Could (Directly Or Indirectly) Cuba Be On Putin/Trump Summit Agenda In Helsinki?

On 16 July 2018, The Honorable Donald Trump, President of the United States of America, and H.E. Vladimir Putin, President of the Russian Federation, are scheduled to meet in Helsinki, Finland.  
 
The official schedule includes a one-on-one meeting, an expanded meeting with staff, and a luncheon.
 
What might be on the agendas?  Acceptance of territorial integrity.  Acceptance of territorial realities.  Exchange of interests.   Acceptance of political realities.  Acceptance of ideologies.  Retaining balance.  Acceptance of muscularity.  Strength by conflict.
 
Notable that neither head of state believes the meeting requires a moment, an announcement, an agreement, and accomplishment other than the optic of the meeting.  
 
For each president, a (or perhaps the) primary goal is to establish the mechanism for a visit to Washington DC by President Putin and to Moscow by President Trump.
 
The Countries (in alphabetical order):
 
Baltics (Estonia, Latvia and Lithuania)
China
Cuba
Georgia
Iran
Israel
North Korea
Russia (Crimea)
Syria
Turkey
Ukraine
Venezuela
 
Subjects (in alphabetical order):
 
Arms Control
Elections
Natural Gas
Oil
Re-Opening Consulates
Sanctions
Trade

Putin visit to Washington DC (September 2018)
Trump visit to Moscow (November 2018)

If the Republic of Cuba is discussed, the topics may include the activities in the country by: China (infrastructure, telecommunications, durables, consumables, consumer products, military cooperation); Russia (infrastructure, power generation, railroads, military cooperation); Turkey (civil aviation, ports); and Venezuela (energy, financial services).  The Trump Administration would seek assistance from the Putin Administration towards fostering commercial, economic and political changes in the Republic of Cuba.  There would likely none to minimum assistance.

US Food/Ag Exports To Cuba Decrease In May; 2018 Remains 15% Above 2017

May 2018 Food/Ag Exports To Cuba Decrease 8%- 1
15.4% Increase Year-To-Year-5
Cuba Ranks 51st Of 229 U.S. Food/Ag Export Markets- 2
May 2018 Healthcare Product Exports US$327,947.00- 2
May 2018 Humanitarian Donations US$497,061.00- 3
Obama Administration Initiatives Exports Continue To Increase- 3
U.S. Port Export Data- 15

MAY 2018 FOOD/AG EXPORTS TO CUBA DECREASE 8%- Exports of food products & agricultural commodities from the United States to the Republic of Cuba in May 2018 were US$29,169,203.00 compared to US$31,720,403.00 in May 2017 and US$19,384,881.00 in May 2016.  

Total purchases under provisions of the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000 are US$5,681,677,204.00.  

Complete Report In PDF Format

President Diaz-Canel Likely To Attend UN General Assembly In September In New York City

H.E. Miguel Diaz-Canel, President of the Republic of Cuba, is likely to attend the 73rd United Nations General Assembly in New York which begins 18 September 2018 and concludes 5 October 2018. 

This would be his first visit to the United States as Head of State of the Republic of Cuba. 

President Diaz-Canel would expect to have a robust schedule of bilateral meetings with heads of state and heads of government as the country must focus upon the maintenance, establishment and re-establishment of commercial, economic and political relationships with countries which present opportunities to provide to the Republic of Cuba direct financial assistance, indirect financial assistance, extension of repayment for previously-delivered funding, and Direct Foreign Investment (DFI). 

Expectations are for President Diaz-Canel to also host leaders (including ministers of foreign affairs) in the city of Havana, Republic of Cuba, prior to and subsequent to the 73rd United Nations General Assembly in New York.

Not unreasonable to expect H.E. Vladimir Putin, President of the Russian Federation (who could visit Washington DC as well), H.E. Hassan Rouhani, President of the Islamic Republic of Iran, H.E. Bashar al-Assad, President of Syria, and perhaps H.E. Kim Jong-un, the leader of the Democratic People’s Republic of Korea (who could visit Washington DC as well) to attend the 73rd United Nations General Assembly in New York.

Cuba Provision In Farm Bill A Confliction Of Accuracy By Senators Heitkamp & Rubio; OFAC Rule Making Could Be Problematic

Senator Heitkamp Is Misleading

Senator Rubio Is Misleading

U.S. Taxpayer Funding Is To Be Directed In Cuba; That’s OK For U.S. Exporters

New OFAC Regulation(s) May Negatively Impact All Travelers To Cuba

Reminder Of TSREEA In 2000 Which Codified No Travel For Tourism

Might The Conference Committee Remove Amendment- And Protect Travel?

There is, which is not inconsistent with the political process, creatively-written statements by Members of the United States Senate with respect to the meaning of S.Amdt 3364 (The Honorable Marco Rubio R- Florida) and S. 3042 (“Farm Bill”) which included a provision by The Honorable Heidi Heitkamp (D- North Dakota) relating to the Republic of Cuba.  

Neither Senator is being as accurate as they need to be…

For the United States business community, the change to S. 3042 is significant; and it’s far more likely to be of immediate financial value to the government of the Republic of Cuba than to United States food product and agricultural commodity exporters.

The likelihood of a return in value to United States taxpayers, as Members of the United States Senate have posited, of US$28.00 returned for every US$1.00 in expenditures of FMD and MAP throughout the world, and now to include the Republic of Cuba, will be challenging to measure- but it will be important to measure and the United States Department of Agriculture (USDA) should focus upon the cost-benefit analysis.

On 28 June 2018, the United States Senate, by a vote of 86-11, approved the Agriculture Improvement Act of 2018.  Now S. 3042 and H.R. 2 will be subjected to a conference committee with final language submitted to The White House for signature.  

On 21 June 2018, the United States House of Representatives passed H.R. 2, the 748-page Agriculture and Nutrition Act of 2018 by a vote of 213-211.   

Now S. 3042 and H.R. 2 will be subjected to a conference committee with final language submitted to The White House for signature.  

On 18 June 2018, the United States Senate Committee on Agriculture, Nutrition, & Forestry reported, on a vote of 20-1, S. 3042, the 1,210-page The Agriculture Improvement Act of 2018 which included an amendment on page 248 [Link To Text] authored by Senator Heitkamp: “To provide for the use of market access program and foreign market development cooperator program funds in Cuba.”  In Fiscal Year 2018, the total expenditures for these two programs was US$200,287,394.00.    

A representative of a member of the United States Senate Committee on Agriculture, Nutrition, & Forestry shared “[t]here is no set amount of funds that would be made available specifically for Cuba.  The amendment would only allow producers and agricultural trade associations who are already utilizing these programs to also use them to promote their goods in Cuba.  So to that point, yes these funds are only going towards agriculture producers who are represented by trade associations and state regional trade groups.”

On 27 June 2018, Senator Rubio reported, via Twitter, that “I have decided to block the addition of any new amendments to #FarmBill until they either accept the Cruz amendment striking the use of taxpayer $ for promotions in #Cuba or they accept my amendment that prohibits taxpayer $ being spent at business owned by Cuban military.”  

Then, in remarks on the floor of the United States Senate later in the day, Senator Rubio said: “I’m not going to object to the ability for American farmers to market our products to a market,” he said. “In the end, it’s food. What I do think we should not allow, however, is the ability to spend taxpayer money in properties and in other places on the island that are owned and controlled by the Cuban military.”

From an interview in Politico: Under current law, U.S. producers are free to travel to Cuba to meet with importers on their own dime, said Olivia Perez-Cubas, a spokeswoman for Rubio. “Taxpayer dollars shouldn’t be used to subsidize private U.S. industries to travel to Cuba, especially when that money goes into the pocket of the Cuban military,” she said.

Senator Heitkamp responded with a statement: “This amendment passed unanimously with overwhelming bipartisan support during markup of the farm bill in the Senate Agriculture Committee… This amendment would do nothing to lift current restrictions on doing business with the Cuban government, and it would provide a much-needed opportunity for American producers when so many of our important trade relationships are suffering from uncertainty.”

This is the text of and LINK (with handwritten notes) to the amendment submitted by Senator Rubio which was approved by the United States Senate:

https://www.congress.gov/amendment/115th-congress/senate-amendment/3364/actions?q=%7B%22search%22%3A%5B%22S.Amdt.+3364%22%5D%7D

1. S.Amdt.3364 to S.Amdt.3224   — 115th Congress (2017-2018) Purpose: To prohibit the use of funds to carry out programs in Cuba in contravention of the National Security Presidential Memorandum prohibiting transactions with entities owned, controlled, or operated by or on behalf of military intelligence or security services of Cuba. Amends Bill: H.R.2 Sponsor: Sen. Rubio, Marco [R-FL] (Submitted 06/28/2018) (Proposed 06/28/2018) Latest Action: 06/28/18 Amendment SA 3364 agreed to in Senate by Unanimous Consent. (All Actions) 

S.Amdt.3364 to S.Amdt.3224115th Congress (2017-2018)

Amends Bill:  H.R.2 — Agriculture and Nutrition Act of 2018

Sponsor:          Sen. Rubio, Marco [R-FL] (Submitted 06/28/2018, Proposed 06/28/2018)

Latest Action: 06/28/2018 Amendment SA 3364 agreed to in Senate by Unanimous Consent.

On 28 June 2018, Senator Rubio issued the following through Twitter: Rubio Keeps Taxpayer Dollars Out of the Cuban Regime's Pocket.  Washington, D.C. – U.S. Senator Marco Rubio (R-FL) today issued the following statement after the Senate adopted his amendment to the Agriculture Improvement Act of 2018, commonly known as the 2018 Farm Bill, to prevent U.S. taxpayer funds for agricultural export promotion from going to the Cuban regime: “American taxpayer dollars should never go into the pocket of the Cuban regime. That is why we worked to ensure that taxpayer funds for agricultural promotion will not be going to the oppressive Cuban military and its subsidiaries.”

On 28 June 2018, Senator Heitkamp issued two statements: 1) LINK and 2) “Her amendment to boost trade with Cuba. Heitkamp and Boozman successfully included their bipartisan amendment to allow USDA to use its existing export market development programs to create, expand, and maintain a strong Cuban export market for U.S. agricultural producers and processors— at no additional cost to U.S. taxpayers. This change in USDA policy would provide some needed relief from low American commodity prices by fostering a new, reliable trade relationship, boosting agricultural export revenue, and increasing export volume for American farmers and ranchers. This builds on Heitkamp’s efforts to boost trade with Cuba going back to 2015, when she first introduced legislation to lift the ban on private banks and companies offering credit for agricultural exports to Cuba.”

Senator Heitkamp is inaccurate to submit that her amendment will be “at no additional cost to U.S. taxpayers.”  Accurate that the amendment does not specifically allocate new Republic of Cuba-specific United States taxpayer funds, but it does permit the eighty-nine (89) United States-based entities (and potentially others in Fiscal Year 2019) who obtained US$200,287,394.00 for use in FMD and MAP expenditures in Fiscal Year 2018 to seek authority from the USDA to use United States taxpayer funds for Republic of Cuba-focused activities.  The amendment as passed by the United States Senate does authorize the use of United States taxpayer funds in the Republic of Cuba.

