Crawford advances excise tax bill to help restart Cuba exports

In a perfect world, the U.S. Congress and the Trump administration would agree the 57-year-old Cuban Embargo hasn’t worked and probably never will and remove all barriers to trade between the U.S. and a nation located barely 90 miles off its coast.

This is no perfect world, of course, and those in Congress who believe U.S. farmers should be able to sell rice and other commodities to Cuba without needless restrictions are once again having to find ways to advance their agenda.

Rick Crawford, who represents the largest rice-growing district in the country in northeast Arkansas, is drafting legislation that could attach a 2-percent excise tax on certain agricultural exports to Cuba. Rep. Crawford has been in discussions with Miami-area Rep. Carlos Curbelo, R-Fla., about the legislation.

The 2-percent tax would help pay the claims of those who lost property when Fidel Castro came to power in 1959. But Rep. Crawford’s proposal is already drawing criticism from Cuba experts who claim the legislation would make a bad problem worse.

The USA Rice Federation, one of the organizations which has the most to gain – or lose – by changes in the embargo, is supporting the legislation although rice farmers or merchants ostensibly would have to pay the tax when sales were made to Cuba.

2 percent better than nothing

“If that’s what it takes to keep the issue moving forward in Congress, then that’s what it takes, and we’re with Congressman Crawford,” said Ben Mosely, vice president of government affairs for USA Rice. “Paying 2 percent on some trade is better than paying nothing on no trade at all.”

U.S. rice producers made their first sales to Cuba in four decades after Congress passed the Trade Sanctions Reform and Export Enhancement Act of 2000. But the sales began to diminish and then virtually stopped after U.S. officials required the Cuban government to pay for the rice before it could leave U.S. ports.

Crawford has introduced or co-sponsored several bills to remove some of those restrictions. The excise tax proposal, which would be the latest, has run into criticism from experts with the U.S.-Cuba Trade and Economic Council Inc., in New York.

An essay by John S. Kavulich, president of the Council, and a frequent critic of those who want to perpetuate the blockade, claims the 2-percent excise tax legislation is an affront to the “5,913 companies and individuals who have waited 57 years for an equitable resolution to the expropriation of assets” that occurred in 1960.

“Rep. Crawford is not solving a problem; he is making the existing problem worse and creating additional problems,” said Kavulich. “He may believe that his efforts of bipartisan engagement are creating a space for bipartisan dialogue with a goal of closure. He is not. He is solidifying delay and distraction. Rice from Arkansas will not be flooding the Republic of Cuba marketplace because of his efforts.”

Long-term payback

Kavulich said U.S. agricultural commodity and food product exports have reached about $5.3 billion since the first deliveries in December 2001 under provisions of the TSREEA. If the proposed 2 percent had been collected since the first TSREEA-related exports to the Republic of Cuba, the total thus far would be $106 million or 1 percent of the current value of the certified claims.

“United States citizens, owners of privately-held companies, and shareholders of publicly-held companies should not be required to make (reimburse) payments for actions by the government of the Republic of Cuba,” said Kavulich. “Why would the Trump administration, which extols the role of exporters in the United States economy, support creating an additional impediment to the one statutorily-permitted category with the greatest history and greatest potential?”

Rep. Curbelo recently told a Miami-area newspaper he supports the 2-percent tax on sales of agricultural products as a possible means of compensating former owners who lost property when Fidel Castro came to power.

“Although no definitive agreement has been reached, the concept that the victims of Castro’s tyranny may perceive some benefit from U.S.-Cuba transactions deserves to be considered,” he said. “During the previous administration everything was granted to the dictatorship without demanding anything. Now that has to change.”

Other members of the Cuban-American congressional delegation say they are studying the proposal, but have not agreed to support it.  

USA Rice Federation leaders said the recognition of aggrieved “certified claimants” and the proposed method of repaying them in the new legislation is considered a compromise to keep anti-Castro Members of Congress talking about trade normalization.

Door slammed shut?

They say that, despite advances toward normalization of trade between the U.S. and Cuba in recent years, it appeared the door was being slammed shut by hardliners in Congress and the new administration. “Congressman Crawford has wedged his foot in the door to keep it open, and that’s good news,” said USA Rice’s Ben Mosley.

Prior to the U.S. embargo, Cuba was the No. 1 one export market for U.S. rice. However, no U.S. rice has been sold to Cuba since 2008 when the U.S. Treasury Department blocked Cuba from using the letters of credit usually employed in foreign sales.

“U.S. rice is quite popular on the Island due to superior taste, cooking qualities, and logistical advantages over other suppliers, and we believe Cuba could once again become a top market as soon as the many export and financial restrictions that stand in the way are lifted.”

But Kavulich and members of the U.S.-Cuba Trade and Economic Council claim the legislation is rushing to a solution filled with the potential for unintended consequences.

“In an eagerness to “accomplish” something, the result may be the creation of a statutory template and judicial precedent impacting United States bilateral and multilateral relationships, as well as, complicate the commercial, economic and political landscape from which to resolve other United States-Republic of Cuba issues,” Kavulich said.

“Representative Crawford would be best advised to await 24 February 2018, the inauguration of the next president of the Republic of Cuba, when the bilateral dynamic may well be more… dynamic. Change for the sake of change is not always productive- and can be harmful.”

For more information on the Cuban Embargo, visit http://cuba-embargo.procon.org/.