Cargill takes the lead in urging end to Cuba trade restrictions
Just a month after President Obama announced plans to normalize relations with Cuba, Cargill is taking the lead on a more controversial and ambitious goal: Urging Congress to roll back the 54-year-old trade embargo that restricts U.S. businesses from selling to Cubans.
“Ending the embargo is necessary for meaningful trade,” the company’s director of Latin American corporate affairs, Devry Boughner Vorwerk, said earlier this week at a seminar on the future of Cuban-American interaction. Vorwerk called restrictions “a failed policy experiment for 54 years” that costs the U.S. hundreds of millions of dollars annually in potential soybean, rice and wheat exports.
Congress must vote on lifting the embargo, though the president has taken dramatic steps in the past month to open up business, trade and travel relationships with the island.
On Thursday, the Commerce Department announced measures to shed rules against travel, trade, banking and formal communications with Cuba. Commerce Department officials authorized airlines to provide air service and permitted U.S. insurers to provide coverage for global health, life or travel insurance policies for people traveling within Cuba. The department also lifted restrictions on telecommunications and certain Cuban imports.
Also Thursday, legislation was reintroduced in the new Congress to repeal the trade embargo with Cuba and crack open the market for everything from wheat to American automobiles. Democratic Rep. Collin Peterson, who represents northwestern Minnesota’s agricultural interests, is a cosponsor, as are Democratic Reps. Keith Ellison and Rick Nolan.
“The question is what are the Republicans going to allow to happen,” Peterson said Thursday, referring to the GOP majority in both the House and the Senate.
“They could well bottle these bills up.”
Cargill and the newly formed U.S. Agriculture Coalition for Cuba — which includes more than two dozen trade associations representing virtually every crop and meat produced in the United States — have also engaged Sens. Amy Klobuchar, D-Minn., and Jerry Moran, R-Kan., for help in the other chamber.
Klobuchar said she supports killing the Cuba embargo and would be willing to offer legislation that does so, but wants to get an ambassador to Cuba first.
“Sometimes the best defense is a good offense,” Klobuchar said. “And part of that is legislation to remove the embargo. Some of this can be done by tying it to changes that we want [Cuba] to make on human rights and other things. The timing is the question. We want this to be bipartisan.”
Klobuchar acknowledged that “there are people who really want to block this” and that Cuba has committed human rights violations. But she said feelings about Cuba have changed since she came to the Senate in 2007.
“The public has a different mood,” she said. “The thought is: We have 11 million people 90 miles off our shore who can one day buy our goods. That means jobs in our country.”
The Cuban market of 11 million people seems minuscule for Cargill, which grossed nearly $135 billion in sales in 2014. Since it began selling in Cuba in 2002, Cargill has sold barely a million metric tons of agricultural products and vegetable oil.
But the Minnetonka-based company lobbies aggressively for open trade everywhere, and Vorwerk called Cuba a “natural market” for American agricultural producers and distributors.
She said food and agricultural product sales are diminishing, in part because of the embargo’s limits on exports and extensions of credit to Cuban buyers. Annual sales from the U.S. to Cuba peaked at $700 million in 2008. In 2013 they were less than $350 million.
Vorwerk said increased Cuban trade can turn into “commercial diplomacy” for the U.S. She will lead a group of businesspeople to Cuba in March to help them learn about the country’s economics and agriculture.
Vorwerk said she has discussed with members of the Senate and House a very simple, “clean” bill to end the embargo that is only a page and a half long.
Trade lawyers Robert Muse and John Veroneau predicted that Congress will be slow to act on Cuba.
Muse, who represents multinational corporate clients, agreed with Vorwerk that a majority of members of Congress do not support the embargo. But he said those objections are private and will not be expressed publicly until Cuban-American members of Congress come out against the embargo.
“There is zero possibility of the embargo being lifted this year,” Muse said.
Emotional issues resonate as strongly as economic issues in U.S.-Cuba relations, said John Kavulich II, a senior policy adviser to the U.S.-Cuba Trade and Economic Council.
“They still feel they are at war with us,” Kavulich said, noting that Cuban President Raul Castro responded to Obama’s diplomatic initiative wearing a military uniform.
Vorwerk replied that Castro “wore a business suit” when he met with U.S. business leaders, including Cargill executives, in May 2014.
She spoke of a “policy imperative and a moral imperative.” For example, she said, Cubans pay three times more for wheat than they would if Cuba opened to U.S. wheat producers, who now sell virtually none of their crops there.
Peterson agreed. He said the current restrictions “don’t do anything but give business to our competitors.”
“They’re still going to buy these agricultural products,” he said.
Nevertheless, the battle to lift the embargo is complicated by what many consider past bad deeds by a hostile neighbor. Countries doing business in Cuba continue to feel a risk of having property confiscated by the Communist government.
On top of that, private property seized from wealthy Cubans by Fidel Castro’s 1950s revolution remains unresolved. Many of those Cubans fled to the U.S.
The U.S. government recognizes $7 billion in corporate claims and accrued interest from what it considers illegal actions by the Castro regime. Those claim holders, said Veroneau, will not abandon those claims.
By Jim Spencer and Allison Sherry, Star Tribune