Senator Rubio is inaccurate to submit that his amendment to Senator Heitkamp’s amendment ensures that “taxpayer funds for agricultural promotion will not be going to the oppressive Cuban military and its subsidiaries.”  United States taxpayer funds may continue to weave their way to companies controlled by the Revolutionary Armed Forces (FAR) of the Republic of Cuba, albeit indirectly.  Here’s why:

In November 2017, the United States Department of State in Washington DC published a list (https://www.state.gov/e/eb/tfs/spi/cuba/cubarestrictedlist/275331.htm) of Republic of Cuba government-operated entities that were to be restricted from engagement by travelers (and United States companies) subject to United States jurisdiction.  

The list identifies entities affiliated with and/or controlled by (Grupo de Adminisracion Empresarial (GAESA) and FAR.  The wording with respect to compliance is “Direct financial transactions with certain entities and subentities under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services are also generally prohibited.”  Significant the document also contains “*** Entities or subentities owned or controlled by another entity or subentity on this list are not treated as restricted unless also specified by name on the list. ***.”  

Republic of Cuba government-operated Havanatur (reported to be controlled by GAESA and thus FAR) is not on the list.  The majority of travelers subject to United States jurisdiction use the services of Havanatur.  

In March 2018, the Miami, Florida-based publication Cuba Standard reported that a New York, New York-based attorney received verbal confirmation from a representative of the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington DC that at least one Trump Administration travel-related narrative believed true by many is not accurate.  

It is the process of engagement that defines the impact upon travelers.  The meaning of “direct” and “indirect” are relevant.  If a payment to an entity on the list maintained by the United States Department of State (which has not been updated since its initial publication) is made indirectly, that indirectness may satisfy the OFAC requirement.

From one experienced legislative observer: “The Rubio legislation will require a new rule making by OFAC.  We’ll see if the OFAC takes its traditional position that independent due diligence is required by United States companies to determine whether a Republic of Cuba entity is owned, controlled etc. by a different Republic of Cuba entity - in this case the due diligence must focus on whether the proposed recipient of United States taxpayer money is “operated by or on behalf” of the FAR.  If so, it can’t receive that United States taxpayer money.  Also, we might see a new OFAC rule in the context of a new statute (i.e. Senator Rubio’s amendment) addressing the word “direct” to eliminate the pass-through deals currently permitted with third party intermediaries to get around the State Department’s Prohibited Cuban Entities List.” 

And added, "There could have been some sloppy lobbying work- and a result could be impactful, collaterally, on all visitors to Cuba."

Link To Analysis:

https://www.cubatrade.org/blog/2018/3/10/2b05qodxrf4d2m8qego70oflydtezl?rq=kempinski

What Is FMD & MAP?

For Fiscal Year 2018, the USDA allocated US$173,802,447.00 in taxpayer funds to sixty-six (66) participants [see list at end of analysis or use link] under the Market Access Program (MAP), an average of US$2,633,370.00 per distribution.  

https://www.fas.usda.gov/programs/market-access-program-map/map-funding-allocations-fy-2018

MAP: “Through the Market Access Program (MAP), FAS partners with U.S. agricultural trade associations, cooperatives, state regional trade groups and small businesses to share the costs of overseas marketing and promotional activities that help build commercial export markets for U.S. agricultural products and commodities.

MAP reaches virtually every corner of the globe, helping to build markets for a wide variety U.S. farm and food products. FAS provides cost-share assistance to eligible U.S. organizations for activities such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research and technical assistance. When MAP funds are used for generic marketing and promotion, participants must contribute a minimum 10-percent match. For promotion of branded products, a dollar-for-dollar match is required.

Each year, FAS announces the MAP application period and criteria in the Federal Register. Applicants apply for MAP through the Unified Export Strategy (UES) process, which allows eligible organizations to request funding from multiple USDA market development programs through a single, strategically coordinated proposal. FAS reviews the proposals and awards funds to applicants that demonstrate the potential for effective performance based on a clear, long-term strategic plan.”

For Fiscal Year 2018, the United States Department of Agriculture (USDA) allocated US$26,484,947.00 in taxpayer funds to twenty-three (23) cooperators [see list at end of analysis or use link] under the Foreign Market Development Program (FMD), an average of US$1,021,084.00 per distribution.  

https://www.fas.usda.gov/programs/foreign-market-development-program-fmd/fmd-funding-allocations-fy-2018

FMD: “The Foreign Market Development (FMD) Program, also known as the Cooperator Program, helps create, expand and maintain long-term export markets for U.S. agricultural products. Under the program, FAS partners with U.S. agricultural producers and processors, who are represented by non-profit commodity or trade associations called “cooperators,” to promote U.S. commodities overseas.

The FMD program focuses on generic promotion of U.S. commodities, rather than consumer-oriented promotion of branded products. Preference is given to organizations that represent an entire industry or are nationwide in membership and scope.

FMD-funded projects generally address long-term opportunities to reduce foreign import constraints or expand export growth opportunities. For example, this might include efforts to: reduce infrastructural or historical market impediments, improve processing capabilities, modify codes and standards, or identify new markets or new uses for the agricultural commodity or product.

Each year, FAS announces the FMD application period and criteria in the Federal Register. Organizations apply for the FMD program through the Unified Export Strategy (UES) process, which allows applicants to request funding from multiple USDA market development programs through a single, strategically coordinated proposal. FAS reviews the proposals and awards funds to applicants that demonstrate the potential for effective performance based on a clear, long-term strategic plan.” 

Original Heitkamp Amendment

Revised Heitkamp Amendment

Senator Heitkamp Twitter Message

Complete Analysis In PDF Format

Senator Heitkamp's Cuba Amendment Survives, With Conditions. Now To Conference Committee

From Twitter:

Rubio Keeps Taxpayer Dollars Out of the Cuban Regime's Pocket
Jun 28 2018

Washington, D.C. – U.S. Senator Marco Rubio (R-FL) today issued the following statement after the Senate adopted his amendment to the Agriculture Improvement Act of 2018, commonly known as the 2018 Farm Bill, to prevent U.S. taxpayer funds for agricultural export promotion from going to the Cuban regime:
 
“American taxpayer dollars should never go into the pocket of the Cuban regime. That is why we worked to ensure that taxpayer funds for agricultural promotion will not be going to the oppressive Cuban military and its subsidiaries.”

Trump Administration Again Suspends Title III Of Libertad Act

Secretary's Determination of Six Months' Suspension Under Title III of LIBERTAD Act

Media Note
Office of the Spokesperson
Washington, DC
June 28, 2018

The Secretary of State reported on June 28, 2018 to the appropriate Congressional committees that, consistent with section 306(c)(2) of the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 (22 U.S.C. 6021 - 6091) and the authority delegated to the Secretary by the President on January 31, 2013, the Secretary had made the statutorily required determination in order to suspend for six months beyond August 1, 2018, the right to bring an action under Title III of the Act.

Text Of Libertad Act

Negotiations On Cuba Provision In Farm Bill Have Begun

https://www.politico.com/story/2018/06/27/marco-rubio-cuba-senate-farm-bill-657545

Senate farm bill stalled by Rubio's Cuba crusade

The Florida Republican is blocking further amendments over a provision that would promote agricultural trade with Cuba.

By LIZ CRAMPTON and CATHERINE BOUDREAU

Updated 06/27/2018 09:27 PM EDT

Senate leadership's goal of holding a floor vote on the farm bill this week is now in doubt, as key farm-state lawmakers work to resolve a new demand from Sen. Marco Rubio over a provision that would promote agricultural trade with Cuba.

The Florida Republican on Wednesday declared on Twitter that he’d block any new amendments to the farm bill unless the Senate votes to strike a provision that would allow USDA funding for foreign market development programs to be spent in Cuba — or until senators adopt his proposal to ban U.S. taxpayer dollars from being spent on businesses owned by the Cuban military.

After a full day of debate on Wednesday, the Senate had only cleared a manager’s package by unanimous consent that contains 18 mostly uncontroversial amendments, including new protections for pollinators and provisions that would increase funding for the milk donation program and raise the catastrophic coverage level under an insurance program for milk producers.

Sen. Chuck Grassley (R-Iowa) scored a win for some taxpayer watchdog and sustainable agriculture groups by securing a provision that would allow only one manager per farm to qualify for commodity subsidies under eligibility criteria set by USDA that require a person to be “actively engaged” in a farm's operation.

But no votes on standalone amendments are expected to be held until Senate Agriculture Chairman Pat Roberts (R-Kan.) and ranking member Debbie Stabenow (D-Mich.) can reach an agreement with Rubio, as well as fellow Cuba hard-liners Sens. Bob Menendez (D-N.J.) and Ted Cruz (R-Texas). Sens. Jeff Flake (R-Ariz.) and Heidi Heitkamp (D-N.D.), both of whom support efforts to change U.S. economic policy in relation to Cuba, are also involved in talks to break the impasse.

Stabenow said during a floor speech on Wednesday that she and Roberts have been working with Rubio to resolve the Cuba dispute for the last few days. After leaving the Senate floor, Stabenow told reporters that they will work through the evening in an effort to reach an agreement, which may mean modifying language pertaining to Cuba, so that it is more narrow, or adding other restrictions on Cuba.

“Hopefully we can do that, because there are a lot of folks really counting on us to be able to come together and get this done,” Stabenow said, adding that the Senate still intends to hold a final vote on the farm bill this week.

Early Wednesday evening, Senate Majority Leader Mitch McConnell filed cloture on the bill. In effect, that means that the earliest a final vote could be held would likely be Friday, unless senators agree to shorten debate.

Roberts, echoing Stabenow's point on the importance of the legislation, said the U.S. agriculture community “is in dire need of this farm bill” because producers have endured slumping commodity prices that have led to a steep decline in farm income in recent years. Further, new woes are cropping up in the form of retaliatory tariffs as trading partners respond to President Donald Trump’s aggressive trade actions.

Lawmakers have cited those conditions as justification for passing a farm bill quickly to provide producers with a greater degree of economic certainty. The current farm bill expires at the end of September.

Roberts, referring indirectly to Rubio, said that passing a farm bill “is paramount over any other issue,” despite some lawmakers wanting to use the farm bill as a vehicle to make a reform “that they believe is very salutary.”

Rubio’s opposition stems from an amendment that Heitkamp secured during the Senate Agriculture Committee's markup of the farm bill earlier this month. It would apply to USDA initiatives like the Market Access Program and Foreign Market Development program, which match taxpayer dollars to private investments by the agribusiness sector to fund projects overseas that build demand for U.S. farm goods.

Many parts of the agriculture industry are interested in opening Cuba to more U.S. farm goods, seeing the island nation as a convenient and largely untapped market. Cuba imported about $260 million in U.S. farm goods last year, according to the U.S.-Cuba Trade and Economic Council.

Cruz has offered an amendment that would block taxpayer funds from being used to support trade promotion programs in Cuba. Rubio’s amendment, meanwhile, would codify an executive order that prohibits taxpayer dollars from being used on programs that benefit businesses owned by the Cuban military.

Following his tweet, Rubio took to the Senate floor on Wednesday afternoon to formally announce his objection.

“I’m not going to object to the ability for American farmers to market our products to a market,” he said. “In the end, it’s food. What I do think we should not allow, however, is the ability to spend taxpayer money in properties and in other places on the island that are owned and controlled by the Cuban military.”

Heitkamp, in a statement, noted that her amendment had broad support when it cleared committee.

