Screeria nigeria. And later, a look at turkeys role uhamid the violence in syria, iraq and yemen. Wednesday the Senate Agricultural hearing held a hearing. Along with officials from the agriculture, treasury and Commerce Departments. Topics include the opportunities and challenges of expanding trade with the island nation. This is 2 hours and 10 minutes. Okay. Just quiet down. Let it go. Let it go. I was going to say that myself. Sure got quiet. Good morning the committee will come to order. I call this meeting of the Senate Committee on agriculture, nutrition and forestry to order. At the beginning of this congress, i was extremely hopeful that trade would be one area to work to find an agreement. I still maintain that hope. We certainly hope thats the case. Were working very hard in the finance committee to make that happen. Tomorrow, will mark up the promotion bill. That allows our negotiators to garner the best deal possible for american exporters. Tpa is good for agriculture. And i look forward to getting it passed. International trade of american agriculture products is critical. Absolutely critical to the nation. And to the nations economy and our farmers and ranchers. Ive long fought to eliminate barriers to trade, and i think we should continue to work to new opportunities for agriculture products. And that is what were hearing or what we are here about to talk about here as of today. The United States and cuba certainly have a long history full of contention and instability. There is no shortage of opinion from members of congress about the relationship of our two countries. Both present and future. Some are concerned about human rights, rightfully so. Others about socioeconomic ideology. But those concerns are not what this committee will focus on this morning. Today, we are here to discuss the role of agriculture. Opportunities and challenges in cuba. For over 50 years, agriculture exports to the islands have seen many ups and downs, sometimes due to the politics and sometimes due to mother nature. And the tropical storms that she brings. This is not an issue we are going to be able to fix overnight. It will take effort, hard work in addition to bills in congress to truly normalize trade with cuba. The decisions are made regarding increased trade with cuba must be made very carefully. Four months ago the president announced a major shift in u. S. Policy towards cuba. It is my hope that in the future, the president will work with the congress to determine the best path forward. Foreign policy does not happen in a vacuum. We have to take a realistic approach and work out a step by step plan towards lifting the embargo. This is a goal that should include congress, will include congress. Today, we will hear from an impressive panel of experts from the regulators responsible for writing our policies toward cuba to the producers who seek to grow the market for their products. I understand that like myself many of our witnesses here have traveled to cuba to see firsthand what challenges and opportunities do exist. I look forward to hearing about what we might be able to achieve with more trade with cuba but we also need to hear about the difficulties that lie ahead. If we want to be successful in creating a new system of engagement with cuba, were going to have to really put in the work. Agriculture has long been used as a tool not a weapon. A tool for peace and stability. It is my hope that cuba will embrace the practices of free trade, enterprise and commerce so that both countries will gain from increased relations earlier this year, the coalition for cuba was launched. They have shared a statement and Additional Information in support of our work today and i ask it be entered into the record at this point in time without objection. I look forward to hearing from our witnesses. And with that, i recognize our distinguished chairwoman senator stabinaw for any of her remarks. Thank you very much, mr. Chairman. Its great to have an opportunity to talk about this topic. I appreciate the opportunity to work with you on trade opportunities between the United States and cuba and to work with all of the committee. We thank those who are with us the officials and industry representatives testifying today for your part in the process. We look forward to hearing from you. Improving trade with cuba represents not only a great opportunity for American Farmers and ranchers and manufacturers, but a meaningful way to help rebuild trust between our two countries. After more than 50 years of stalemate, its time for a new policy in cuba. When i visited cuba earlier this year with senator leahy who was really one of the senates experts if not the expert i think, on various pieces of cuban culture and economy and so on for so many years. We visited days after the president eased trade restrictions, this is the second time ive had the opportunity to be in cuba with senator leahy and senator flake and others. And, it was very different the second time, being reserved and cautious. Cubans were coming up to us and were very eager to develop a new relationship. It was a very different tenner. But we can only do that with meaningful steps. And americas farmers and ranchers are uniquely positioned to lead the way. And i agree with senator roberts, the agriculture is in a very unique position. In 2014, the u. S. Exported just over 290 million in agricultural goods to cuba, good start. But this is a country only 90 miles off our shore. We can do a lot better than that. Cubas own import agency estimates it will receive approximately 2. 