US steps up policing food trade to Cuba

The Bush administration has delayed some Cuban payments to US food exporters to investigate compliance with rules governing sales to Cuba under an exception to the four-decade trade embargo, trade sources said on Tuesday. They said the US Treasury Office of Foreign Assets Control (OFAC), which enforces sanctions against the Communist nation, is preparing new guidelines for the growing food sales to Cuba. Nerves are frayed on both sides of the Florida Straits with exporters and importers worried the Bush administration, which has stepped up actions aimed at depriving Cuba's government of hard currency, may introduce more stringent payment procedures.
"The US banks have been delaying some payments as Treasury checks cargo status and other requirements," a source deeply involved in the food trade said.
"They sometimes rule a company is not in compliance, but issue a special license allowing the payment to go through," he said, asking his name not be used.
A US Treasury Department spokeswoman declined to comment on the payments issue involving food trade with Cuba.
In 2000 the US embargo was modified to allow agricultural sales to Cuba, though only on a "cash in advance" basis.
Cuba has since purchased more than $800 million in cereals, grains, poultry and other products, becoming the United States' 21st largest agricultural market. The food trade has made the United States Cuba's seventh largest trading partner, despite hostility from the Bush administration.
But ships often arrive before Cuba has completed complex paperwork through banks in third countries and the cargo sits on board or in containers unloaded but not released to the Cubans by the shipping company until the payment is made.
For the US Treasury allowing goods to sit on a Cuban dock for a few days or even hours is tantamount to giving Cuba credit, several sources in the food trade said.
The Cuban food import agency Alimport insists delays are the fault of US regulations that oblige Cuba to wire funds through banks in France, Canada and other nations, and ships from nearby US Gulf ports arrive before transactions can be completed.
Alimport has to pay shipping companies for keeping goods on boats anchored off-shore, which has added an additional $10.2 million to freight costs, the agency's President Pedro Alvarez said.
"There has been no credit. The best way to resolve payment delays would be to allow direct banking relations between the two countries," Alvarez told Reuters.
John Kavulich, whose US-Cuba Trade and Economic Council monitors trade with Cuba, said Washington has permitted "cash in advance" to be defined as "cash against documents" which allows for a 72-hour payment period between the arrival of goods in Cuba and receipt of payment by the exporter.