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U.S. Trade With Cuba? You Bet!

This story was written by CBS News Producer Portia Siegelbaum

New rules implemented by Washington could make it harder for U.S. agricultural producers to sell to Cuba, but Louisiana Gov. Kathleen Blanco is seeking a bigger piece of the pie - already worth some $1 billion for her state.

Cuba currently buys from companies in 38 U.S. states, and although more than half of its purchases are shipped through the Port of New Orleans, only a small amount of the cargo originates in Louisiana.

"We are here to explore opportunities that will benefit you as well as Louisiana," the governor told Cuban officials upon arrival.

During a three-day visit that included lunch with President Fidel Castro, Blanco won a commitment from Cuba's food importer, Alimport, to buy $15 million worth of agricultural products.

On Wednesday, Alimport CEO Pedro Alvarez signed the first deals with representatives of Louisiana Rice Mill and AnPro Trading to purchase rice and powdered milk valued at $2 million.

In 2000, Congress passed a law allowing Cuba to purchase agricultural products directly from U.S. suppliers although on a cash-only basis.

That exemption in the more than four-decades-old U.S. economic and trade embargo of the communist island has allowed Cuba to become the 25th largest importer of U.S. agricultural exports.

At the contract signing ceremony, Alvarez optimistically declared, "This brings us closer to the elimination of restrictions. And we are sure that once these restrictions are lifted, Louisiana will have a significant role in trade with Cuba."

On the same note, Alvarez signed an accord with the head of the Port of New Orleans, Gary La Grange, intended to encourage the continued use of that facility for the shipment of goods to the island.

La Grange noted that two ships from his port docked in Cuba on Tuesday and another vessel was in New Orleans at the moment loading cargo for Cuba. "We look forward to great dividends in the future...not just from cargo but from cruise ship passengers," he said.

Alvarez picked up the theme, saying, "The time will come when instead of several ships a month, there will be several ships a day" sailing from New Orleans to Cuba.

In 2001, the first boatload of American food to sail to Cuba under the exemption to the embargo left from the Port of New Orleans. Today goods for Cuba go through 23 U.S. ports.

Despite the positive tone, U.S.-Cuba trade faces a number of obstacles. Although credit is the norm in international trading, Cuba has had to pay its American suppliers fully in cash before the cargo could be turned over to Alimport.

Because the embargo bans direct banking relations, Cuba has paid substantial banking fees to transfer payments through third nations. But a recent Treasury Department ruling effective the end of this month will obligate Cuba to fully pay for the goods even before they are loaded in a U.S. port. Previously it paid when the ship bearing the cargo docked.

Alimport's Alvarez issued a press statement recently saying Cuba "would honor its commitments" but only if "the terms and conditions are consistent with internationally accepted business practices."

U.S. agricultural producers feared the new ruling, intended to squeeze Fidel Castro, would give the edge to suppliers in other countries.

They took their concerns to the head of Treasury's Office of Foreign Assets Control last week. Now, Department spokeswoman Molly Millerwise says, "As long as a standard letter of credit is in place a shipment can move forward."

That should alleviate Cuba's concern that goods paid for in advance of shipment could be held up by U.S. courts as compensation for damages in lawsuits filed against Castro by Cuban exiles.

On Wednesday Alvarez said Cuba was paying the Louisiana exporters with letters of credit. Presumably the letter of credit will be issued while the goods are still in the U.S. However, the U.S. seller would not cash in that bank document until his goods were en route to Cuba. Nevertheless, the use of letters of credit adds to Cuba's costs.

After signing the agreement with Alvarez, Gov. Blanco met for 45 minutes with James Cason, the highest-ranking U.S. diplomat in Cuba and head of the U.S. Interests Section here. He reportedly urged her to make sure Louisiana producers were paid up front in cash.

A State Department official, speaking on the condition of anonymity, also told CBS News the Cubans should pay "cash on the barrel head" adding, "You don't get my gumball until I get your quarter."

The governor turned down Cason's offer to set up a meeting with Cuban dissident Osvaldo Paya, best known for circulating a petition supporting changes in Cuba's economic and political system.

Nevertheless, she did accept a last-minute invitation to lunch with Castro. Blanco's spokesperson, Denise Bottcher, said the invitation was accepted "out of respect for the President."

Blanco's trip to Cuba came under heavy criticism by anti-Castro groups in Louisiana, and they were sure to oppose her meeting with their long-term enemy.

But upon arrival in New Orleans Thursday evening, the governor defended her face-to-face with the Cuban leader by saying, "We had just signed agreements with Cuba to $15 million of our goods, food and fiber products. Many of the agreements were already signed, and many more are waiting to be signed. We didn't want to jeopardize that by perhaps insulting the president of the country."

By Portia Siegelbaum

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