“This amendment passed unanimously with overwhelming bipartisan support during markup of the farm bill in the Senate Agriculture Committee," she said, adding: "This amendment would do nothing to lift current restrictions on doing business with the Cuban government, and it would provide a much-needed opportunity for American producers when so many of our important trade relationships are suffering from uncertainty."

Under current law, U.S. producers are free to travel to Cuba to meet with importers on their own dime, said Olivia Perez-Cubas, a spokeswoman for Rubio. “Taxpayer dollars shouldn’t be used to subsidize private U.S. industries to travel to Cuba, especially when that money goes into the pocket of the Cuban military,” she said.

Another round of fireworks on the Senate floor came earlier in the day when Sen. Bob Corker (R-Tenn.) and Sen. Pat Toomey (R-Pa.) tried to introduce an amendment that would curb Trump’s authority to impose tariffs using national security justifications. The senators aimed to get the amendment tacked onto the farm bill after failing to include it as part of a defense bill earlier this month, but they were rebuffed this time when Sen. Sherrod Brown (D-Ohio) blocked a vote.

Some Republicans had speculated privately earlier in the week that Corker's measure could at least get a procedural vote, as POLITICO reported previously, but any one senator can block a vote under the chamber's rules.

“I don’t even know what this body has become that we can’t vote on an issue that is damaging farmers more than what 20 farm bills can make up for,” Corker said, arguing that the amendment should be considered because existing and forthcoming retaliatory tariffs from China and imminent retaliation by Canada and other U.S. allies will cut into the bottom lines of many farmers and ranchers.

Brown, in response, argued that the controversial amendment would have jeopardized the farm bill and also could have forced lawmakers to choose between supporting either the agriculture industry or the steel industry.

“We should not pit farmers against steelworkers,” he said.

Senators Rubio & Cruz Will Attempt To Block Cuba Provision In Farm Bill

By Liz Crampton
Politico Pro
06/27/2018 01:39 PM EDT

Sen. Marco Rubio (R-Fla.) said today he will block new amendments to the farm bill unless the Senate adopts provisions to prohibit taxpayer money from being used for trade promotion efforts in Cuba or from going to businesses owned by the Cuban military.

In a tweet, Rubio said: "I have decided to block the addition of any new amendments to #FarmBill until they either accept the Cruz amendment striking the use of taxpayer $ for promotions in #Cuba or they accept my amendment that prohibits taxpayer $ being spent at business owned by Cuban military."

Rubio's demand is a direct rebuttal of an amendment from Sen. Heidi Heitkamp (D-N.D.) that would authorize U.S. trade promotion funds to be used to increase market access in Cuba for U.S. agricultural products. The amendment, approved at the Senate Agriculture Committee's markup earlier this month, would authorize funding through the USDA Market Access Program and the USDA Foreign Market Development Program, which fund overseas projects that build demand for U.S. farm goods.

The Senate began debating amendments this morning, and eighteen proposals were added to the latest iteration of the farm bill, S. 3042 (115). It was not clear when the bill would be brought up for a final vote.

Senate Farm Bill Has Valuable Cuba Provision; House Version Doesn't; A US$200 Million Question

Some Of US$200 Million In Senate Farm Bill Funding Could Be Used In Cuba
Provision Not In House Version
Senate/House Conference Committee Will Likely Determine Fate
Will Cuba Provision Be In Farm Bill President Trump Signs Into Law?

Supporters Need Help From 89+ Who May Benefit (Profit)
Eight Arguments Opponents May Use

Cuba’s Purchased US$5.6 Billion Since 2001
Are FMD & MAP The Best Incentives To Get More?

Individuals who have invested at least twenty-six (26) years in following the relationship between the United States and the Republic of Cuba have viewed a legislative process that, in an abbreviated manner, is now revisited by the United States Congress.  Could, however, this time have a different outcome? 

Senate Sub-Committee passes.  Senate Committee passes.  Senate passes.  House Sub-Committee passes.  House Committee passes.  House passes.  Conference Committee considers.  Member of Congress issues media release or makes statement proclaiming intent to block legislation unless provision becomes law.  Provision stricken from final legislative language passed by Senate and House.  Legislation without provision signed by President and becomes law.

During the last twenty-six (26) years, there have been three (3) Republic of Cuba-focused legislative initiatives that have become law: 1992 Cuban Democracy Act (CDA), 1996 Libertad Act (“Helms-Burton”), and the 2000 Trade Sanctions Reform and Export Enhancement Act (TSREEA).  For perspective, it’s been eighteen (18) years or 6,451 days since the last Republic of Cuba-focused legislative initiative became law.  Could this time be different?

The Republic of Cuba-related legislative language in what is known as the once-every-five-year “Farm Bill” expected to be approved by the United States Senate (S. 3042) this week is not in the legislative language passed by the United States House of Representatives (H.R. 2). 

If the United States Senate retains the Republic of Cuba-related legislative language, a bicameral conference committee will determine the fate of the Republic of Cuba-related legislative language.

On 18 June 2018, the United States Senate Committee on Agriculture, Nutrition, & Forestry reported, on a vote of 20-1, S. 3042 [Link To Text], the 1,210-page The Agriculture Improvement Act of 2018 which included an amendment on page 248 [Link To Text] authored by The Honorable Heidi Heitkamp (D- North Dakota): “To provide for the use of market access program and foreign market development cooperator program funds in Cuba.”  In Fiscal Year 2018, the total expenditures for these two programs was US$200,287,394.00.    

A representative of a member of the United States Senate Committee on Agriculture, Nutrition, & Forestry shared “[t]here is no set amount of funds that would be made available specifically for Cuba.  The amendment would only allow producers and agricultural trade associations who are already utilizing these programs to also use them to promote their goods in Cuba.  So to that point, yes these funds are only going towards agriculture producers who are represented by trade associations and state regional trade groups.”

On 21 June 2018, the United States House of Representatives passed H.R. 2 [Link To Text], the 748-page Agriculture and Nutrition Act of 2018 by a vote of 213-211.  

What Has Cuba Purchased & Why It Limits Those Purchases

Since 2000, when the TSREEA re-authorized the direct export of food product and agricultural commodities from the United States to the Republic of Cuba, more than US$5.6 billion in food products and agricultural commodities have been delivered to the Republic of Cuba on a “cash in advance” basis as required by the TSREEA.  Thus far in 2018, TSREEA-authorized exports to the Republic of Cuba have increased 25% compared to the same period in 2017. 

The government of the Republic of Cuba requires United States-based food product and agricultural commodity companies to contract with a single entity, Republic of Cuba government-operated Alimport.  The primary purchases from the United States are poultry, corn, soybeans, soybean oil, soybean oil cake, bulk chocolate, soups, calcium phosphates, beer and cookies.

The government of the Republic of Cuba maintains that statutory prohibition on payment terms and financing are the primary impediments to increasing purchases; and banking regulations currently require third-party payment processing and impede currency use in transactions.

For Supporters Of The Provision

Proponents have focused the provision narrowly rather than expansively with respect to seeking a change to a United States statute.  This focus creates a greater likelihood, but not guarantee, of success.  The provision does, however, include the use of United States taxpayer funds which in previous legislative initiatives has deliberately been absent due to opposition.

Supporters of the provision authored by Senator Heitkamp need to have an answer to: The government of the Republic of Cuba has but one designated purchaser for food products and agricultural commodities from the United States - Alimport, whose purchasing decisions are primarily based upon which country source provides payment terms with the longest duration.  Exporters from other countries of durables, consumables and consumer products to the Republic of Cuba prepare for terms of up to 720 days.  Does Alimport, after purchasing food products and agricultural commodities since 2001 from the United States require further convincing about the value of those purchases to the 11.3 million citizens of the 800-mile archipelago?  Isn’t the primary question payment terms?  How do FMD and MAP address those issues?

Those who support the changes to the FMD and MAP should ask those entities who would likely have access to the new United States taxpayer funding source to state publicly how much funding they would probably request and what they would do with those new resources.

Supporters need to articulate the benefits to be obtained and the process for measuring results for the expenditures of United States taxpayer funds for activities within the Republic of Cuba. 

They need to confirm that these efforts are not about spending United States taxpayer funds on billboards in the Republic of Cuba with messages “Eat More Corn” or “Soy Is Good For You” or “Chicken Is Healthy.”

If the government of the Republic of Cuba were to demonstrate that it would approve of FMD and MAP expenditures, and specifically approve of the goals and objectives of FMD and MAP, that confirmation could benefit those who want to assist the Republic of Cuba.

Entities within the Republic of Cuba should offer what they, as receivers of the outreach, would want to see done with the FMD and MAP funds.  What do they need and why do they need it now. 

Those who would be the beneficiaries of Republic of Cuba-focused legislation fail, on a consistent basis, to articulate the specific immediate value in changing a statute: 

1) When legislation is introduced to remove the “cash in advance” payment requirements of the TSREEA, are there United States-based financial institutions whose executives publicly present themselves at hearings to confirm that they will provide financing and specify the type of financing they will provide for the export of food products and agricultural commodities from the United States to the Republic of Cuba?  No, there are not.

2) When legislation is introduced to remove the “cash in advance” payment requirements of the TSREEA, are there United States-based food product and agricultural commodity producers and exporters whose executives publicly present themselves at hearings to confirm that they will provide payment terms (and perhaps financing) and specify the type of payment terms (and perhaps financing) they will provide for the export of food products and agricultural commodities from the United States to the Republic of Cuba?  No, there are not.

The government of the Republic of Cuba’s absence from articulating what it would do if changes were made to specific statutes remains unhelpful. 

If the government of the Republic of Cuba were to say “if this happens, we are prepared immediately to do…” there would be a benefit to supporters of legislation (and to changes in policy and regulations).

The list of reasons for the failure of legislative initiatives which have been introduced often on an annual basis by Members of Congress who serve in the United States Senate and United States House of Representatives is lengthy and bewildering because of a marketing ineptitude of sponsors, co-sponsors and private sector advocates. 

Much more could have been accomplished and can be accomplished through changes to policy and regulations, but those failures-of-action remain self-evident and often removed from consideration due to a lack of strategic vision. 

Focusing upon changes to policy and regulations are said to not be “convenient” or are “confusing” or a “distraction” to [thus far failed] legislative efforts.  Republic of Cuba-focused advocacy groups prefer the likely revenue stream opportunities from promoting legislation rather than changes to policy and regulations. 

For Opponents Of The Provision

Opponents of the language within S. 3042 will focus upon the use of United States taxpayer funds to provide financial gain to the newly-installed Diaz-Canel Administration in the Republic of Cuba while providing little, if any value to United States exporters. 

By funding visits to and activities within the Republic of Cuba, individuals subject to United States jurisdiction will be bringing revenue into Republic of Cuba government-operated companies, including hotels, restaurants, event venues, and internet/wireless communication systems.

With substantial support in the United States Senate for the language in S. 3042, opponents will be arguing against incrementalism; seeking to demonstrate that such small movements become the foundation for ever-larger changes to United States statutes without commensurate benefits.

Opponents may attempt to insert language during the conference committee deliberations that would: 1) require FMD and MAP United States taxpayer funds be restricted to Airbnb-registered properties and privately-operated paladares (restaurants), 2) restrict marketing expenditures to media (newspapers, magazines, television, and radio) which is not owned by the government of the Republic of Cuba, 3) restrict focus to independent agricultural cooperatives, 4) require expenditures be subject to per visit audits by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, 5) restrict the total value of FMD and MAP taxpayer funds that the USDA may allocate to cooperators and participants, 6) link expenditures with the conclusion of the investigation by the United States Department of State into the matter of injuries sustained by United States Embassy personnel in Havana, Republic of Cuba, and the return of a full complement of diplomats to the Republic of Cuba, 7) require the United States Secretary of Agriculture to report to the United States Congress prior to any distribution of Republic of Cuba-related funds for FMD and MAP, and 8) prohibit funds to any United States political advocacy organization. 

