Inside US Trade
14 September 2016
Lawmaker Pledges To Push Ahead On Cuba Trade Bill After House Hearing
A Republican lawmaker from Arkansas will continue to push forward on his bill allowing private companies to extend credit to Cuba to purchase U.S. agricultural products following a Sept. 14 House Agriculture Committee hearing on trade with that country.
Rep. Rick Crawford indicated during the hearing on trade with Cuba that he is willing to meet with opponents to discuss changes to a bill allowing the issuing of private credit to Cuba to purchase agricultural products from the United States. A staffer in Crawford's office said he's hopeful there's enough support to move the bill during a potential lame-duck session later this year, but added the congressman will offer the bill again next year if it fails to get a vote this year.
The hearing comes after Crawford was promised a path forward for his bill in exchange for not proposing it as an amendment to a House financial services appropriations bill in July. That promise included a committee markup for the stand-alone bill.
Members raised several issues with Crawford's bill, H.R. 3687, including that private money from the U.S. will go to the Castro brothers or the Cuban military; that U.S. agricultural products will be traded through ports and property seized from American companies by the Cuban government; and that the U.S. will not see enough economic concessions in return for easing the embargo.
Agriculture Committee Chairman Michael Conaway (R-TX) and ranking member Collin Peterson (D-MN) both said they support the legislation. A handful of other members, both Republicans and Democrats, either specifically said they back Crawford's bill, or want their states' agricultural industries to have improved access to Cuba.
Rep. Steve King (R-IA) was one of the most vocal opponents to the legislation on the committee, saying the bill does not create new demand for U.S. products, and instead the U.S. would supplant imports from another market. Critics also said the bill only shifts existing U.S. exports from one market to another.
Crawford indicated he is willing to work with opponents of his bill to try strike a compromise on the language.
During an exchange with witness Mauricio Claver-Carone, executive director of Cuba Democracy Advocates, Crawford asked if the anti-Castro activist was willing to continue discussing the legislation outside the hearing. Claver-Carone said he would be open to such discussions and reiterated that he believes the bill needs stronger language ensuring private credit does not end up in the hands of the Castro government, and is instead issued to private citizens and business.
Such a policy would force Cuba to make significant economic changes, especially since all imports currently go through Alimport, a government-owned entity, and not through private companies.
“With all the sincerity, would you be willing to continue the dialogue to bring this to the satisfaction to the folks in south Florida? If we can do that, we can move forward to reaching an agreement,” Crawford said.
Claver-Carone cautioned the committee against voting for the bill in response to a drastic decrease in U.S. agricultural exports to Cuba since 2009. While several nations including China, Korea and Brazil allow the extension of credit that is backed by their respective governments, which gives their agricultural industries an advantage over the U.S., he added Cuba has a history of trying to influence foreign lawmakers through spending and changing its import practices to target specific congressional districts or industries. He added Cuba also has a history of failing to pay its bills on time.
If the U.S. does scale back elements of its existing trade embargo, Claver-Carone said, it needs to see concrete changes in Cuban policies, such as lifting a current prohibition on U.S. companies working directly with privately owned businesses.
“The Castro regime does not allow that currently,” Claver-Carone said. “We want to encourage that -- private ownership. If Congress sent that message to the regime, 'please allow your people to be independent entrepreneurs, have property rights and to trade freely with the United States'… if were going to export our principles, we should do it under the conditions and terms that are consistent with those principles.”
A key question that was not answered during the hearing is whether private export companies or banks are willing to extend credit to Cuba.
Witness Karen Lowe, senior vice president and agriculture export finance division head at CoBank ACB, a company that provides agriculture credit, said anyone issuing credit will want to know whether they are working with Alimport or another entity. U.S. companies will also want more access to financial and credit information, especially because any credit issued will not be backed by the U.S. government.
That is a key difference between the U.S. and other governments, Lowe pointed out. Other governments have backed the credit their private industries extended to Cuba.
“In the very short-term, the impact this bill has will be somewhat limited, but it does create a level playing field,” Lowe said. “More things need to happen -- particularly with the credit worthiness of the importing agency in Cuba.”
John Kavulich, president of the U.S.-Cuba Trade and Economic Council, a group that analyzes U.S.-Cuban policies, said nothing new came out of the hearing regarding U.S.-Cuban relations. Kavulich maintained his position that lawmakers are wasting their time focusing on Crawford's bill, especially since no legislation on Cuba has passed in nearly 16 years. House Speaker Paul Ryan (R-WI) and key members of the Senate have also opposed easing the embargo.
Instead, Kavulich said more pressure should be directed at the Obama administration to issue changes to the embargo as President Obama prepares to leave office in January, especially since Cuba will be a low priority under a new administration.
It will also be easier for lawmakers to wait until 2018, when Raul Castro is expected to step down from power, in order to build support for any Cuba-centric legislation. Current law limits what can be done under the embargo as long as the Castros remain in power.
“For many members of Congress, there are only two people that live on that 800-mile-long archipelago, and they're both named Castro,” Kavulich said, referring to brothers Raul and Fidel Castro, who have run the one-party communist state for decades. “That makes it easier for some members of Congress who are just vehemently opposed to what the Castros stand for, to help 11.3 million people whose names are not Castro.” -- Nate Robson