USA Rice Federation Calls for Senate Action on OFAC’s Cuba Trade Restrictions

WASHINGTON, July 18, 2005 — The Treasury Department’s revised and restrictive rule interpretation requiring cash payment in advance of shipment for U.S. agricultural sales to Cuba has seriously damaged the U.S. rice export market for Cuba, the USA Rice Federation said in a letter Friday to members of the Senate Appropriations Committee.

“U.S. rice sales to Cuba in Jan-May 2005 have declined 50 percent by volume and 62 percent on a value basis compared to the same period in 2004,” says the letter cosigned by USA Rice Federation Chairman Lee Adams and USA Rice Producers’ Group Chairman Jackie Loewer. Cuba was the fourth-largest milled-rice market for U.S. rice last year, totaling 177,000 tons, they note.

The net effect of the payment restriction has been to dampen U.S. rice sales at a critical time for the industry and to enhance rice sales to Cuba by two other communist governments, China and Vietnam, the letter says.

Congress authorized cash agricultural sales to Cuba in the Trade Sanctions Reform and Export Enhancement Act of 2000. That statute enabled the successful redevelopment and escalation of U.S. rice sales to Cuba for the first time in several decades, the letter explains.

Until the Treasury Department Office of Foreign Assets Control (OFAC) earlier this year began reinterpreting the intent of Congress on the payment issue, payments had been conducted on a cash basis at the time of delivery.

According to the letter, “OFAC is not expected to withdraw or correct its current regulation. For this reason, USA Rice strongly supports a legislative resolution of the problematic OFAC payment in advance rule.”

As a partial but immediate solution to the problem of OFAC payment restrictions, the USA Rice Federation urges the Senate to adopt in its fiscal year (FY) 2006 Transportation, Treasury Appropriations bill legislative language prohibiting the use of funding in FY 2006 for enforcement of the OFAC rule.

The Treasury Appropriations Subcommittee and the Senate Appropriations Committee will mark up the FY 2006 funding bill tomorrow, July 19, and Thursday, July 21, respectively.

“Markup offers an ideal forum in which to adopt legislation that addresses the current payment in advance rule,” the letter says.

“Though this funding prohibition option is temporary,” the letter notes, “it is an important and germane first step in replacing ultimately the current restrictive OFAC rule.”

“Export markets are vital to the U.S. rice industry’s survivability,” the letter concludes. “The U.S. rice industry wants the opportunity to continue competing in Cuba’s market within applicable federal law, but without unnecessary restrictive regulation. Your support for legislation to enable competitive U.S. rice exports to Cuba is urged.”

David Coia, (703) 236-1444, dcoia@usarice.com

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The USA Rice Federation is the national advocate for all segments of the US rice industry, conducting programs to build awareness of the many attributes of rice and increasing worldwide demand for U.S. rice.