2 billion in u. S. Worth of food and agriculture this year. And we can do even better than that. That type of economic potential deserves a chance to succeed. And is one reason why many of the largest producer groups trade associations, companies from within agriculture have come together to increase engagement. Many on the committee as senator roberts indicated have taken the opportunity to go to cuba in addition to senator leahy, again, who he and his staff have been real leaders in this effort in developing our relationship with cuba. But senator klobuchar boseman, i know working in a bipartisan way, as well and we appreciate your leadership and your efforts. The commitment to democratic ideas and human rights we share as americans are best realized through engagement. And i believe our bedrock principles accompany every single product that our farmers and ranchers send to cuba. Last week, last weeks actions by the president is a step forward in normalizing a relationship. And will test the commitment of the cubans to this process. But even while were making significant progress in rebuilding our relationship, the policies governing trade between our countries are not yet designed to allow a steady flow of goods and services. So mr. Chairman, i look forward to working with you and others on the compete to find a path for u. S. Financial institutions to be able to safely and securely work with cuban purchasers, including extending the lines of credit to look for a broader range of goods and services and supplies we can export to cuba. These measures are not only good for business but they will help cubas agriculture capacity and make the island a better trading partner in the long unare. And i know that working together, we can write the next chapter in the u. S. cuban relationship. Thank you. Thank you, madame chairwoman. I now have the pleasure of introducing a friend and colleague of mine, senator leahy. The undeclared yet accurate king of the, of the dairy policy. And the dairy policy posse who comes in at 11th hour and 59th minute that helps us write a farm bill for a brief remark, sir. You may manage a bill on the floor in your very snappy attire. Thank you, mr. Chairman. I like being with the chairman who knows how to comb his hair. I appreciate that so much. Just let it go, okay . I cant do as well as you do on the tones on your phone, but i commend you for holding this. All seriousness. This is an important hearing. Heres cuba 90 miles from our shores. We have the ability to help them gain control of their own lives but we can also expand American Farmers. Selling their product. Therell be some winners as part of normalizing trade with cuba. We have to temper our hopes and remember cubas economy is in shambles as people are suffering. But i i would note what senator stabinaw said she wouldnt spend time with Agriculture Community there on our last trip. Ive been going to cuba numerous times in the last 20something odd years. This last trip, you saw a huge difference. Seeing american flags in the stores. American flags on the taxis, a lot of the taxis are mid50s automobiles. And they have flags of different countries. Never seen the american flags. Now we saw them. Were not going to have an immediate commercial windfall for american agriculture, but cuba has used our embargo as a phony excuse for its own failed policies. Now, we have a chance to create more efficient and less burdensome opportunities for cubans to buy u. S. Products. Canada and the European Union are there already. Last summer, they were talking about things we produced that they were bringing in from new zealand. And were 90 miles away. So i think that american agricultures often been the bridge in normalizing with countries. This will allow us to do that. But also, let the cuban people see this. Their own government not the United States is blamed for the poverty and dysfunction and repression of the country. And so mr. Chairman, i say that is all really to applaud you for doing this, i think its we can all learn by this. And i look forward to my next trip down there. Well, thank you, sir. I thank you for your comments. And i know you have to manage a bill on the floor. Thats something were doing differently this year. Were actually managing bills. Good luck in that respect. Its nice to go back the old way. Thank you. Welcome to our first panel of witnesses before the committee this morning. The honorable michael skews as undersecretary for agriculture services. Under the secretary, has previously served as the deputy undersecretary for farm and Foreign Agriculture Services as well as secretary of agriculture for the state of delaware. Welcome, mr. Undersecretary, i look forward to your testimony. Chairman roberts, ranking member, members of the committee. Im pleased to come before you today to discuss agriculture trade with cuba. As you know, in december, president obama announced policy to chart a new course with cuba. The measures also seek to expand opportunities for americas farmers and ranchers to sell goods in cuba. In january, the Treasury Department published regulatory changes, including a revised interpretation of the term cash and advance. And authorization for u. S. Banks to establish correspondent accounts at cuban banks. These changes have been sought by members of the u. S. Agricultural community. 15 years ago congress lifted the decades old ban on products to cuba. But despite this opening, u. S. Government agencies including usda remained prohibited from providing export assistance and credit guarantees for exports to cuba. He cant use a single dollar for trade promotion funding where a trade with cuba. These restrictions applied to usdas very successful Market Development programs like the Market Access program and the foreign Market Development program. The policy changes announced by the president are significant. But legislative hurdles remain. Bills have been introduced to further open trade with cuba including legislation sponsored and cosponsored by members of this very committee. Usda stands by ready to offer assistance to congress. If the embargo is removed, we could be poised to become a major agricultural trading partner with cuba. Cuba depends on imports to feed its 11 million citizens. And according to the world food program, cuba imports about 80 of its food. Which means the potential for our producers here is significant. The United States has potentially huge advantages in exporting to cuba. Chief among them is location. Where less than 100 miles away. Meaning lower shipping costs and transit times, especially