July 29,2005

Baucus Secures Deal on Ag Sales to Cuba

Senator Lifts Treasury Holds

(WASHINGTON, D.C.) U.S. Senator Max Baucus, ranking Democrat on the FinanceCommittee, today reached agreement with the Treasury Department on a clarification of the rulesgoverning U.S. agricultural sales to Cuba. The clarification gives agricultural exporters inMontana and across the United States a way to continue to sell agricultural products to Cuba on acash basis.

“I pushed the Treasury Department hard so that ag exporters could continue to sell theirproducts to Cuba,” Baucus said. “I’m optimistic that this clarification will provide U.S. agexporters in Montana and elsewhere with another option to restart ag sales to Cuba.”

In a letter to Finance Committee Chairman Grassley and ranking Democrat Baucus, theTreasury Department agreed to allow goods to ship to Cuba once payment is received by a thirdcountry bank acting as the seller’s agent. By allowing the shipment to go forward once theseller’s agent receives the payment, the goods would not be vulnerable to seizure for unrelatedclaims while they are still at the U.S. port.

In exchange for the clarification, Baucus agreed to drop his hold on consideration ofTreasury nominees before the Senate. Back in December 2004, when Baucus first learned thatthe Treasury Department was planning a restriction on agricultural sales to Cuba, he threatenedto block consideration of nominees if they went ahead with the rule change. Treasury issued itsrule change February 22, 2005 requiring payment of cash in advance for ag products before theyshipped from a U.S. port. Previously, Treasury’s regulations only required payment to be madebefore the goods were delivered to the Cuban buyer.

“Whatever it takes to make it work, we’ve got to try to give it a try,” said Jim Stinehagen,of Yellowstone Bean Company based in Bridger, MT. “There is no way we’d have a shot at thismarket today if Max hadn’t kept fighting this rule every step of the way.”

Jake Cummins, Executive Vice President of the Montana Farm Bureau Federation, alsopraised the deal. “Max kept his word to Montana farmers and ranchers that he wouldn’t give upthis fight. This deal could help Montana farmers and ranchers regain a foothold in the Cubanmarket. We can’t afford to pass up this market.”

Baucus said that Treasury’s clarification of the rule might help restart some of the cashbasis sales lost this year to the new rule if the cost and logistics could be worked out. While thistype of transaction would still tie up the buyer’s money longer than it should, Baucus noted, itwould at least provide a potential framework in which to conduct the cash sales.

“This kind of transaction is far from ideal,” Baucus said. “Sales will still be lost. Butgiven the burdensome restrictions imposed by Treasury and the resulting plummet in agriculturalsales to Cuba, something had to be done. I’m confident we’ve opened the door a crack, and Ithank Chairman Grassley for his support in helping me do so.”

Baucus continued, “The fact remains, however, that this Treasury rule is still in place,and as long as it is, we’ll never be able to realize the full potential of the Cuban market. I remain100% committed to overturning this rule fully, and I will work hard to get Congress to sendlegislation to the President’s desk this session that will do just that.”

Baucus has cosponsored legislation with Sen. Larry Craig (R-ID) and twenty-eight otherfarm state senators from both sides of the aisle that would overturn the Treasury rule altogether.Legislation that would block enforcement of the rule was attached to the 2006 TreasuryAppropriations bill in the Senate by Senator Byron Dorgan (D-ND) and in the House ofRepresentatives by Representative JoAnn Emerson (R-MO).