Fears that an order stipulating that US exporters must use letters of credit (L/Cs) if they sell to Cuba would stifle trade appear to be have been unfounded.

Five years ago, Washington approved a scheme enabling US exporters to sell food and agricultural products to Cuba for the first time in almost 40 years.

In 2004, however, the Treasury said US exporters to Cuba must use L/C transactions, prompting some US business groups to say at the time that the arrangements would stifle trade (DC World News, 23 March 2004).

Burgeoning trade

Although the US Treasury restricts travel to Cuba and bars the financing of most US exports to the island, sales of food and agricultural goods under the scheme are apparently burgeoning.

Since the 2000 Trade Sanctions Reform and Export Enhancement Act authorised the sale of agricultural products Cuba, nearly US$1.5 billion of US food exports have flowed into Cuba.

Trade contacts

US trade officials, farmers and food traders meanwhile are said to be flocking to Cuba to sign deals with Cuba's food import firm Alimport.

The food importer says Cuban importers have now made contact with 4,000 US companies from 45 states, signed deals with 162 firms and received 815 shipments from the US since 2001.

Tighter rules

In 2004, the Treasury Department's Office of Foreign Assets Control tightened up the payment rules, demanding that US companies are paid before their shipments leave the country.

Payments are routinely arranged via L/C transactions, albeit under strict arrangements involving four banks - a Cuban bank, a European bank, the European bank's correspondent bank in the US and the exporter's bank

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