compared to our current top competitors, brazil and the members of the eu. And fiscal year 2008 u. S. Agriculture exports to cuba reached 658 million. However, by the end of last fiscal year, they had fallen to 300 million. At the same time, the Global Exports to cuba have doubled over the past decade to approximately 2 billion. Right now, the largest u. S. Agricultural exports to cuba, poultry, soybean and corn. Im confident that u. S. Agriculture exporters can capture the market in cuba. But i dont want to minimalize the obstacles. Cuba is a country with limited foreign exchange. Were also behind our foreign competitors in Market Development. Another impediment is cubas import policy requiring all u. S. Imports to be channeled through one state corporation, alanport. The policy changes toward cuba are one example of opportunities to help our farmers and ranchers build on their record agricultural exports. Agricultural exports reached a record 152. 5 billion and supported nearly 1 million american jobs. The potential for u. S. Agricultural exports around the globe is, in fact, considerable. Its critically important that Congress Quickly consider and pass Bipartisan Trade Promotion Authority legislation introduced last week. Tpa will help ensure that americas farmers, ranchers and Food Processors receive the greatest benefit from trade agreements currently being negotiated. In conclusion, there is potential for expanding agricultural exports to cuba over time. Agriculture is served as a bridge to foster cooperation, understanding, and the exchange of ideas among people. I have no doubt that agriculture will play an Important Role as we expand our relationship with the cuban people. Thank you, mr. Chairman, and members of the committee. We thank you, sir. Mr. Matthew boreman currently serves as the Deputy Assistant secretary of commerce for export administration. And this position, mr. Boreman is responsible for implementing the bureau of industry and security controls. On the export of dual use items for National SecurityForeign Policy nonproliferation and short supply reasons. Welcome, mr. Boreman, and i look forward to your testimony. I thank undersecretary for being on time. Just remind the witnesses that most senators can read all all of their staff can read. Feel free to summarize your statements. Thank you mr. Chairman, thank you, its a pleasure to be here. Of course ill address the role the department of commerce with regard to agricultural trade with cuba. As you know in terms of the cuba embargo the Commerce Department is responsible for regulating the export of items to cuba. Treasury Department Responsible for financial transactions, including travel. As you know on december 17th of 2014, the president announced the most significant changes in cuba policy in more than 50 years. As the president noted these changes are intended to create more opportunities for the american and cuban people by increasing commerce, travel and the free flow of information. To implement these changes, we at the department of commerce the bureau of industry and security amend our regulations on january 16th 2015, to expand the authorization for exports and reexports of certain categories of items to cuba. Principally, we expanded the license exceptions available for consumer communication devices, to facilitate the flow of information among cubans and between cubans and the outside world. We expanded the ability for u. S. Exporters to send gift parcels and consolidated packages to cuba without a license, and then we created a new license exception of support for cuban people. So in our system, a license exception means as long as the exporter complies with the conditions of the license exception set out in the regulations, they dont have to come into commerce submit a license application and wait for the government to say yes or no and give them a license. So exporters always feel that license exceptions facileitate trade in whatever topic they cover. The principle focus of the license exception support for cuban people is getting items into the hands of the private sector in cuba. So under that license exception u. S. Persons are now able to export Building Materials for private sector Building Activity in cuba. Theyre able to export items going to the private Agricultural Sector in cuba the agricultural coops, again, without a license. And generally things that go to private sector entrepreneurs. So the focus of that is to make it much easier for the export of items from the United States to the private sector in cuba, including the private Agricultural Sector. The license exception also authorizes the export of items to the internet infrastructure in cuba to again, facilitate communication among the cuban people and between the cubans and the outside world. Youll notice in all of that ive mentioned, theres just a little bit of focus on agriculture, we did not change our primary regulatory process for agricultural exports to cuba. And the reason we didnt, thats pretty well governed by the trade sanctions reform act. So under that trade sanctions reform act, we have an expedited process in place where a u. S. Company that wants to make it agricultural export to cuba comes into commerce we refer it to the state department, we get a position from the state department and give them an answer typically in 12 days. So its an expedited process but it still is a licensing process. And, again, thats largely governed by the requirements of the trade sanctions and reform act. Under that process, exporters can get an online application. As i mentioned, we consult with the state department. We also screen the end users of the license of the agricultural exports to make sure theyre not involved in terrorist or proliferation activities. And then the last requirement is that those exports that are licensed must be made within one year of the license, within the year of the license. Last year, we processed 56 notifications under this expedited process, valued at about 2. 