Surprise: A Cuba hearing on Ag Trade

WASHINGTON, D.C. – With all eyes focused on Iran and a threatened shutdown of the government by the Tea Party crowd, it was somewhat surprising that a hearing on Cuba issues was held on the second day after Congress returned from recess. After all, the gossip has been that efforts to lift the restrictions on travel to Cuba would move first, because a Senate bill in the Senate to do just that already has 45 sponsors—including several Republicans. Yet this bill, and a parallel one in the House, have until now simply been referred to their respective foreign affairs committees.

Yet the Subcommittee on Terrorism, Nonproliferation, and Trade of the House Foreign Affairs Committee held a hearing on agricultural trade with Cuba last Tuesday (Sept.8), with its Republican chair apparently eager to undertake legislative changes to the embargo to further facilitate agricultural trade with the island. The hearing featured senior civil servants responsible for Cuba-related issues from the Departments of Treasury, Commerce and Agriculture. They briefed the subcommittee on the changes in embargo regulations related to agricultural trade with the island since last December 17, as well as trade prospects for American businesses. Phil Karsting, from the Department of Agriculture, described these prospects as “major opportunities,” an assessment echoed by both Republican and Democratic representatives during the hearing.

The Republican chair of the subcommittee, Congressman Ted Poe from Texas, began with introductory remarks about the “Communist tyranny” and other obligatory topics, but soon dove right into his main message: “Farmers have the freedom to export to Cuba, but the government seems to get in the way.” His target was the principal obstacle to agricultural trade under the existing embargo rules, which requires “cash-in-advance” from Cuba for any transaction, and prohibits any public or private credit for such transactions.

Rep. Poe rued that “Cuba was the largest market for U.S. long-grain rice exports” before 1959, but today is not importing any U.S. rice. He referred to the “cash-in advance” requirement as a “half-in half-out trading environment [that] does not make much sense to me,” because “it is clear that the U.S. could be a strong contender in the Cuban market.” In other words, let’s get rid of it.

The agency witnesses pointed out that other competitors for the Cuban market don’t face this obstacle, emphasizing that it is likely the main reason why trade of U.S. agricultural goods with Cuba has dropped from more than $600 million in 2009 to less than $300 million in 2014. In that time, Cuba’s food imports have grown steadily, to a level of $2 billion per year.

Another Republican, Congressman Rick Crawford from Arkansas, thanked the departments for recent changes that slightly eased the “cash-in-advance” requirement in response to a letter from him and Rep. Poe, but stressed that “there is a lot more we can do,” strongly suggesting that legislative action was needed.

Republican representative Tom Emmer from Minnesota pressed the witnesses, but their answer was that that their hands were tied. Eliminating the credit obstacle simply requires congressional action, they said, but they would collaborate with Congress if it decides to undertake such action. Rep. Emmer recently sponsored the “Cuba Trade Act of 2015,” which would remove the long-standing restrictions on trade and travel regarding Cuba. Although not a focus of the hearing, his proposed legislation was certainly in the air for anyone following Cuba issues.

The other Republican at the hearing, Congresswoman Ileana Ros-Lehtinen from Florida, made the astonishing assertion during her opening remarks that “little imported food or medicine ever makes it into the stores where Cubans shop, nor is it available [through] ration cards, it is gobbled up by high-ranking officials of the regime.” It would seem that these “high-ranking officials” must be rather obese on tens of millions of dollars of frozen chicken, one of the few U.S. exports to Cuba that have not declined in the last few years. More interesting, however, was her focus on whether the recent changes in Treasury and Commerce regulations were legal in the context of the current embargo legislation.

Rep. Ros-Lehtinen asked that the witnesses submit written answers to her questions in this regard, which presumably will become available on the subcommittee website after they are delivered. This certainly suggests that the Congresswoman may be considering legal challenges.

Ironically, the Democratic ranking member, Congressman William Keating of Massachusetts, seemed more skeptical of relaxing the existing rules than Poe, emphasizing instead in his opening remarks and his subsequent questions of the witnesses that he “remains cautious with regard to well-intentioned policy [which] may impact those who may be hurt most, the Cuban people,” and making reference to arrests of dissidents and alleged failure to “respect the rule of law” in Cuba. The other Democrat present, Congressman Joaquin Castro from Texas, in contrast, wanted to understand how much American businesses lose each year due to the embargo.

A congressional hearing is by no means a sign of success for any particular legislation, though it suggests “movement.” Both Mr. Pope and Mr. Crawford represent districts with important rice-growing constituents, so the hearing may simply have been a gesture to important corporate constituents.

It is somewhat surprising, however, that this one took place before any similar action on the travel issue, which presumably had the biggest momentum, at least in the Senate. But the biggest take-away from the hearing was the Republican chair’s strong implication that he would support legislation to eliminate the existing obstacles to agricultural trade with Cuba under the existing embargo laws. As he said, “it is clear that our current policy when it comes to agricultural exports to Cuba is not working.”