WASHINGTON (AP)--The U.S. Treasury Department made clear Feb. 22 that Cuba must produce payment in cash before U.S. agriculture and medical products are shipped to the island. The ruling drew quick criticism from senators whose states have important farm interests.

One senator threatened to block Senate approval of nominees to jobs in the department.

"I'm outraged at this attempt by Treasury Department bureaucrats to choke off U.S. agriculture sales to Cuba," Montana Sen. Max Baucus, senior Democrat on the Senate Finance Committee, said in a statement.

"When I first heard of the proposed change, I threatened to block consideration of significant Treasury nominees," said Baucus, whose state has wide-ranging livestock and grain crops industries. "Now that the change is made, I promise to be good to my word."

Baucus has joined senior Republicans in promoting legislation to remove what they contend are bureaucratic obstacles to farm trade being put up by the administration of President George W. Bush.

With the new rule, said Dan Whiting, spokesman for Republican Sen. Larry Craig of Idaho, "It's clear that we need to have the bill to change the direction."

Congress passed a law in 2000 that allowed cash sales to Cuba of farm and medical products, an exception to a four-decade-old trade embargo against the communist-led government of President Fidel Castro. Since then sales have shot up, with Cuba buying some $762.6 million in agricultural goods from 2001 to 2004.

That makes the embargoed island 25th-largest export market for the U.S.

Exporters and lawmakers now say sales have been stymied by the lack of clarity over payment procedures. Up to now, they said, they could ship their products to Havana Bay, then turn over the goods after a third-country bank had transferred the money to a U.S. bank.

The new rule by Treasury's Office of Foreign Assets Control, which takes effect in 30 days, clarifies that payment of cash must occur before the goods are shipped.

"Seldom has the use of food as a foreign policy weapon been successful," said Sen. Pat Roberts, another member of President George W. Bush's Republican Party. "The position taken by OFAC represents a policy decision that will harm both American producers and the Cuban people." Roberts represents Kansas, another Western state with large livestock and Wheat industries.

"All this ruling is designed to do is shut down U.S. farm sales to Cuba," said Democratic Sen. Byron Dorgan of North Dakota.

The Treasury Department said in a statement that the payment policy conforms to common understandings of international trade finance. The statement said the position strikes a balance between administering sanctions against Cuba and ensuring that the island can continue to receive food and medicine shipments.

The office, it said, "is steadfast in effectively administering the Cuba sanctions program to hasten freedom to the Cuban people."

Date: 2/24/05

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