Opponents will also ask if the Republic of Cuba is of such value, why don’t the twenty-three (23) cooperators in the FMD and the sixty-six (66) participants in the MAP continue to use their member-dues resources?  

Opponents will argue that the government of the Republic of Cuba, knowing a portion of approximately US$200 million in United States taxpayer funds are available, will pressure cooperators and participants to use funds in the Republic of Cuba as a means of demonstrating political support for the government of the Republic of Cuba and a not-too-subtle message: if an organization wants its members to receive orders for food products and agricultural commodities, let’s see just how important a market is the Republic of Cuba for organization members and United States taxpayers whose monies will be used to support those efforts.

Something For Both

Opponents could determine that an effort to strip the Republic of Cuba-focused provision from the Farm Bill would not be necessary because permitting the provision may then be used to focus additional attention on the inadequacies of the Republic of Cuba marketplace.  That’s one challenge that proponents would accept.

What Is FMD & MAP?

For Fiscal Year 2018, the United States Department of Agriculture (USDA) allocated US$26,484,947.00 in taxpayer funds to twenty-three (23) cooperators [see list at end of analysis or use link] under the Foreign Market Development Program (FMD), an average of US$1,021,084.00 per distribution.  

https://www.fas.usda.gov/programs/foreign-market-development-program-fmd/fmd-funding-allocations-fy-2018

FMD: “The Foreign Market Development (FMD) Program, also known as the Cooperator Program, helps create, expand and maintain long-term export markets for U.S. agricultural products. Under the program, FAS partners with U.S. agricultural producers and processors, who are represented by non-profit commodity or trade associations called “cooperators,” to promote U.S. commodities overseas.

The FMD program focuses on generic promotion of U.S. commodities, rather than consumer-oriented promotion of branded products. Preference is given to organizations that represent an entire industry or are nationwide in membership and scope.

FMD-funded projects generally address long-term opportunities to reduce foreign import constraints or expand export growth opportunities. For example, this might include efforts to: reduce infrastructural or historical market impediments, improve processing capabilities, modify codes and standards, or identify new markets or new uses for the agricultural commodity or product.

Each year, FAS announces the FMD application period and criteria in the Federal Register. Organizations apply for the FMD program through the United Export Strategy (UES) process, which allows applicants to request funding from multiple USDA market development programs through a single, strategically coordinated proposal. FAS reviews the proposals and awards funds to applicants that demonstrate the potential for effective performance based on a clear, long-term strategic plan.” 

For Fiscal Year 2018, the USDA allocated US$173,802,447.00 in taxpayer funds to sixty-six (66) participants [see list at end of analysis or use link] under the Market Access Program (MAP), an average of US$2,633,370.00 per distribution. 

https://www.fas.usda.gov/programs/market-access-program-map/map-funding-allocations-fy-2018

MAP: “Through the Market Access Program (MAP), FAS partners with U.S. agricultural trade associations, cooperatives, state regional trade groups and small businesses to share the costs of overseas marketing and promotional activities that help build commercial export markets for U.S. agricultural products and commodities.

MAP reaches virtually every corner of the globe, helping to build markets for a wide variety U.S. farm and food products. FAS provides cost-share assistance to eligible U.S. organizations for activities such as consumer advertising, public relations, point-of-sale demonstrations, participation in trade fairs and exhibits, market research and technical assistance. When MAP funds are used for generic marketing and promotion, participants must contribute a minimum 10-percent match. For promotion of branded products, a dollar-for-dollar match is required.

Each year, FAS announces the MAP application period and criteria in the Federal Register. Applicants apply for MAP through the United Export Strategy (UES) process, which allows eligible organizations to request funding from multiple USDA market development programs through a single, strategically coordinated proposal. FAS reviews the proposals and awards funds to applicants that demonstrate the potential for effective performance based on a clear, long-term strategic plan.”

Complete Analysis In PDF Format

Will Farm Bill Retain Provisions Giving Cuba Access To MAP & FMD?

What is known as the “Farm Bill” is revisited by the United States Congress every five (5) years.

During the last twenty-six (26) years, there have been three (3) Republic of Cuba-focused legislative initiatives that have become law: 1992 Cuban Democracy Act (CDA), 1996 Libertad Act (“Helms-Burton”) and 2000 Trade Sanctions Reform and Export Enhancement Act (TSREEA).  For perspective, it’s been eighteen (18) years or 6,400+ days since the last Republic of Cuba-focused legislative initiative became law.

On 18 June 2018, the United States Senate Committee on Agriculture, Nutrition, & Forestry reported, on a vote of 20-1, S. 3042, the 1,210-page The Agriculture Improvement Act of 2018 which included an amendment [Link To Text] authored by The Honorable Heidi Heitkamp (D- North Dakota): “To provide for the use of market access program and foreign market development cooperator program funds in Cuba.”  The United States Senate has scheduled a vote on 3042 for 26 June 2018.  

A representative of a member of the United States Senate Committee on Agriculture, Nutrition, & Forestry shared “[t]here is no set amount of funds that would be made available specifically for Cuba.  The amendment would only allow producers and agricultural trade associations who are already utilizing these programs to also use them to promote their goods in Cuba.  So to that point, yes these funds are only going towards agriculture producers who are represented by trade associations and state regional trade groups.”  

On 21 June 2018, the United States House of Representatives passed H.R. 2, the 748-page Agriculture and Nutrition Act of 2018 by a vote of 213-211.  H.R. 2 has no provision similar to the amendment in S. 3042. 

For Fiscal Year 2018, the United States Department of Agriculture (USDA) allocated US$26,484,947.00 in taxpayer funds to twenty-three (23) cooperators under the Foreign Market Development Program (FMD), an average of US$1,021,084.00 per distribution.

https://www.fas.usda.gov/programs/foreign-market-development-program-fmd/fmd-funding-allocations-fy-2018

For Fiscal Year 2018, the USDA allocated US$173,802,447.00 in taxpayer funds to sixty-six (66) participants under the Market Access Program (MAP), an average of US$2,633,370.00 per distribution.

https://www.fas.usda.gov/programs/market-access-program-map/map-funding-allocations-fy-2018

NOTE: Since 2000, when the TSREEA re-authorized the direct export of food product and agricultural commodities from the United States to the Republic of Cuba, more than US$5.6 billion in food products and agricultural commodities have been delivered to the Republic of Cuba on a “cash in advance” basis as required by the TSREEA.  Thus far in 2018, TSREEA-authorized exports have increased 25% compared to the same period in 2017.  The government of the Republic of Cuba maintains that prohibition on payment terms and financing are the primary impediments to increasing purchases.

Text Of S. 3042 In PDF Format

Text Of H.R. 2 In PDF Format

Confiserie Sprungli AG & Dieter Meier Of Switzerland Use Cocoa Beans From Cuba

Confiserie Sprungli AG & Dieter Meier Of Switzerland Use Cocoa Beans From Cuba  

http://www.spruengli.ch

https://www.spruengli.ch/en/shop/chocolates-truffes/cuba-autentica-coleccion-de-trufas-gran-cru-gr-1-en.html

https://www.spruengli.ch/en/search?q=cuba

https://www.spruengli.ch/en/cuba-chocolate-negro-en.html

From The Company:

“Since we are a traditional Zurich-based company we sell our products exclusively through our own Spruengli stores (Switzerland, Dubai and Abu Dhabi) and via our E-Shop.

We regret to inform you that it is not our business policy to export our products through a franchising system nor do we sell any licenses.  Furthermore, we also do not have any expansion plans for the United States.

For our Cuba auténtica collección products we only use cocoa beans from Baracoa, Cuba. 

The beans are obtained by another company, Max Felchlin AG located in Schwyz, Switzerland. Link: https://www.felchlin.com/en/company/company-portrait

They import the cocoa beans and process them to couverture chocolate which we then use for our well-known products.”

Zurich, Switzerland-based Dieter Meier is also creating chocolate products using cocoa beans from the Republic of Cuba.

https://www.chocolatdietermeier.com/

Editor’s Note: The products from Confiserie Sprungli and Dieter Meier taste very good.    

And, chocolate goes well with a cup of Nespresso Café de Cuba Vertuo… 

https://www.nespresso.com/us/en/order/capsules/original/cafecito-de-cuba-limited-edition-coffee

Secretary Of State Pompeo Speaks At Detroit Economic Club; He Answers 6 Questions- One Is About Cuba

Remarks
Mike Pompeo
Secretary of State
Detroit Economic Club
Detroit, Michigan
June 18, 2018

excerpts......

MR ANDERSON: Well, maybe we will wrap up with one international question that’s a little closer to home, and that’s a question about Cuba. So Cuba now has the first non-Castro president in many decades. Do you continue to think we’ll grow closer with Cuba? How do you see that relationship evolve?

SECRETARY POMPEO: It’s true his last name’s not Castro. (Laughter.) But you wouldn’t know it from looking at his policies and plans. So I don’t see significant changes in the Cuban Government. Having said that, I do see significant opportunity. I think over time that its proximity to the United States, the nature of the human beings there, I think we – I think ultimately we end up in a much better place in Cuba. The question has always been speed, how quickly can you get there, and what are the right toolsets to reinforce that and make that more likely to happen. President Trump’s made clear he wants us to do that, he wants us to be engaged in ways that increase the capacity for ordinary Cubans to have the opportunities that we all have in America, both economic freedoms and political freedoms. And today we still have a lot of work to do.

President Trump Has A Problem: Tariffs By Canada, China, EU & Mexico

Updated…. New Export Data

President Trump Has A Problem: Tariffs By Canada, China, EU & Mexico
Here’s One Solution
He’d Support It If He Knew About It
A Good, Strong Simple Quick Decision
Where Are Secretaries Mnuchin, Perdue & Ross?

Thus Far In 2018:
U.S. Food/Ag Exports To China Decreased 12.2%
U.S. Food/Ag Exports To Mexico Increased .2%
U.S. Food/Ag Exports To Canada Increased 1.1%
U.S. Food/Ag Exports To The EU Increased 13.4%

U.S. Food/Ag Exports To Cuba Increased 25.3%
Cuba Imported More Food/Ag Products From U.S. Than 19 Of 28 EU Members
Cuba Ranks 52nd Of 229 Countries For U.S. Food/Ag Exports

No Change To Law
One OFAC License Could Increase Exports
Home BancShares In Arkansas
Removing Foreign Banks From Transactions Can Increase U.S. Exports
Direct Banking Can Save Exporters 2%+ From Each Payment  
Where’s Arkansas’s Republican Governor & All-Republican Congressional Delegation?

To some, The Honorable Donald J. Trump, President of United States, views trade as binary, having two parts- a winner and a loser.  Perhaps, it’s more ternary, having three parts- a winner, a loser and a component that equates to fairness.

He believes in overtly rewarding good behavior and overtly punishing bad behavior.  He believes in good (strong) deals and not bad (poor) deals.  He believes in high risk, high reward strategies.  All binary.  He espouses and did so during the decades prior to his presidency that trade should be “fair” and the United States should be “treated fairly” and not “treated badly” or “treated poorly.”

