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041214 Poultry Industry Fears Loss of Cuba Trade

December 2, 2004

Mobile, AL - Poultry industry officials say a surge in product sales to Cuba could be halted by the Bush administration's attempt to reinterpret a 2000 trade law covering payment for the shipments.

U.S. poultry sales to Cuba more than doubled to $61 million in the past year, according to Richard Lobb, a spokesman for the National Chicken Council in Washington, D.C. But Lobb said sales could be jeopardized because the reinterpretation of the law if adopted requires Cuba to deposit money for the purchases in U.S. banks before shipments leave port for Havana.

"Such a reinterpretation of this law would be a reckless act at the expense of Alabama's poultry farmers and producers," said Alabama Agriculture Commissioner Ron Sparks, who has traveled to Cuba supporting trade ties.

Treasury spokeswoman Molly Millerwise said the review of the 2000 law began when some U.S. financial institutions handling Cuba's purchases asked the government to clarify the policy. "We expect to issue guidance in the near future," she said.

She declined to speculate on the final decision or the extent of a lobbying campaign against any change in the payment system. She said the U.S. Agriculture Department and State Department are working with Treasury on the issue.

Sen. Byron Dorgan, D-N.D., a sponsor of the 2000 trade law, called for an Inspector General's probe into whether Treasury's Office of Foreign Assets Control has exceeded its legal authority by using its resources in the matter. He also plans to introduce legislation in the new Congress to prevent OFAC from using strong-arm tactics to thwart the sales.

Dorgan said OFAC's top job is to track terrorists' funding sources. "It's clear the administration wants to shut down agricultural trade with Cuba," Dorgan said. "This wrong-headed policy is doing nothing to bring down Fidel Castro. It just hurts American farmers and violates the spirit of the law allowing these sales to go forward."

According to Dorgan, U.S. farmers and ranchers have sold nearly $1 billion worth of agricultural goods to Cuba in the past three years despite numerous Bush administration roadblocks.

The United States has maintained embargoes of various forms against Cuba for more than 40 years to pressure the communist-controlled island to make democratic and economic changes. Now Bush has named Cuban-born Carlos Gutierrez, former chief executive officer of Kellogg Co., to his Cabinet as secretary of commerce and he's expected to support the president's policies of blocking most trade with Fidel Castro's government.

Agriculture products are only part of the multimillion-dollar trade with Cuba pegged to the 2000 law. Sales to Cuba are required to be in cash, but nothing is unloaded from vessels until Cuba's payments are deposited in a bank.

Federal officials, however, have been looking at the terminology "payment in advance" versus "cash against documentation" in the law to determine whether it extends a line of credit to Cuba. The new interpretation of the law could potentially require "in-hand" prepayment for goods prior to being shipped out of the United States.

"Cuba is very concerned about the idea of putting money in a bank before the product has left U.S. ports, concerned it might be seized," Lobb said in a telephone interview.

Attempts to seize prepaid Cuban cargo in U.S. ports could come from anyone with claims against Cuba, said Alabama Port Authority spokeswoman Judith Adams in Mobile.

But John Kavulick, president of the U.S. Cuba Trade and Economic Council, pointed out that some $714 million has moved through the financial system for Cuba purchases in the last three years without a problem.

"Some companies have got payment in advance," he said.

Food giants Tyson Foods Inc., Louis Dreyfus Corp. and Gold Kist Inc. currently ship about 15,000 tons of Alabama-raised poultry to Cuba, Alabama Port Director and CEO James K. Lyons said in a Nov. 29 letter to U.S. Sen. Richard Shelby, R-Ala., enlisting his support in protecting the current payment system.

Other ports in the Southeast share in those shipments. "There appears to be no legitimate grounds for considering U.S. agricultural sales transactions as a credit sale of goods, nor a need for tightening requirements on these U.S. sales to Cuba," Lyons said.

In Atlanta, Gold Kist spokesman Wayne Lord said the company awaits guidance from Treasury officials.

"We want to be in position to serve the world market within the limitations of the law," he said. The National Chicken Council's Lobb said the current payment system is not an extension of credit to Cuba. He said officials at Treasury and the State Department are giving a "bureaucratic" interpretation to the law.

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