The US' share of Cuban agricultural imports would rise to between one-half and two-thirds if trade and travel restrictions were lifted says a report by the US International Trade Commission (ITC).

Its publication - US Agricultural Sales to Cuba: Certain Economic Effects of US Restrictions - singles out letter of credit (L/C) restrictions as a particularly onerous burden on US-Cuban trade.

Growth impeded

The independent federal agency - which says it is non-partisan - examined the effects of US trade and travel restrictions on Cuban purchases of US agricultural products at the request of the US Senate Committee on Finance.

In 2000-01 US agricultural exports to Cuba were negligible, but under more favourable trading conditions grew rapidly in the following years so that by 2004 the US was Cuba's largest supplier says the report. It says the US now provides around one-third of Cuba's agricultural imports.

Payment costs

The report says US regulations, specifically the requirement for the Cuban government to pay for US agriculture products in cash or through L/Cs drawn on third-country banks, raise the cost of US goods for Cubans and likely limit US sales.

Other factors that increase costs according to the ITC are port delays; high transport charges owing to limited shipping routes; foreign exchange transactions exacerbated by the need for third-country financing, and the uncertainty surrounding visas for Cuban officials to inspect US agriculture production facilities.

Agreement

Business leaders apparently agree with the report findings and also point specifically to the L/C restrictions on US agricultural exports to Cuba. "The ITC report clearly shows that American agriculture would benefit enormously if trade with Cuba was normalised," says North Dakota Agriculture Commissioner Roger Johnson.

"In particular, requiring the Cubans to pay for our agriculture products in cash or through L/Cs drawn on third-country banks does nothing but raise our costs and limit our sales," he adds.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.