Leahy sees slow increase in trade with Cuba

A Vermont delegation visited Cuba in 2005 on a tour of the country’s dairy operations. From left, Dr. Gerardo Quaassdorf of the Brattleboro-based Holstein Association USA, Agency of Agriculture Secretary Steve Kerr and Lt. Gov. Brian Dubie visited a farm outside of Havana. Bruce Edwards / file photo

RUTLAND — Don’t look for Cuban cigars anytime soon at your neighborhood store. But President Barack Obama’s bold initiative last month to drastically improve relations with Cuba includes a loosening of trade and travel restrictions.

Sen. Patrick Leahy, who returned from Cuba last month with imprisoned U.S. Agency for International Development worker Alan Gross, said trade with Cuba will increase, though slowly at first.

Leahy hopes to do his part to encourage trade between the two adversaries. As it stands now, the 54-year old trade embargo limits U.S. exports to medical supplies, agricultural products and commodities.

“I hope at some point, and I’ve talked to a number of people at our Chamber of Commerce and others, to bring a trade mission down to Cuba,” Leahy said last week.

Leahy said Vermont’s specialty foods industry is one area that could eventually benefit from increased trade with Cuba.

“I’ve had a lot of people tell me here in Vermont, they’d like to be involved,” he said.

Although Cuba is a small market, Leahy said increased trade and cultural ties would be a positive development. He noted Burlington College already has a semester abroad program in Havana.

Ten years ago, Vermont farmers sold 76 cows to Cuba to help the country rebuild its dairy industry. The Cubans also purchased powdered milk and agreed to buy 4,000 bushels of Vermont apples. However, the apple deal fell through when Cuban inspectors failed to obtain the required visas from the Bush administration to visit the U.S.

Florida businessman John Parke Wright IV, who brokered the sale of Vermont cows, said Obama’s initiative will allow for more licensed (non-tourist) travel to Cuba, which could also increase the demand for additional food products.

In terms of the dairy industry, Wright said more needs to be done to rebuild Cuba’s dairy herd.

“The dairy situation is sad because the economy is so weak in Cuba that they have not been able to import much-needed animal feed to support the dairy industry,” said Wright, who has been doing agricultural business in Cuba for a number of years.

He said Vermont has the resources to help Cuba, including the Brattleboro-based Holstein Association USA and the University of Vermont dairy program.

Wright, like Leahy, said there may be an opportunity for Vermont’s manufacturers of specialty food, including cheese and coffee. He said Vermont could also lend its expertise in the areas of environmental cleanup and historic preservation.

John Kavulich, senior policy adviser with the US-Cuba Trade and Economic Council, said while a normal, two-way trade relationship with Cuba is not on the immediate horizon, agricultural exports to Havana could increase “not dramatically, but meaningfully.”

Kavulich said an increase in American visitors allowed under the Obama plan will not by itself generate enough business for Cuba to open its wallet to buy more food and agricultural products.

When it comes to Vermont’s specialty products, he said the price would likely be out of reach for the Cuban government.

“In Vermont’s case, should a Vermont producer of maple syrup be gearing up to send additional cases down to Havana to meet the demand of U.S. visitors who want maple syrup on their Belgian waffles and pancakes and their French toast?” Kavulich asked. “The answer is no.”

He said politics and money have driven Cuba’s decision whether to buy agricultural products from the U.S., which have declined since their peak in the mid-2000s.

“You still have to have an economy that supports this stuff and Cuba doesn’t have that yet,” he said, referring to speciality food products.

He said that’s why increasing trade with Cuba will be “a slow process.”

He added that given the demand on the existing hotel accommodations, Cuba couldn’t handle a large influx of tourists from the U.S.

Vermont’s Agency of Agriculture is monitoring the potential for trade with the island nation of 11 million. Agency officials said while there is indeed potential, what transpires in the future will depend on what happens at the federal level.

Deputy Secretary Diane Bothfeld, who oversees dairy policy, identified several potential areas of interest: genetics (the export of top-quality animals to improve Cuba’s dairy herd), powdered milk, whey and cheese.

Chelsea Bardot Lewis, who oversees the agency’s export program, said the Caribbean has been a good market for U.S. exporters.

“The Caribbean generally is considered a strong market for U.S. specialty goods, with its close proximity, lenient regulatory structure, and tourist market,” Lewis said in an email. “Cheeses tend to command higher prices there, meaning that Vermont’s premium cheeses could potentially compete.”

She said a Caribbean market workshop the agency held three years ago in Randolph was attended by eight specialty food companies, “so there’s definitely interest among Vermont companies to tap this market.”

Total Vermont exports last year (2014) to all countries totaled $4.27 billion, a decline of 14 percent from the previous year, according to the Vermont Global Trade Partnership.

Dairy-related exports totaled $45.8 million, which ranked ninth among all Vermont exports and represented a 56 percent increase from 2013.

Under the current setup, Cuba is required to pay cash for U.S. agricultural products, depositing money in a third country bank, which is then transferred to a U.S. bank.

What Obama is proposing would streamline the process by allowing the Cuban government to wire transfer money the same day directly to a bank in the U.S.

“So the exporter would receive it within several hours,” Kavulich said. “That would increase efficiencies and decrease costs.”

He also said the U.S. should stick to its cash-in-advance payment policy. Since the U.S. authorized agricultural exports to Cuba in 2001 on humanitarian grounds, U.S. suppliers have been paid $5 billion.

“U.S. companies have never had to wait in line with hundreds of companies from throughout the world that Cuba owes money to,” Kavulich said.

Not everyone is thrilled with the new tack Obama is taking with the communist regime. Cuban-American lawmakers, including Sen. Marco Rubio, R-Fla., and Sen. Robert Menendez, D-N.J., expressed outrage at the new policy, warning it will only ensure a continuation of the Castro regime’s authoritarian rule.

Kavulich also added a word of caution.

“People should not think the Cuban government is going to welcome changes that’s going to cause it to change in any way it doesn’t want to,” he said. “It will only allow change to a level that it can control.”

Leahy, however, is more optimistic that change will come to Cuba. He said after more than 50 years of a failed policy of trying to topple the Castros from power, it’s time to engage Cuba with trade and people-to-people diplomacy.

“I think it’s all positive,” he said.

Times Argus, January 5, 2015

This entry was posted in Exchanges. Bookmark the permalink.