OFAC Issues Final Rule Modifying Payment Terms for Exports to Cuba
Today the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) announced that it has issued a final rule modifying the payment policy associated with the sale of agricultural commodities, medicine and medical supplies to Cuba under export licenses issued by the U.S. Department of Commerce's Bureau of Industry and Security (BIS). Under the revised policy, OFAC has stated that the phrase "payment of cash in advance" as used in the Cuban Assets Control Regulations (CACR) means payment of cash prior to shipment of goods.
The final rule on the payment policy was submitted to the Federal Register today and becomes effective immediately, although the notice will not be published for several days. The language in the final rule provides a 30-day transition period for exporters to continue to engage in transactions under financing terms resembling cash against documents, but requires payment for such transactions to be completed within the 30-day period. All exporters will still have to receive a license from BIS prior to shipment. The purpose of this 30-day window is to provide a transition period.
As previously reported (see February 13, 2005 posting below), legislation was recently introduced in the Senate and House to overturn OFAC's long-expected change of policy regarding the phrase "payment of cash in advance." The Agricultural Export Facilitation Act of 2005, which has been designated as S. 328 and H.R. 719, would modify the Trade Sanctions Reform and Export Enhancement Act of 2000 (22 U.S.C. 7207) (commonly known as TSRA) to insert language stating that the term "payment of cash in advance" means the payment by the purchaser of an agricultural commodity or product and the receipt of such payment by the seller prior to--(i) the transfer of title of such commodity or product to the purchaser; and (ii) the release of control of such commodity or product to the purchaser.
After learning of today's announcement by OFAC, Senator Max Baucus of Montana, the ranking Democrat on the Senate Finance Committee, said "I'm outraged at this attempt by Treasury Department bureaucrats to choke off U.S. agriculture sales to Cuba." He also pledged to make good on his promise to block the Bush Administration's nominees to hold positions in the Treasury Department over the trade dispute.
|posted by Douglas N. Jacobson| Permalink 
