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February 09, 2005 

Bill to Modify Trade Sanctions Reform Act Introduced in Senate

A bipartisan group of Senators today introduced a bill known as "The Agricultural Export Facilitation Act of 2005." The bill, which already has 20 co-sponsors, 10 from each party, was introduced by several senior Senators, including Senate Foreign Relations Committee Chairman Dick Lugar (R-Ind.), Intelligence Committee Chairman Pat Roberts (R-Kan.),Senator Larry Craig (R-Idaho) and Senator Max Baucus, Ranking Member of the Senate Finance Committee. A bill number was not assigned as of this writing.

The most significant aspect of the legislation would clarify that the term "cash payment in advance" contained in the Trade Sanctions Reform and Enhancement Act of 2000 (commonly known as TSRA) means "receipt of payment before transfer of title and release of physical control of goods to the seller." Until late last year, the standard practice had been for Cuba to pay for agricultural shipments in transit or after they arrived at a Cuban port but before formal title for the goods exchanged hands. But some opponents of trade with Cuba argued that such a payment mechanism provided the Cuban purchasers a short-term credit, a practice that was prohibited by TSRA. The Treasury Department's Office of Foreign Assets Control (OFAC), which enforces trade and travel restrictions with Cuba, held up several sales in November 2004 as a result of a review of the policy related to cash in advance payments. As an interim solution, OFAC began issuing specific licenses for each transaction, however no official announcement has been made on this policy change.

The proposed legislation also contains several additional provisions, including language that would permit direct transactions between Cuban and U.S. banks. Currently, U.S. food exporters must now must wait several days to be paid as payments are handled through banks located in third countries. In addition, the legislation would make it easier for U.S. citizens to travel to Cuba to market agricultural products by granting a general license for agriculture producers to travel to Cuba to sell, market, and finalize any sales or trade agreements, rather than having to obtain a specific license from OFAC. It would also facilitate visits from Cuban agricultural inspectors and trade officials by expediting temporary visas for such such visitors. Finally, the bill would repeal Section 211 of the Omnibus Appropriations Act of 1998 which was deemed by the WTO to be incompatible with the TRIPS Agreement.

A companion bill is expected to be introduced by Republican House leaders in the coming weeks.


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