Rules slow burgeoning trade with Cuba

Radlo Foods sold more than $1.5 million in eggs, about 3 million dozen, to Cuba from September through February, said David Radlo, the company’s chief executive officer.

Exports from the Watertown, Mass., firm to the communist-ruled island were rising steadily until Bush administration regulations took effect at the end of March and limited the way Cuba’s government can pay U.S. food and commodity producers.

“Now we have no orders,” Mr. Radlo said, though the company is trying.

Agriculture and food companies sold almost $392 million worth of goods to Cuba last year under a special export program. Industry representatives fear the tighter rules will diminish that market.

“This is a big deal to the companies that are in this business,” said Richard Lobb, spokesman for the National Chicken Council, an industry group that listed Cuba as its seventh-largest overseas market.

Corn, rice, wheat, soybean, dairy, pork and other farm commodity groups also are concerned.

Congress in 2000 loosened an embargo that had stifled U.S.-Cuba trade since 1963, allowing limited exports under carefully controlled terms.

In February, the Treasury Department’s Office of Foreign Assets Control, which is responsible for administering and enforcing economic embargoes and sanctions, announced a change to that law, effectively tightening conditions for export.

The Treasury Department says the change provides a much-needed clarification for financial institutions, and is not related to broader policy on Cuba.

“The new guidance does not affect the ability of U.S. companies to ship goods to Cuba,” said Molly Millerwise, a Treasury spokeswoman.

The Bush administration, though, has opposed closer commercial relations with Cuba. President Bush last year called increasing trade with the country the “wrong decision” because it would help maintain a “tyrant” in power.

The privately funded group Human Rights Watch in March said the Castro government “systematically denies its citizens basic rights to free expression, association, assembly, movement and a fair trial.” Police warnings, surveillance, detentions, arrests and other methods are used to crush dissent, including well-publicized crackdowns in 2003 and 2004.

Treasury last month implemented a seemingly small change to Cuba trade regulations. U.S. companies had been able to ship products to Cuba and accept payment just before unloading. The new regulations require cash or a letter of credit from a non-U.S. bank before the goods leave an American port.

Companies say the new “cash-in-advance” definition means that Cuba would take ownership of the goods while they are in the United States, allowing anyone with a legal claim against Cuba, for property expropriation for example, to try to seize the goods as payment. Terms for the letters of credit were not changed, but such payments were never as popular as cash because bank charges add to the expense of the transaction.

“The new regulations are an impediment, but they are not prohibitive,” said John Kavulich, a senior policy adviser with the U.S.-Cuba Trade and Economic Council in New York. “The statements [by exporters] have more to do with currying favor with the government of Cuba than actually reflecting any lost sales.”

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