4 billion, thats what we authorized. As you heard, the actual dollar value of exports was far less than that and roughly 290 million. So you can see u. S. Exporters see a tremendous market in kuby the authorizatione cuba even though they only export a small fraction of that. As you also heard those exports go through the cuban export agency. And the so theres really no changes in our regulations specifically on agricultural exports to cuba. Because, again thats limited by the trade sanctions reform act. Thank you, mr. Chairman. Thank you for your statement. Our next witness johnny smith, acting Director Office of foreign assets control the department of treasury. Mr. Smith serves as the acting director of foreign assets. Control or ofac that is mr. Smiths acronym for which he works. Administering economic trade sanctions to advance u. S. National security and Foreign Policy goals. Prior to joining ofac, mr. Smith served as an expert to the united nations, al qaeda and taliban sanctions committee. As a Trial Attorney at the u. S. Department of justice. Welcome to your new job. Thank you for joining us, mr. Smith. I look forward to hearing from you, sir. Please proceed. Good morning, chairman roberts, ranking member, and distinguished members of the committee. Thank you for the opportunity to appear before you today to discuss our recent amendments to the cuban assets control regulations. And the implications for agricultural trade with cuba. On december 17, the president announced a number of significant significant, treasurys office of assets control amended the control regulations. On january 16th. These amendments ease sanctions related to cuba and a number of key areas. Including trade financial services, travel, and remittences. These changes are intended to enhance commerce and communications between the United States and cuba. And to help the cuban people to freely determine their own future. Ofac expects its recent rule changes will benefit american exporters in at least four key respects. Expanded the financing provisions of the regulations to allow americas agricultural exporters to be more competitive in selling their wares to cuba. Second, ofac broadened the ability of institutions to provide services and affecuate payments. Third, trade delegations and exporters satisfying the conditions of the regulations to travel to cuba without needing to come into ofac first to apply for and receive a license and expanded the ability of airlines and other u. S. Travel Services Companies to offer more reliable and potentially cheaper travel, with far less paperwork to cuba. Finally, ofac permitted certain humanitarian projects in cuba, including those related to agricultural and Rural Development that promote independent activity. With respect to the first change, ofac modified the interpretation of the term cash in advance, which describes a financing requirement for agricultural trade between the United States and cuba that is imposed by statute. Previously, ofac determined the statutory term to mean that the u. S. Exporters had to receive payment from the cuban importer prior to the goods leaving american shores. An interpretation that u. S. Exporters said made their products less competitive than those from other countries. Ofac has now revised the interpretation of the term to mean that payment of the from the cuban purchaser is required now prior to transfer of title two and control of goods. This change should provide for a more efficient, less expensive means for cuban importers to purchase american produced agricultural, medical, and other authorized products. Exporters continue to face barriers including that all u. S. U. S. Agricultural goods. U. S. Exporters continue to be prevented by statute from offering financing inducements such as loans for authorized agricultural exports. A limitation that may prevent them from being as attractive as third country competitors. With respect to the second key regulatory change to improve the speed, efficiency and oversight of authorized payments between the United States and cuba, ofac has authorized u. S. Banks to establish correspondent accounts at Financial Institutions in cuba. This change is intended to ease the flow of authorized payments and eliminate the need for third country payment structures, which should benefit u. S. Exporters to cuba. With respect to the third key regulatory change, its important to note that ofacs cubans sanctions program is the only such program that restricts travel to a country. The recent amendments eased restrictions by licensing certain additional travel within the 12 existing categories of travel and ofacs regulations. Without the need for a specific license from ofac. This means that exporters and other travelers who satisfy the criteria in our regulations may travel to cuba and conduct travelrelated transactions there without requesting or receiving individual authorization from ofac. With respect to the fourth key regulatory change and to help strengthen cuban civil society, ofac eased certain restrictions on remittences to cuba and authorized remittences to certain individuals in independent, nongovernmental organizations in cuba for humanitarian projects including those related to agricultural and Rural Development. Increased remittences with increased Financial Resources to purchase american produced agricultural goods. Thank you, and i look forward to answering any questions. To the entire panel thank you again for taking the time to share your professional experiences and perspectives about the opportunities and the challenges we face and opening up trade with cuba for the entire panel. What was the administrations process in preparing for this major policy shift in the relationship between the United States and cuba. What was the involvement with the stake holders in determines what changes could be made . And how have you worked with industry during the regulatory amendment process . Big question, hopefully a short answer, i apologize for that. Undersecretary . Mr. Chairman, weve been working with the cooperators now for quite some time. Not just at the national level, but also at the state