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Can U.S. Farmers Break Open Trade with Cuba?


When Congress cracked open the door to Cuba in 2000 by allowing food exports, it looked as though nothing had really changed. That's because U.S. banks were still barred from financing those exports, and a prickly President Fidel Castro vowed to purchase "not one grain of American rice." Then along came Hurricane Michelle, devastating the Cuban harvest last November, and Castro tapped French banks for the money to start buying $122 million worth of U.S. crops.

Now, as cash registers ring, Congress is pushing the door open wider. In July, the House passed a spending measure--by a comfortable 308-121--that would effectively cripple the Treasury Dept.'s enforcement of the U.S. bank-financing ban, as well as travel restrictions.

That has left anti-Castro forces struggling to save what's left of the 40-year-old trade embargo. Demanding reforms in Cuba "seems to be of no interest to our colleagues," lamented Representative Ileana Ros-Lehtinen (R-Fla.) on Sept. 6, as she announced that Congress' beleaguered anti-Castro forces were switching from a moral and political argument to an economic one: Castro can't or won't pay his creditors.

Anti-Castro Cuban-Americans, a dependable voting bloc, are also turning up the heat on Bush brother Jeb as he seeks a second term as governor of Florida. So even though House Republicans increasingly see Havana as more a market than an enemy, the White House is threatening a veto of the pro-trade spending bill. George W. Bush's first Presidential veto would serve to make one very clear point: The Bush family doesn't like Castro.

Nevertheless, the momentum is with the free traders. Despite the ban on U.S. bank financing, Cuba last year became the 52nd-largest market for U.S. farm goods, up from 228th in 2000, according to the U.S.-Cuba Trade & Economic Council, a business group. On Sept. 17, the American Farm Bureau Federation will co-sponsor a "National Summit on Cuba" at the National Press Club in Washington. And in late September, Havana will host the first U.S. food exhibition, with nearly 250 companies from 32 states participating, including such agriculture giants as Archer Daniels Midland, Cargill, and PepsiCo's Quaker Oats.

Free-trade supporters also figure the President may be less likely to wield the veto pen if the spending bill gets put off until a postelection lame-duck session. Another reason for the anti-Castro forces to despair: Senator Jesse Helms (R-N.C.), senior Republican on the Senate Foreign Relations Committee and author of the harshest anti-Cuba measure of all, the Helms-Burton Act, retires this year.

Pro-embargo forces acknowledge that they are fighting a losing battle against the armies of the Farm Belt. Not even the White House has found a way to explain why free trade makes for good relations with Beijing and Hanoi but not Havana. "People ask me about our Cuba trade policy, and I tell them we don't have a policy. What we have is politics," says former U.S. Trade Representative Charlene Barshefsky. "If the Cuban-American population had settled in Vermont, with just 3 electoral votes, instead of Florida, with 26, we'd have trade relations with Cuba today."

For Jeb Bush, the upcoming farm show in Havana at least provided him with the opportunity to write to Minnesota Governor Jesse Ventura on Sept. 2, urging him not to lead a state delegation of farmers to Cuba. "Now is not the time to encourage expanded trade," warned Governor Bush in a letter quickly released to anti-Castro groups. Ventura said he would go anyway. And why not? He's not running for reelection, and in Minnesota, Cuba is just another market. After his boffo performance at President Bush's Waco (Tex.) economic summit last month, Charles R. Schwab is being floated as a possible successor to Paul H. O'Neill if the Treasury Secretary steps down after the November elections. At Waco, Bush cheered proposals by Schwab, chairman of the discount brokerage, to increase the capital losses investors can write off, from $3,000 to $20,000, and to end the so-called double taxation of dividends. Schwab has sterling GOP credentials. His company and employees forked over $735,970 to candidates and parties in 2000, 91% of it to Republicans, according to the nonpartisan Center for Responsive Politics. And he gave $100,000 for Bush inaugural festivities. John H. Biggs, the outspoken retiring chairman of giant pension fund TIAA-CREF, is emerging as the likely choice to chair the new accounting oversight board. That should please corporate-governance activists, because Biggs has stumped hard for corporate accountability and boardroom reforms. Another reformer favorite, former Fed Chairman Paul A. Volcker, took himself out of the running to head the Public Company Accounting Oversight Board, established by the Sarbanes-Oxley Act in response to audit failures at Enron and other collapsed companies. Still to be settled: How Biggs and SEC Chairman Harvey L. Pitt will share power in picking four other members for the board, which the SEC is required to appoint by Oct. 28.


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