, senior administration officials said today.

OFAC will change “the regulatory definition of cash in advance to a cash-before-transfer-of-title definition,” an official said.

In addition, U.S. banks will be allowed to establish correspondent banking relationships, and individuals traveling to Cuba will be able to use U.S. credit and debit cards. At present, U.S. companies have to go through banks in third countries to arrange the payment.

U.S. agricultural products are the only American items that can be exported to Cuba besides medical supplies. But Cuban officials have said the restrictive financing rules have discouraged Cuba from buying U.S. products on the grounds that the system has required cumbersome and expensive transaction fees.

The U.S.-Cuba Trade and Economic Council, a group that analyzes U.S. sales to Cuba, has downplayed the importance of the financial regulation in reducing U.S. sales to Cuba in recent years.

The regulatory changes will not go into effect until the regulations have been developed. No schedule was provided for that today.

In addition, the Commerce Department will also allow the sale of U.S. farm equipment to small farmers in Cuba.

Travel restrictions to Cuba will also be lifted — including those on Americans doing business in Cuba, the officials said. Americans will be allowed to bring back $400 in Cuban goods, including $100 in alcohol and tobacco.

President Barack Obama is scheduled to speak to the nation at noon on the normalization of U.S.-Cuban relations for the first time since 1961, when the United States established an embargo due to the communist nature of the Cuban revolution.

The U.S. government has allowed sales of U.S. agricultural products to Cuba on a cash basis since the passage of the Trade Sanctions Reform and Export Enhancement Act (TSRA) of 2000.

The decision to normalize relations and open a full-scale U.S. embassy in Havana and a Cuban embassy in Washington follows the release of Alan Gross, a U.S. Agency for International Development subcontractor who has been imprisoned in Cuba, and an exchange of U.S. and Cuban prisoners involved in intelligence operations.

Although the Agriculture Department does not have an agricultural office in Cuba, USDA does keep track of sales to Cuba. Here are a chart of U.S. agricultural sales and an April analysis by a private sector group, the U.S. Trade and Economic Council Inc.

The Hagstrom Report covers Congressional hearings, markups and press conferences in Washington D.C., as well as national nutrition news and farm meetings throughout the United States. Subscribers to The Hagstrom Report receive a digital newsletter daily while Congress is in session and at other times as events require and news happens.

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