President Trump can appreciate the absurdity where a bank located in Canada, Mexico, Panama or the EU receives a fee from a transaction between a farmer, cooperative or company in the United States and the Republic of Cuba. 

Thus far in 2018, according to the United States Department of Commerce (USDOC), the Republic of Cuba has purchased, in U.S. Dollar value, more agricultural commodities and food products from the United States, on a cash-in-advance basis as required by U.S. law, than have nineteen (19), or 68% of the twenty-eight (28) members of the European Union (EU). 

The Republic of Cuba’s 25.3% increase in agricultural commodity and food product purchases from the United States thus far in 2018 is also a higher percentage increase than nineteen (19) of the twenty-eight (28) members of the EU.

President Trump does not consider the government of the Republic of Cuba to be good, a friend.  To him, the government of the Republic of Cuba is a bad actor, a disruptor, deserving to be punished until it changes its behavior voluntarily or through coercion.  He has stated he is a friend (“loves”) to the 11.3 million citizens of the 800-mile long archipelago, whose closest point is approximately one hundred (100) miles from the United States; he separates those who lead from those who are led, as have his predecessors. 

How does the President maintain punishment, remain tough, strong, be a winner, show love, embrace a good deal, accept high risk… and balance (or re-balance) the interests of politically and economically significant constituencies in those among the fifty states where agricultural exports and food product exports are first without equal?

The President’s position is tariffs are necessary to correct macro-imbalances in bilateral and multilateral trade agreements; and that short-term to medium-term micro-impact upon certain constituencies in certain states may be required to create a far better long-term. 

He’s asking those who support him to trust him by accepting pain from his decisions; to those who oppose him, they will come around once he has secured victory.  “Make America Great Again” is not without pain- perceived or real.  There is a means to mitigate that pain.

For the Republic of Cuba to have a role in providing that victory, that “againness,” President Trump needs to permit one United States bank in Arkansas to obtain a portion of a license it does not have from the United States Department of the Treasury. 

One signature from The Honorable Steven Mnuchin, United States Secretary of the Treasury or Ms. Andrea Gacki, Acting Director of the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury makes it happen.

That license would immediately benefit United States agricultural commodity and food product exporters from the first transaction- United States exporters will get paid safer, faster and with less cost for each payment they receive from the Republic of Cuba.  And, ports in Alabama, Florida, Georgia, Louisiana, Mississippi, Texas and Virginia would benefit.

President Trump appreciates that straight line transactions are generally good; triangular transactions are generally bad.  He appreciates spending less and receiving more. 

That’s a view also appreciated by The Honorable Lawrence Kudlow, Director of the National Economic Council at The White House and his colleague The Honorable Peter Navarro, Director of the National Trade Council at The White House.  For both gentlemen, exports matter.

Since December 2001, when the first deliveries from the United States to the Republic of Cuba commenced under provisions of the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000, the Republic of Cuba has purchased, on a cash-in-advance basis, more than US$5.652 billion in agricultural commodities and food products from United States companies. 

In 2017, the Republic of Cuba ranked 53rd amongst 229 agricultural commodity and food export markets for United States companies according to the United States Department of Commerce; ahead of Poland, Jordan, Argentina, Russia, Qatar and Greece and ahead of twenty (20) of the twenty-eight (28) members of the EU among others. 

During the last seventeen (17) years, the Republic of Cuba has purchased approximately US$1.4 billion in soybean products: more than US$623 million in soybeans, more than US$531 million in soybean oil cake, and more than US$251 million in soybean oil.

Thus far in 2018, the Republic of Cuba has purchased approximately US$15 million in soybeans and soybean oil, compared with US$8,493,537.00 (soybeans; no soybean oil) during the same period in 2017.  That is a 76.6% increase.

Soybean products represent approximately 25% of all agricultural commodities and food products exported from the United States to the Republic of Cuba since December 2001.

During the last seventeen (17) years, the Republic of Cuba has purchased approximately US$1.15 billion in corn.

Thus far in 2018, the Republic of Cuba has purchased approximately US$9.4 million in corn, compared with US$14,462,001.00 during the same period in 2017.  That is a 53.8% decrease.              

Corn represents approximately 20% of all agricultural commodities and food products exported from the United States to the Republic of Cuba since December 2001.

On 15 June 2018, President Trump said that the United States “The United States will pursue additional tariffs if China engages in retaliatory measures, such as imposing new tariffs on United States goods, services, or agricultural products; raising non-tariff barriers; or taking punitive actions against American exporters or American companies operating in China.”

On 31 May 2018, President Trump announced that the United States was “taking action to protect America’s national security from the effects of global oversupply of steel and aluminum. Following extensive discussions and a months-long process, the President will implement tariffs on steel and aluminum imports from Canada, Mexico, and the European Union.”

Following the announcement, the governments of Canada, Mexico and twenty-eight members of the EU reported that tariffs on products, including agricultural commodities and food products, from the United States would be implemented.

On 4 May 2018, President Trump was quoted as saying: “My people are coming back right now from China, and we will be doing something, one way or the other, with respect to what's happening in China.  And let me say this:  I have great respect for President Xi.  That's why we're being so nice.  And we have a great relationship.  But we must bring fairness into trade between the U.S. and China.  And we'll do it.”

On 5 May 2018, The Wall Street Journal reported that exports of soybeans and corn from the United States to the People’s Republic of China had substantially decreased.  According to The Honorable Charles Grassley (R- Iowa), a member of the United States Senate, “If [the Chinese] market closes, it could be devastating for local communities across the Midwest.” 

Increasing the export of soybeans and corn, and other agricultural commodities and food products from the United States to the Republic of Cuba would not be a panacea, but could materially offset without risk to United States taxpayers because United States law requires payment of cash-in-advance for deliveries of agricultural commodities and food products from the United States to the Republic of Cuba.  The law does not need to be altered for exports to increase.

President Trump could take immense satisfaction from using rational commercial logic to correct simple commercial arithmetic that escaped comprehension of the Obama Administration: When export opportunities exist, assist and do no harm.  And, if there are two parts to create success, don’t authorize one part and then self-congratulate for not authorizing the other part.  President Trump would concur that’s terrible.

To assist towards increasing agricultural commodity and food product exports, along with other authorized exports (agricultural machinery, farm implements, and medical equipment, for example), Conway, Arkansas-based Home BancShares (2018 assets approximately US$14 billion), who through its Centennial Bank subsidiary purchased Pompano Beach, Florida-based Stonegate Bank in September 2017, must augment its existing license from the OFAC.  Home BancShares has experience with agriculturally-focused transactions on behalf of its customers in Arkansas, Alabama, Florida and New York.

Mr. C. Randall Sims, President and Chief Executive Officer of Home BancShares, along with Mr. John W. Allison, Chairman of Home BancShares, should seek assistance from their Governor (who visited the Republic of Cuba in 2015) and their Members of Congress:

The Honorable Asa Hutchinson (R), Governor of the State of Arkansas; United States Senators: The Honorable John Boozman (R) and The Honorable Tom Cotton (R); and the four members of the United States House of Representatives: The Honorable Eric “Rick” Crawford (R) who has visited the Republic of Cuba, The Honorable French Hill (R), The Honorable Steve Womack (R), and The Honorable Bruce Westerman (R).

In 2015, the OFAC authorized Stonegate Bank (2017 assets approximately US$2.9 billion) to have an account with Republic of Cuba government-operated Banco Internacional de Comercia SA (BICSA). 

However, the Obama Administration would not authorize BICSA under a general OFAC license or in the OFAC license issued to Stonegate Bank, so United States export-related payments have been sent and received through Panama City, Panama-based Multibank, which has dealings with the Republic of Cuba. 

Without bilateral direct correspondent banking accounts, the payment process for funds from the United States to the Republic of Cuba and from the Republic of Cuba to the United States remains triangular rather than a straight line- which would be more efficient, more secure, more transparent, more timely (same day versus two or more days), and less costly. 

The augmentation of the OFAC license would be consistent with the export-focused mandates of the United States Department of Agriculture (USDA) and United States Department of Commerce (USDOC) by the Trump Administration.

Previously, officials within the OFAC and United States Department of State shared that if a license application were submitted, the license application would likely be approved.

OFAC Regulations:

55.  Are financial institutions other than banks permitted to open correspondent accounts in Cuba?  Depository institutions, as defined in 31 CFR §515.333, which include certain financial institutions other than banks, are permitted to open correspondent accounts at banks in Cuba. See 31 CFR §515.584(a).

(f) Any banking institution, as defined in §515.314, that is a person subject to U.S. jurisdiction is authorized to provide financing for exports or reexports of items, other than agricultural commodities, authorized pursuant to §515.533, including issuing, advising, negotiating, paying, or confirming letters of credit (including letters of credit issued by a financial institution that is a national of Cuba), accepting collateral for issuing or confirming letters of credit, and processing documentary collections. With the exception of transactions related to exports or reexports of medicines or medical supplies, items associated with the provision of telecommunications and internet services for the Cuban people, or items associated with air and sea operations that support permissible travel, cargo, or trade, nothing in this paragraph authorizes a direct financial transaction prohibited by §515.209.

56.  Are Cuban banks permitted to open correspondent accounts at U.S. banks? No. U.S. depository institutions are permitted to open correspondent accounts at Cuban banks located in Cuba and in third countries, and at foreign banks located in Cuba, but Cuban banks are not generally licensed to open such accounts at U.S. banks. See note to 31 CFR §515.584(a).

What To Do?

Home BancShares should seek the 50% of its correspondent banking license from the OFAC that it does not possess to then transparently, securely, and efficiently receive funds from the Republic of Cuba and transfer funds to the Republic of Cuba.

A fully-implemented direct correspondent banking agreement will lessen transaction costs by up to 2% or more; and that 2% could result in additional soybean products and corn and other agricultural commodities and food products exported from the United States to the Republic of Cuba.  

Since December 2001, the Republic of Cuba has transferred more than US$5.6 billion to United States-based companies for the purchase of agricultural commodities, food products and healthcare products (medical instruments, medical equipment, medical supplies and pharmaceuticals); approximately US$150 million went to third-country financial institutions to process those payments.

Additional effort.  Additional time.  Additional expense.  And, additional reasons for the government of the Republic of Cuba to avoid United States-based companies.

The government of the Republic of Cuba may believe, and not without some reasonableness, that if the OFAC does not want United States companies to save on transaction fees and gain from the potential savings in terms of increased product exports, then so be it.  And, providing additional revenues to banks located in Canada, Mexico and the EU creates goodwill for the Republic of Cuba.

The government of the Republic of Cuba has a responsibility to gain as much as possible from each bilateral commercial relationship; and United States companies can provide high quality product, with competitive pricing, on a consistent basis, through efficient ground and rail and port transportation networks.  That’s a benefit to the 11.3 million citizens of the 800-mile long archipelago.  

United States companies (large, medium and small; and individual farmers) who engage in authorized transactions with any country should not be financially penalized by the United States government.

There exists an available OFAC licensing pathway to solve a payment problem.  Home BancShares and BICSA should make use of it.  The USDA, USDOC and OFAC should support it.  

It’s the type of good deal for the United States that President Trump looks to support… he just needs to know about it.

