Proposed Cuba Regulations May Be Illegal

Sen. Byron Dorgan, D-N.D., is calling on Treasury Secretary John Snow to "cease the campaign" to block sales to Cuba.

In a controversy that hasn't seen much of a resolution, farm state senators and a coalition of agriculture industry groups are joining forces in hopes of preserving the $400 million agriculture export market.

The Treasury Department has indicated that the Office of Foreign Assets Control (OFAC), an office under the Treasury Department, is considering new guidelines to interpret payment terms in a way that would force U.S. exporters to receive payment before goods leave U.S. ports. This means that the Cubans have to pay for the products possibly weeks before they arrive, terms that make American products not as competitive to Cuban buyers.

Since trade began in December 2001, under terms of the Trade Sanctions Reform and Export Enhancement Act (TSRA), payment from Cuba has only been required prior to goods being released to the buyer, not prior to shipment. Payment procedures have not been questioned since the TSRA went into effect at the end of 2001, until the OFAC disrupted the process during the past few weeks. There were delays in releasing title and goods to Cuban buyers.

A new analysis requested by Dorgan from the Congressional Research Services (CRS) suggests the Administration's proposal may be violating federal law. According to the CRS report, OFAC's new interpretation of the law "appears likely to result in a reduction in trade with Cuba, which appears contrary to the express intent of Congress."

"The Administration's stance is doing nothing to bring down the regime of Fidel Castro, but is hurting family farmers in North Dakota and across the nation and is flying in the face of federal law," Dorgan says.

Dorgan notes that the law requires that any new restrictions on trade to Cuba be approved by Congress.