Arkansas Democrat // By Jennifer Liberto. 11:42 AM - Dec
11, 2000 EST. AgWeb.com
Arkansas -- The Riceland Foods executive who championed the opening of U.S.
trade with Cuba earlier this year now doubts that Arkansas rice will be sold
anytime soon to the communist country. And he has plenty of company.
In October, Congress partially lifted the historic, 38-year-old trade
embargo with Cuba at the urging of Riceland's Richard Bell and many other U.S.
agricultural executives. But the bill was laced with restrictions that Cuban
leaders have called "onerous" and "discriminatory." And the
regime of President Fidel Castro now vows that it won't buy any American goods
until the law is changed.
"We continue to have dialogue with the Cubans," said Bell,
chief executive of Stuttgart-based Riceland, the nation's largest cooperative of
rice farmers. Still, "we are hopeful that something will eventually open up
there allowing us to make a sale." So far, just a handful of agriculture
executives have said they're actively pursuing trade deals for when the law goes
into effect Feb. 28. Most, in fact, said they're waiting to see if Cuba's
attitude changes before they commit more time and energy.
"We're trying to explore different ways to start, but it's clear
the Cuban government is disappointed with the legislation," said Tony
DeLio, corporate vice president at Archer Daniels Midland, whose leaders are
talking with financial firms in Canada and Mexico that already do business with
Cuba.
"But, you know, in politics, the positions change." The new
law bars U.S. banks from financing deals to Cuba, which must find financing from
a third country or pay cash. The new regulations also codify existing travel
restrictions, which particularly irritates Cubans because tourism provides the
island's main revenue.
"The Cuban government has made a strong, repeated, unambiguous
public statement, here, about how they feel about the measure," said
Lawrence Corwin, spokesman for the U.S. Interests Sections in Havana. "I
haven't seen any sign that they are going to purchase anything." Politics
aside, Cuba may not be able to afford to purchase much under the regulations.
The Cuban economy has grown slowly since its epic economic fallout from 1989-93,
when its gross domestic product declined 40 percent after the loss of regular
subsidies from the Soviet Union.
Cuba imports far more goods than it exports, and the country has not
attracted enough foreign investment to make up the difference, said Bill
Messina, an agricultural economist at the University of Florida.
"Even if they have some cash, I don't think they're going to want
to be giving it to U.S. companies and run the risk of offending the trading
partners they've relied on an awful lot since the fall of the Soviet Union,"
said Messina, who co-directs a research team that studies Cuban agriculture.
In fact, finding third-country financial institutions willing to
finance trade with Cuba will prove challenging, as many rank Cuba among the
world's worst credit risks, he said.
However, U.S. agricultural companies, like Producers Rice Mill in
Stuttgart, a rice farmers cooperative, argue that Cuba's need for cheap imports
will foster trade because the United States can sell goods at lower shipping
prices, since the island lies just 90 miles off Florida's coast.
"Eventually, we will wear them out, because we can load barges of
rice down the Mississippi River and ship it all the way to Cuba," said
Marvin Baden, senior vice president at Producers Rice Mill, which wants to sell
to Cuba.
"It comes down to dollars and cents and what they have and don't
have. And they have very few dollars." In early November, a Cuban
agricultural minister told a group of visiting Michigan bean farmers that Cuba
purchased 300,000 tons of rice this year from China, paying $37 per ton more in
shipping compared with U.S. transportation costs. But the minister also
reiterated that Cuba has no intention of buying American products under the new
legislation.
Nevertheless, two weeks after the Michigan farmers returned, Michigan
Farm Bureau spokesman Dennis Rudat said he received two calls from Cuban
businessmen interested in purchasing beans. "A political statement is one
thing, reality is another," he said.
Those executives of companies pursuing contracts have said they see
the legislation more as an opportunity to get a foot in the door.
"We're not under any illusions that overnight there's going to be
a huge trade flow between the U.S. and Cuba," said Van Yeutter of Cargill
Inc.
Sales of U.S. pharmaceutical supplies to Cuba started out slowly when
first allowed by a 1992 law. During the first five years of sales, the U.S.
Dept. of Commerce licensed only nine firms to sell a total of $1 million in
medical supplies from 1992-97, according to the Bureau of Export Administration.
However, in 1998, just after the federal government streamlined
licensing procedures, 12 firms applied for licenses to sell $19 million worth of
goods. And last year, 21 firms were permitted to sell $61 million worth of
pharmaceuticals.
"Basically, Castro is a one-man show. He's calling the shots,"
said Steven Johnson, a Latin America policy analyst for the Heritage Foundation,
a conservative think tank in Washington. "There's an open door, but whether
it remains open and how far open it goes depends on Castro himself." Rather
than try to predict Castro's mood, many companies plan to wait before they make
a decision to enter the Cuban market. More information should be available later
this month, when federal regulators are expected to finish drafting the trade
language.
These minor details could be important in corporate decisions whether
to sell to Cuba, said John Kavulich, president of the U.S.-Cuba Trade and
Economic Council, a nonpartisan research group funded through memberships.
For example, companies would like the ability to wire money directly
between U.S. and Cuban banks, forgoing the current way of transferring dollars
via third-country banks, which adds up to 15 percent extra on the transaction
cost, "making it more difficult for U.S. companies to be competitive,"
Kavulich said.
If Cuba sticks to its refusal to buy American, some U.S. companies are
concocting backup plans, like poultry company Fieldale Farms in Baldwin, Ga.,
which wants to sell Cuba the hind half of its chickens because unlike Americans,
Cubans prefer dark meat.
Fieldale Farms Vice President Gus Arrendale said he has found a Cuban
buyer and a Canadian firm willing not only to finance the deal, but also to
resell the chicken to Cuba, if necessary.
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