Complete Text In PDF Format

Link To Previous Blog Post:

https://www.cubatrade.org/blog/2017/12/12/president-trump-deserves-opportunity-to-right-an-obama-administration-wrong-sftcp-dcb?rq=Stonegate%20Bank

FedEx Seeks Another Delay From USDOT To Initiate Services To Cuba

MOTION OF FEDERAL EXPRESS CORPORATION FOR ADDITIONAL EXTENSION OF START-UP DATE

14 June 2018

Federal Express Corporation ("FedEx") hereby respectfully moves the Department of Transportation ("DOT") for a six-month extension of time (i.e., through December 15, 2018) to inaugurate U.S.-Cuba scheduled, all-cargo air services. In its July 15, 2016 Notice of Action Taken, the DOT granted FedEx an allocation of five weekly frequencies to provide business daily (i.e., Monday-Friday) all-cargo air services between Miami, Florida (MIA) and Matanzas/Varadero, Cuba (VRA). Under the Notice's standard ninety (90) day start-up requirement, FedEx was required to inaugurate its U.S.-Cuba air services by April 15, 2017. However, the DOT granted FedEx two extensions of this start-up deadline, the latest giving FedEx until June 15, 2018, to inaugurate its U.S.-Cuba all-cargo services. FedEx needs this new extension to provide it with additional time to work through the continuing doing-business challenges and operational constraints that persist in the Cuba market, especially given its emergent nature and the Cuban and U.S. legal, regulatory and policy complexities overlaying such matters.

In additional support of this Motion, FedEx respectfully submits the following:

As the only all-cargo participant in the Department's 2016 U.S.-Cuba Frequency Allocation Proceeding, FedEx is pleased to have received authority from the Department to operate five weekly all-cargo flights between MIA and VRA. Since FedEx is the only U.S. all-cargo carrier seeking to provide U.S.-Cuba scheduled air services, DOT's granting this request for an additional extension will not adversely affect any other U.S. carriers nor the U.S. shipping public.

As previously indicated in this docket, FedEx began the rigorous preparatory and planning work for its Cuba services some time ago. However, FedEx requires another six-month extension of time because of several continuing inextricable dynamics, such as securing and establishing business relationships with Cuban service providers in relation to air operations support services, customs clearance, and ground/ delivery operations. The company must ensure these service providers would appropriately complement the express delivery services for which FedEx is world­ renowned while simultaneously remaining within the limits of the existing, relevant

U.S. and Cuban laws, regulations and policies.

The Department's grant of FedEx's extension request would be consistent with the public interest and Department precedent. FedEx remains committed to using its Cuba authority to provide the highest quality of reliable and efficient U.S.-Cuba air express and general cargo services, which would maximize the public benefit of the U.S.-Cuba Memorandum of Understanding for U.S. shippers and commerce alike. The six-month extension requested herein would not impact such longer-term benefits.

Moreover, all other U.S. carriers who received U.S.-Cuba authority from the Department have requested, and ultimately received, start-up extensions relating to certain U.S.-Cuba flights, including flights serving markets which are in much higher demand than VRA.

WHEREFORE, FedEx respectfully requests that the Department grant this motion for a six-month extension of time, to December 15, 2018, for the start-up of FedEx’s scheduled all-cargo air services between Miami, Florida, and Matanzas/Varadero, Cuba.

Complete Filing In PDF Format

One Year Since President Trump's Speech About Cuba.... Then Regulations

On their own, the changes to regulations enacted in 2017 by the Trump Administration have materially impacted the Republic of Cuba.

The regulations coupled with the lessening of economic support from Venezuela, increase in oil price imports, decrease in agricultural product exports, increase in cost of overall imports, and self-imposed impediments on the re-emerging self-employed will have the Republic of Cuba’s challenging 2017 continuing through 2018 and into 2019 unless the Diaz-Canel Administration takes dramatic, and potentially destabilizing actions.

The Diaz-Canel Administration may be a one-term transitional moment in a series of moments as its success may ironically be defined by the pain that is inflicted upon the population, which must be for 11.3 million citizens of the Republic of Cuba to be tomorrow what they are not today.

The Diaz-Canel Administration will preside over the destabilizing merging of the dual currencies, the implementation of the constitutional changes recommended by the commission led by his predecessor, General Raul Castro, the lessening of the role of the government throughout society, and a realignment of the relationship with the United States. 

Its most fundamental societal role will be to guide government institutions and a population made suspicious of self-employed “success” to appreciate the role of “success” in a society.  What it means for the self-employed to be “successful” and to what level those residing on the 800-mile long archipelago need accept differences in income will be a lengthy debate.   

The Trump Administration regulatory changes most impacted travel to Cuba by individuals subject to United States jurisdiction. 

The announcement of the regulations and implementation of the regulations by the United States Department of the Treasury, United States Department of Commerce, and United States Department of State were crafted and presented in a manner designed to create uncertainty with goals of fewer individuals subject to United States jurisdiction visiting the Republic of Cuba and fewer United States companies seeking engagement with the Republic of Cuba.  Both goals have succeeded.

Although the regulatory changes were written in a manner which lessened their direct impact, and retained most travel-related opportunities, cruise lines benefited while airlines saw fewer passengers.

Once seemingly contradictory regulation: An individual subject to United States jurisdiction may not directly make payment to an entity listed by the United States Department of State as under the control of or affiliated with the Revolutionary Armed Forces (FAR) of the Republic of Cuba.  However, an indirect payment may be permitted.

Important to remember that the Trump Administration was only able to do what it did because the Obama Administration and Castro Administration failed to do more when they were in office.

Had both administrations been more proactive and planned for a November 2016 outcome other than a victory by Hillary Clinton, the bilateral commercial landscape would have been rooted in such a manner that the Trump Administration would have been far more cautious in what it implemented in 2017. That’s the tragedy.

Trump Administration May Be Focusing Upon Certified Claims Unlike Obama Administration

Media Note
Office of the Spokesperson
Washington, DC
June 14, 2018

The United States and Cuba held the seventh Bilateral Commission meeting in Washington, D.C. on Thursday, June 14. Deputy Assistant Secretary of State for Western Hemisphere Affairs John Creamer led the U.S. delegation. The Cuban delegation was led by Carlos Fernandez de Cossio, the Foreign Ministry’s Director General for U.S. Affairs.

The United States reiterated the urgent need to identify the source of the attacks on U.S. diplomats and to ensure they cease. We also reiterated that until it is sufficiently safe to fully staff our Embassy, we will not be able to provide regular visa services in Havana. We expressed our continued concerns about the arbitrary detention of independent journalists and human rights defenders. The United States acknowledged progress in repatriating Cubans with final orders of removal from the United States, but emphasized Cuba needs to accept greater numbers of returnees.

The delegations also reviewed other areas for engagement that advance the interests of the United States and the Cuban people including combatting trafficking in persons; facilitating safe civil aviation; law enforcement cooperation; agricultural cooperation; maritime safety and search and rescue cooperation; resolution of certified claims; advancing understanding of environmental challenges; and protecting the national security and public health and safety of the United States.

The delegations agreed to hold the next rounds of the biannual Migration Talks and the Law Enforcement Dialogue this summer. The Bilateral Commission last met in September 2017.

Media Note
Office of the Spokesperson
Washington, DC
September 20, 2017

The United States and Cuba held the sixth Bilateral Commission meeting in Washington, D.C. on Tuesday, September 19. Deputy Assistant Secretary of State for Western Hemisphere Affairs John Creamer led the U.S. delegation. The Cuban delegation was led by Josefina Vidal, the Foreign Ministry’s Director General for U.S. Affairs.

The meeting provided an opportunity to discuss the incidents affecting diplomatic personnel at the U.S. Embassy in Havana. The United States reiterated its deep concern for the safety and security of the U.S. Embassy community in Havana and the urgent need to identify the cause of these incidents and to ensure they cease. The delegations also reviewed the Administration’s priorities and areas for engagement in the interests of the United States and the Cuban people, including human rights; implementation of the Migration Accords; and protecting the national security and public health and safety of the United States.

The Bilateral Commission last met in December 2016.

Media Note
Office of the Spokesperson
Washington, DC
December 7, 2016

The United States and Cuba held the fifth Bilateral Commission meeting in Havana, Cuba on Wednesday, December 7. Acting Assistant Secretary of State for Western Hemisphere Affairs Mari Carmen Aponte led the U.S. delegation. Embassy Havana Chargé d’Affaires Jeffrey DeLaurentis and Deputy Assistant Secretary John Creamer also attended for the United States. Josefina Vidal, the Foreign Ministry’s Director General for U.S. Affairs, led the Cuban delegation.

The United States and Cuba reviewed the achievements of the Bilateral Commission since diplomatic relations were re-established in July 2015. The Commission has prioritized and sequenced a number of bilateral initiatives since its first quarterly meeting in November 2015. The United States and Cuba have established dialogues on law enforcement, claims, human rights, and economic and regulatory issues, and have continued biannual Migration Talks. The Bilateral Commission has provided a framework to address trafficking in persons and the return of fugitives, as well as to schedule technical exchanges on law enforcement and environmental issues.

In the last 18 months, the United States and Cuba concluded 11 non-binding agreements, including Memoranda of Understanding on health, cancer research, agriculture, environmental cooperation, hydrography, marine protected areas, counternarcotics, federal air marshals, civil aviation, and direct transportation of mail. In the coming weeks, the United States and Cuba expect to sign agreements formalizing cooperation on law enforcement, conservation, seismology, meteorology, search and rescue, and oil spill response protocols.

The United States and Cuba have coordinated a number of high-level visits, including that of President Obama in March 2016, seven cabinet-level officials, and Dr. Jill Biden. Seven U.S. governors from New York, Louisiana, Arkansas, Texas, Virginia, Missouri, and West Virginia have led trade delegations to Cuba since April 2015. More than 80 Members of Congress, both Democrats and Republicans, have visited Cuba in the last two years, many for the first time.

Purposeful travel by Americans to Cuba increased by approximately 75 percent from 2014 to 2015. Ten U.S. airlines now provide scheduled service between U.S. and Cuban cities, and Carnival cruises are docking in several Cuban cities, further connecting the U.S. and Cuban people. Under the Bilateral Commission, the United States and Cuba expanded educational and cultural exchanges. The number of Cubans studying in the United States increased 63 percent in academic year 2015-16. More than 2,000 U.S. students visited Cuba as part of their academic program in academic year 2014-15. The United States welcomed the first Cuban Hubert H. Humphrey Fellow to the United States. Four U.S. cellular providers offer roaming service in Cuba, further connecting Cuba and the United States.

The delegations agreed the Bilateral Commission has provided a framework for discussion of a wide range of issues. Where U.S. and Cuban interests align, including on counternarcotics, health, and environmental issues, the United States and Cuba have made important strides for the benefit of both peoples. Where the two countries have disagreements, including on human rights, the United States and Cuba have articulated those differences in a clear, productive, and respectful manner. The dialogues and working groups that fall under the Bilateral Commission framework have allowed the United States and Cuba to establish working relationships with counterparts, which are essential to continued bilateral cooperation, advancement of U.S. interests, and progress toward normalization.

The United States looks forward to hosting the next Bilateral Commission Meeting in Washington, DC at the earliest opportunity.

