Senators blast Treasury over Cuba trade limits

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By Jeremy Pelofsky

WASHINGTON (Reuters) - A group of U.S. senators has complained that the Treasury Department is not easing trade with Cuba as called for under new legislation, according to a letter released on Tuesday.

President Barack Obama last week signed into law a spending measure that included provisions that ease a strict embargo on Cuba, focusing on allowing more travel and making it easier to sell agriculture goods to the communist-run island nation.

However, 15 Republican and Democratic senators accused the Treasury of failing to implement the changes by continuing to uphold payment restrictions introduced in 2005 by the Bush administration.

"The intent of those provisions was to facilitate already legal agricultural trade with Cuba," the group said in the March 16 letter.

Senate Finance Committee Chairman Max Baucus said that there was an opportunity for the United States to make Cuba a bigger trading partner and that he would press the Treasury to resolve the matter.

Many lawmakers have pressed for a review of U.S. policy toward Cuba after Fidel Castro, who seized power in a 1959 revolution, retired last year. President Barack Obama has favored relaxing some limits on the trade embargo.

Federal law adopted in 2000 permitted agriculture exports to Cuba as long as they were paid for with cash in advance. This allowed U.S. companies to ship food to Cuba and be paid through third-country banks before the goods were unloaded.

But the Bush administration added a hurdle in 2005 when the Treasury's Office of Foreign Assets Control (OFAC) interpreted "cash in advance" to mean payment before the goods could be shipped from a U.S. port.

The lawmakers had hoped the new law approved last week would remove this hurdle which slowed food sales to Cuba.

However, that was thwarted by Treasury Secretary Timothy Geithner who made it clear that the law would remain the same when he sent a letter to two Democratic senators unhappy about easing restrictions on Cuba.

"This is contrary to the intention of the provisions included in the omnibus legislation to halt this use" of the regulations, the senators said.

A Treasury Department spokesman was not immediately available for comment.

The letter was signed by Baucus and Senators Jeff Bingaman, Tom Harkin, Blanche Lincoln, Jon Tester, Patty Murray, Mary Landrieu, Tim Johnson, Richard Lugar, Mike Enzi, Pat Roberts, Mike Crapo, Kit Bond, Mark Pryor and Maria Cantwell.

U.S. companies sold $710 million in agricultural products to Cuba last year, mainly grains and chicken.

Last week's spending law denied funding to the Treasury to enforce the Bush rules on food payments by Cuba, but those rules remain in force, said Phil Peters, vice president of the Lexington Institute and an expert on Cuba. Besides, the congressional measure expires at the end of this fiscal year.

"No U.S. business will trade with Cuba in a way that violates the law, because they could get in trouble as of October 1," Peters said.