Media Note
Office of the Spokesperson
Washington, DC
September 30, 2016

The United States and Cuba held the fourth Bilateral Commission in Washington, D.C., on Friday, September 30. Acting Assistant Secretary of State for Western Hemisphere Affairs Mari Carmen Aponte led the U.S. delegation, supported by Chargé d’Affaires Jeffrey DeLaurentis, Deputy Assistant Secretary John Creamer, and Chief of Staff and Director of Policy Planning Jon Finer. The Cuban delegation was led by Josefina Vidal, the Foreign Ministry’s Director General for U.S. Affairs, supported by Cuban Ambassador to the United States Jose Ramon Cabanas.

The Bilateral Commission advances the normalization process between the United States and Cuba. The meeting took place in a cooperative and productive environment. The U.S. and Cuban delegations discussed the way forward on key issues such as agriculture, health, environmental protection, economic engagement, science and technology, civil aviation, regulatory affairs, claims, culture and education, law enforcement, nonproliferation, trafficking in persons, human rights, maritime borders, and migration. The delegations also discussed prospects for upcoming high-level visits and their shared desire to achieve as much progress as possible by the end of the year.

The United States looks forward to the next Bilateral Commission Meeting in Havana in December 2016.

Media Note
Office of the Spokesperson
Washington, DC
May 12, 2016

The United States and Cuba will hold the third Bilateral Commission in Havana, Cuba on Monday, May 16. Following the successful visit of President Obama to Havana in March 2016, Secretary Kerry asked Ambassador Kristie Kenney, the Counselor of the U.S. Department of State, to lead the delegation. The Secretary places a top priority on deepening our dialogue with the Government of Cuba, the primary mechanism for which is the Bilateral Commission. Deputy Assistant Secretary John S. Creamer will also attend for the United States. The Cuban delegation will be led by Josefina Vidal, the Foreign Ministry’s Director General for U.S. Affairs.

The meeting will provide an opportunity to review progress on a number of shared priorities since the last Bilateral Commission meeting in November 2015, including progress made during the President’s historic trip to Cuba in March. The United States and Cuba expect to plan continued engagements on environmental protection, agriculture, law enforcement, health, migration, civil aviation, direct mail, maritime and port security, educational and cultural exchanges, telecommunications, trafficking in persons, regulatory issues, human rights, and claims for the remainder of 2016.

Media Note
Office of the Spokesperson
Washington, DC
November 10, 2015

The United States and Cuba held the second Bilateral Commission in Washington, D.C., today. Deputy Assistant Secretary for Western Hemisphere Affairs Alex Lee led the delegation for the United States, and the Foreign Ministry’s Director General for U.S. Affairs, Josefina Vidal, led the Cuban delegation.

The Bilateral Commission is the primary coordination vehicle for advancing the normalization process between the United States and Cuba. The meeting took place in a respectful, cooperative, and productive environment. It provided an opportunity to review progress on shared priorities, including regulatory issues, telecommunications, claims, environmental protection, human trafficking, human rights, migration, and law enforcement. It also provided an opportunity to discuss priorities for 2016 and to identify mechanisms to continue narrowing our differences.

The United States looks forward to the next Bilateral Commission Meeting in Havana in early 2016.

Media Note
Office of the Spokesperson
Washington, DC
September 11, 2015

The United States and Cuba held the inaugural session of the bilateral commission in Havana today. The discussions were full and frank, extensive and conducted in a courteous and respectful manner. Both governments agreed to concrete steps to continue on the path toward normalized relations.

The group discussed a preliminary timeline through the end of this year for engagements on key topics including human rights, combating trafficking in persons, claims, migration, counter-narcotics, regulatory issues, environmental cooperation, civil aviation, telecommunications and the internet, and direct mail.

The bilateral commission agreed to meet again in November in Washington, D.C. to review progress in these areas and to chart areas of cooperation for 2016.

April Food/Ag Exports Increase 39.8%; Purchases Up 25.3% Compared To 2017

ECONOMIC EYE ON CUBA©
June 2018

April 2018 Food/Ag Exports To Cuba Increased 39.8%- 1
25.3% Increase Year-To-Year-5
Cuba Ranks 52nd Of 229 U.S. Food/Ag Export Markets- 2
April 2018 Healthcare Product Exports US$59,934.00- 2
April 2018 Humanitarian Donations US$640,778.00- 3
Obama Administration Initiatives Exports Continue To Increase- 3
U.S. Port Export Data- 15

APRIL 2018 FOOD/AG EXPORTS TO CUBA INCREASED 39.8%- Exports of food products & agricultural commodities from the United States to the Republic of Cuba in April 2018 were US$25,159,062.00 compared to US$17,988,565.00 in April 2017 and US$18,188,315.00 in April 2016.  

Complete Report In PDF Format

Secretary Of State Pompeo Discusses Cuba In Speech To OAS

Secretary's Remarks: Remarks at the General Assembly of the Organization of American States (OAS)

Remarks
Mike Pompeo
Secretary of State
OAS Headquarters
Washington, DC
June 4, 2018

SECRETARY POMPEO: Thank you. Thank you, Secretary General Almagro and your team, for organizing this 48th General Assembly of the OAS. We are incredibly grateful for your leadership.

It is a pleasure to be here at the OAS for the first time as Secretary of State of the United States of America, and I am delighted to meet many of my fellow foreign ministers here and today.

I would also like to acknowledge the great work of our permanent representative, Ambassador Trujillo, and his team, and – as well as all of those – work of the perm-reps to the Organization of American States.

Before I continue, I’d like to express our solidarity with the Guatemalan people and send our condolences to the families and loved ones of those who perished as a result of the volcano eruption in Guatemala on Sunday.

Just as we did when this first body met 70 years ago, the United States continues to place a great deal of value on the OAS and its role in forging a hemisphere distinguished by democracy, peace, respect for human rights, and cooperation. We must all do our part to strengthen the OAS to deal effectively with the challenges to our values we face together today and, of course, those we will face in the future.

I would like to thank our fellow member-states for their support of a decision at last year’s General Assembly to reduce the OAS’s dependence on a single member-state: mine. This is an important step rooted in increasing buy-in and burden sharing to achieve our shared goals. This year I hope that we can agreeably adopt a plan to implement this decision in order to put the OAS on more sustainable financing footing.

As for confronting shared challenges in the region, at the Summit of the Americas our leaders agreed upon steps to combat corruption, a cancer that eats away at the underpinnings of democracy and stifles the dreams of our citizens. We must continue to improve transparency in government and public procurement, and call out and prosecute corrupt officials.

Transnational criminal organizations kill our people, they destabilize our societies, and they challenge our democratic institutions. The United States will not stand for this. We will continue to cooperate with our Mexican counterparts and with leaders from the Northern Triangle to build on our gains in addressing the drivers of illegal immigration and the illicit trafficking.

Our fight to crush these TCOs will continue with the implementation of the Caribbean Basin Security Initiative. We will also continue to pursue Caribbean 2020, our strategy-focused – our strategy for enhanced Caribbean engagement in the areas of security, diplomacy, prosperity, energy, education, and health.

The natural disasters of the past year have tested our people’s resilience. The United States is proud to help OAS countries bounce back in the aftermath of such tragedies. One way we are doing this is helping small businesses in the vital Caribbean tourism industry get back on their feet again after hurricanes.

In Cuba today, we see an expectation that change is inevitable and that it can't come quickly enough. Young Cubans born under a dictatorship are uninterested in hollow revolutionary slogans. They demand educational opportunities free from political constraints or a totalitarian regime’s repression. They want what youth everywhere else wants: opportunities to use their talents, to exercise their voice, achieve their potential, and build a bright future for themselves. As democratic societies, we must support young people in Cuba and elsewhere in the hemisphere in their hopes for democratic change.

In Nicaragua police and government-controlled armed groups have killed dozens, merely for peacefully protesting. I echo what Vice President Pence said in this very building on May 7th: “We join with nations around the world in demanding that Ortega Government [respond] to the Nicaraguan people’s demands for the democratic reform and hold accountable those responsible for violence.” The United States supports the work of the Inter-American Commission on Human Rights and what it is doing in Nicaragua, and strongly urges the Nicaraguan Government to implement the recommendations issued by the commission this past May 21st.

But there is no greater challenge today than the full-scale dismantling of democracy and the heartbreaking humanitarian disaster in Venezuela. While the United States welcomes the release of the unjustly imprisoned Holt family, our policy towards Venezuela remains unchanged. The United States stands steadfast in support of the Venezuelan people and their efforts to return to democracy. The Maduro regime’s efforts towards – to move towards unconstitutional government and its human rights abuses are now well known by all. All these actions have, among other ill consequences, resulted in an unconstitutional alteration of Venezuela’s constitutional order.

Given these circumstances, we are all challenged to act under the Inter-American Democratic Charter, which this body has already begun to do.

On more than one occasion, Venezuela has squandered opportunities to have the kind of dialogue that the charter calls for. We seek only what all the nations of the OAS want for our people: a return to the constitutional order, free and fair elections with international observation, and the release of political prisoners. The regime’s refusal to take meaningful action on these issues has demonstrated unmistakable bad faith and exhausted options for dialogue under current conditions.

Just two weeks ago, the Venezuelan Government staged sham elections that offered no real choice to Venezuelan people and its voters. Many of them responded sensibly by simply staying home.

For all of these reasons, Vice President Pence challenged member-states last month to do what the Democratic Charter asks of us when faced with an unconstitutional interruption in democratic order of a member-state: suspend Venezuela from this body.

That suspension is not a goal unto itself. But it would show that the OAS backs up its words with action. And it would send a powerful signal to the Maduro regime: Only real elections will allow your government to be included in the family of nations.

In addition to suspension, I call on fellow member-states to apply additional pressure on the Maduro regime, including sanctions and further diplomatic isolation, until such time as it undertakes the actions necessary to return genuine democracy and provide people desperately needed access to international humanitarian aid.

We call on all OAS nations to do this today regarding Venezuela, and in the future, wherever necessary, for good of the region and the world. Thank you. (Applause.)

President Trump Can Help Offset Import Tariffs By Canada, Mexico, EU & China

President Trump Can Help Offset Import Tariffs By Canada, Mexico, EU & China
Binary & Ternary Strategies
He’d Likely Support It If He Knew About It
Good, Strong Decision

U.S. Food/Ag Exports To Canada Increased 2.2% In 2018
U.S. Food/Ag Exports To Mexico Decreased 3.5% In 2018
U.S. Food/Ag Exports To The EU Increased 9.3% In 2018
U.S. Food/Ag Exports To China Decreased 15.2% In 2018

U.S. Food/Ag Exports To Cuba Increased 20.8% In 2018
In 2018, Cuba Imported More Food/Ag Products From U.S. Than 20 Of 28 EU Members

One OFAC License Could Increase Exports; Secretary Mnuchin Can Authorize It
Home BancShares In Arkansas Has 50% Of The License
Removing Foreign Banks From Transactions Can Increase U.S. Exports
Direct Banking Can Save Exporters 2%+ From Each Payment  
Where’s Arkansas’s Republican Governor & All-Republican Congressional Delegation?

To some, The Honorable Donald J. Trump, President of United States, views trade as binary, having two parts- a winner and a loser.  Perhaps, it’s more ternary, having three parts- a winner, a loser and a component that equates to fairness.

He believes in overtly rewarding good behavior and overtly punishing bad behavior.  He believes in good (strong) deals and not bad (poor) deals.  He believes in high risk, high reward strategies.  All binary.  He espouses and did so during the decades prior to his presidency that trade should be “fair” and the United States should be “treated fairly” and not “treated badly” or “treated poorly.”

President Trump can appreciate the absurdity where a bank located in Canada, Mexico, Panama or the EU receives a fee from a transaction between a farmer, cooperative or company in the United States and the Republic of Cuba.  

Thus far in 2018, according to the United States Department of Commerce, the Republic of Cuba has purchased, in U.S. Dollar value, more agricultural commodities and food products from the United States, on a cash-in-advance basis as required by U.S. law, than have twenty (20) of the twenty-eight (28) members of the European Union (EU).  

Putting this another way, the Republic of Cuba has thus far in 2018 purchased more agricultural commodities and food products than has 71% of the members of the EU.  

The Republic of Cuba’s 20.8% increase in agricultural commodity and food product purchases from the United States thus far in 2018 is also a higher percentage increase than twenty (20) of the twenty-eight (28) members of the EU.

President Trump does not consider the government of the Republic of Cuba to be good, a friend.  To him, the government of the Republic of Cuba is a bad actor, a disruptor, deserving to be punished until it changes its behavior voluntarily or through coercion.  He has stated he is a friend (“loves”) to the 11.3 million citizens of the 800-mile long archipelago, whose closest point is approximately one hundred (100) miles from the United States; he separates those who lead from those who are led, as have his predecessors.  

How does the President maintain punishment, remain tough, strong, be a winner, show love, embrace a good deal, accept high risk… and balance (or re-balance) the interests of politically and economically significant constituencies in those among the fifty states where agricultural exports and food product exports are first without equal?

The President’s position is tariffs are necessary to correct macro-imbalances in bilateral and multilateral trade agreements; and that short-term to medium-term micro-impact upon certain constituencies in certain states may be required to create a far better long-term.  

He’s asking those who support him to trust him by accepting pain from his decisions; to those who oppose him, they will come around once he has secured victory.  “Make America Great Again” is not without pain- perceived or real.  There is a means to mitigate that pain.

For the Republic of Cuba to have a role in providing that victory, that “againness,” President Trump needs to permit one United States bank in Arkansas to obtain a portion of a license it does not have from the United States Department of the Treasury.  

One signature from The Honorable Steven Mnuchin, United States Secretary of the Treasury or Ms. Andrea Gacki, Acting Director of the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury makes it happen,  

That license would immediately benefit United States agricultural commodity and food product exporters from the first transaction- United States exporters will get paid safer, faster and with less cost for each payment they receive from the Republic of Cuba.  And, ports in Alabama, Florida, Georgia, Louisiana, Mississippi, Texas and Virginia would benefit.

President Trump appreciates that straight line transactions are generally good; triangular transactions are generally bad.  He appreciates spending less and receiving more.  

That’s a view also appreciated by The Honorable Lawrence Kudlow, Director of the National Economic Council at The White House and his colleague The Honorable Peter Navarro, Director of the National Trade Council at The White House.  For both gentlemen, exports matter.

On 31 May 2018, President Trump announced that the United States was “taking action to protect America’s national security from the effects of global oversupply of steel and aluminum. Following extensive discussions and a months-long process, the President will implement tariffs on steel and aluminum imports from Canada, Mexico, and the European Union.”

Following the announcement, the governments of Canada, Mexico and twenty-eight members of the EU reported that tariffs on products, including agricultural commodities and food products, from the United States would be implemented.

On 4 May 2018, President Trump was quoted as saying: “My people are coming back right now from China, and we will be doing something, one way or the other, with respect to what's happening in China.  And let me say this:  I have great respect for President Xi.  That's why we're being so nice.  And we have a great relationship.  But we must bring fairness into trade between the U.S. and China.  And we'll do it.”

On 5 May 2018, The Wall Street Journal reported that exports of soybeans and corn from the United States to the People’s Republic of China had substantially decreased.  According to The Honorable Charles Grassley (R- Iowa), a member of the United States Senate, “If [the Chinese] market closes, it could be devastating for local communities across the Midwest.”  

Increasing the export of soybeans and corn, and other agricultural commodities and food products from the United States to the Republic of Cuba would not be a panacea, but could materially offset without risk to United States taxpayers because United States law requires payment of cash-in-advance for deliveries of agricultural commodities and food products from the United States to the Republic of Cuba.  The law does not need to be altered for exports to increase.

President Trump could take immense satisfaction from using rational commercial logic to correct simple commercial arithmetic that escaped comprehension of the Obama Administration: When export opportunities exist, assist and do no harm.  And, if there are two parts to create success, don’t authorize one part and then self-congratulate for not authorizing the other part.  President Trump would certainly concur that’s a terrible deal.

Since December 2001, when the first deliveries from the United States to the Republic of Cuba commenced under provisions of the Trade Sanctions Reform and Export Enhancement Act (TSREEA) of 2000, the Republic of Cuba has purchased, on a cash-in-advance basis, more than US$5.6 billion in agricultural commodities and food products from United States companies.  

In 2017, the Republic of Cuba ranked 53rd amongst 229 agricultural commodity and food export markets for United States companies according to the United States Department of Commerce; ahead of Poland, Jordan, Argentina, Russia, Qatar and Greece and ahead of twenty (20) of the twenty-eight (28) members of the EU among others.  

During the last seventeen (17) years, the Republic of Cuba has purchased approximately US$1.4 billion in soybean products: more than US$621 million in soybeans, more than US$531 million in soybean oil cake, and more than US$245 million in soybean oil.

Thus far in 2018, the Republic of Cuba has purchased approximately US$15 million in soybeans and soybean oil, compared with US$8,493,537.00 (soybeans; no soybean oil) during the same period in 2017.  That is a 76.6% increase.

Soybean products represent approximately 25% of all agricultural commodities and food products exported from the United States to the Republic of Cuba since December 2001.

During the last seventeen (17) years, the Republic of Cuba has purchased approximately US$1.15 billion in corn.

Thus far in 2018, the Republic of Cuba has purchased approximately US$9.4 million in corn, compared with US$14,462,001.00 during the same period in 2017.  That is a 53.8% decrease.

Corn represents approximately 20% of all agricultural commodities and food products exported from the United States to the Republic of Cuba since December 2001.

To assist towards increasing agricultural commodity and food product exports, along with other authorized exports (agricultural machinery, farm implements, and medical equipment, for example), Conway, Arkansas-based Home BancShares (2018 assets approximately US$14 billion), who through its Centennial Bank subsidiary purchased Pompano Beach, Florida-based Stonegate Bank in September 2017, must augment its existing license from the OFAC.  Home BancShares has experience with agriculturally-focused transactions on behalf of its customers in Arkansas, Alabama, Florida and New York.

Mr. C. Randall Sims, President and Chief Executive Officer of Home BancShares, along with Mr. John W. Allison, Chairman of Home BancShares, should seek assistance from their Governor (who visited the Republic of Cuba in 2015) and their Members of Congress:

The Honorable Asa Hutchinson (R), Governor of the State of Arkansas; United States Senators: The Honorable John Boozman (R) and The Honorable Tom Cotton (R); and the four members of the United States House of Representatives: The Honorable Eric “Rick” Crawford (R) who has visited the Republic of Cuba, The Honorable French Hill (R), The Honorable Steve Womack (R), and The Honorable Bruce Westerman (R).

In 2015, the OFAC authorized Stonegate Bank (2017 assets approximately US$2.9 billion) to have an account with Republic of Cuba government-operated Banco Internacional de Comercia SA (BICSA). 

However, because the Obama Administration would not authorize BICSA under a general OFAC license or in the OFAC license issued to Stonegate Bank, United States export-related funds have been sent and received through Panama City, Panama-based Multibank, which has extensive dealings with the Republic of Cuba.  

Without bilateral direct correspondent banking accounts, the payment process for funds from the United States to the Republic of Cuba and from the Republic of Cuba to the United States remains triangular rather than a straight line- which would be more efficient, more secure, more transparent, more timely (same day versus two or more days), and less costly.  

The augmentation of the OFAC license would be consistent with the export-focused mandates of the United States Department of Agriculture (USDA) and United States Department of Commerce (DOC) by the Trump Administration.

Previously, officials within the OFAC and United States Department of State shared that if a license application were submitted, the license application would likely be approved.

OFAC Regulations:

55.  Are financial institutions other than banks permitted to open correspondent accounts in Cuba?  Depository institutions, as defined in 31 CFR §515.333, which include certain financial institutions other than banks, are permitted to open correspondent accounts at banks in Cuba. See 31 CFR §515.584(a).

(f) Any banking institution, as defined in §515.314, that is a person subject to U.S. jurisdiction is authorized to provide financing for exports or reexports of items, other than agricultural commodities, authorized pursuant to §515.533, including issuing, advising, negotiating, paying, or confirming letters of credit (including letters of credit issued by a financial institution that is a national of Cuba), accepting collateral for issuing or confirming letters of credit, and processing documentary collections. With the exception of transactions related to exports or reexports of medicines or medical supplies, items associated with the provision of telecommunications and internet services for the Cuban people, or items associated with air and sea operations that support permissible travel, cargo, or trade, nothing in this paragraph authorizes a direct financial transaction prohibited by §515.209.

56.  Are Cuban banks permitted to open correspondent accounts at U.S. banks? No. U.S. depository institutions are permitted to open correspondent accounts at Cuban banks located in Cuba and in third countries, and at foreign banks located in Cuba, but Cuban banks are not generally licensed to open such accounts at U.S. banks. See note to 31 CFR §515.584(a).

What To Do?

Home BancShares should seek the 50% of its correspondent banking license from the OFAC that it does not possess to then transparently, securely, and efficiently receive funds from the Republic of Cuba and transfer funds to the Republic of Cuba.

A fully-implemented direct correspondent banking agreement will lessen transaction costs by up to 2% or more; and that 2% could result in additional soybean products and corn and other agricultural commodities and food products exported from the United States to the Republic of Cuba.   

Since December 2001, the Republic of Cuba has transferred more than US$5.6 billion to United States-based companies for the purchase of agricultural commodities, food products and healthcare products (medical instruments, medical equipment, medical supplies and pharmaceuticals); approximately US$150 million went to third-country financial institutions to process those payments.

Additional effort.  Additional time.  Additional expense.  And, additional reasons for the government of the Republic of Cuba to avoid United States-based companies.

The government of the Republic of Cuba may believe, and not without some reasonableness, that if the OFAC does not want United States companies to save on transaction fees and gain from the potential savings in terms of increased product exports, then so be it.  And, providing additional revenues to banks located in Canada, Mexico and the EU creates goodwill for the Republic of Cuba.

The government of the Republic of Cuba has a responsibility to gain as much as possible from each bilateral commercial relationship; and United States companies can provide high quality product, with competitive pricing, on a consistent basis, through efficient ground and rail and port transportation networks.  That’s a benefit to the 11.3 million citizens of the 800-mile long archipelago.   

United States companies (large, medium and small; and individual farmers) who engage in authorized transactions with any country should not be financially penalized by the United States government.

There exists an available OFAC licensing pathway to solve a payment problem.  Home BancShares and BICSA should make use of it.  The USDA and DOC should support it.  

It’s the type of good deal for the United States that President Trump looks to support… he just needs to know about it.

Link To Complete Analysis In PDF Format

Link To Previous Blog Post:

https://www.cubatrade.org/blog/2017/12/12/president-trump-deserves-opportunity-to-right-an-obama-administration-wrong-sftcp-dcb?rq=Stonegate%20Bank