level. It has been evident now for a number of years that our stake holders have wanted cuba opened up for the markets that for the products that our farmers and ranchers produced in this country, which are the best to be found anywhere in the world. And weve been at a very big disadvantage because of the restrictions that have been in place. But, i mean, our stake holders have made it known very clear that this is a country that they want to do business in. And when you look at ill give an example not because betsy wards sitting behind me but rice, half of the rice consumed in that country is imported and its coming from vietnam, not coming from the United States. And it should be. Our stake holders, again this is something theyve been wanting for a great deal of time. And we look forward to the opportunity to eventually get products in there on a level of Playing Field. Mr. Boreman . Thank you, mr. Chairman. As far as the process in the executive branch to identify ways that we could facilitate trade to the private sector in cuba within the bounds of the existing embargo. And thats how we came to go from license individual license requirements to license exceptions. And since the announcement of our regulations weve probably done several dozen outreach events, both from washington and across the country where we explain the changes and answer questions. We estimate weve probably individually talked to, or part of these events well over 3,000 people. And so we continue to solicit feedback from those who want to understand what the regulations are. I appreciate that. Mr. Smith . The comments from my colleagues here. We work very closely within the executive branch to utilize some of the comments that we receive from industry and members of congress over the years about how we could Better Change our regulations. And we have worked with commerce and other agencies since that time to actively promote our regulatory changes so people know what the new rules are. This is for undersecretary, ive traveled to cuba as many others have done. Some time back max baucus under max baucus the ambassador to china and i went down, we didnt tell anybody, we just went down. And for 18 hours discovered the world according to fidel castro. And then also with an ag group trying to establish trade. I want to make sure we go about this in the right way after little history of little to no meaningful engagement with cuba. Many of these folks came down met with people and then been informed, yes, you can trade and only find out you can trade with hospitals, schools and what was the other one . Ill think of it in a minute. Three very limited situations. Then all of a sudden you come up against the stateowned enterprise and thats where it ended. So all of the talk and everything happened and nothing really happened. So do you envision the reestablishment of diplomatic relations to be helpful to agriculture trade . Are there any concerns you have regarding this renewed relationship . The process to establish these ties and the interaction with exports to and Agricultural Development within cuba, sir . I think normalizing relations and opening up trade mr. Chairman will have a tremendous impact on agriculture. The United States is the only country to my knowledge that has to go through the stateowned corporation to get its products in there. So hopefully with the normalization of relations and opening of trade, that restriction would, in fact, be lifted. Number two theres been a study done by texas a m, as well as the American Farm bureau. Which says once the relations are normalized and trade is opened up therell be a significant increase in the purchase of products by cuba. And what the studies showed was u. S. Sales of Agricultural Supplies to cuba could exceed 1 billion. So i think thats a tremendous increase over the 300 million that were selling today. This is for all of the panel and i apologize to my colleagues for going just a tad over time. All of you made reference to allenport. The state run monopoly through all u. S. Imports are channeled. We hit a brick wall. What transactions if any have been made by the cuban government to provide the same ability that our competitors receive with other cuban organizations organizations. Mr. Smith, well try you first. Thats a question id largely defer to the state department. Something wed expect as a normalization of relations that would be discussed as part of the talks and that would be something we would expect to open up as part of that process. I dont know my commitments made but id have to defer to the state department. Mr. Smith would have to note we have an ongoing discussion going on with cuban officials and i expect this will be one of the topics that will come up in the sectorspecific discussions. Undersecretary . No, i defer to the answer to my colleagues. Senator . Well, thank you very much mr. Chairman. When i was last in cuba, i had the same conversations with the secretary of agriculture about alanport and the process for them. They were indicating about 80 of the farmland is owned by the government, about 20 by the private sector. And i said well, can we sell to the 20 . Can we sell Farm Equipment to the 20 or agricultural . No. Its got to all at this point go through the same process. Theres a lot of change that needs to occur. I do want to stress that we have tremendous opportunities when senator leahy was talking about products from new zealand. Theyre getting milk from new zealand in powdered milk form. I talked to the Michigan Milk Producers who would be happy to oblige and others would, as well. Were a whole lot closer. And potatoes and beans and a whole range of things that are available. And apples seems to be a delicacy at christmas time. And i said we can give you christmas every day. So we have a lot of opportunities. Let me ask undersecretary theres an expression that says, the first step to achieving success is showing up. And i think thats really true on trade, showing up and also our ability to market. And you mentioned the Market Access program and the other tools at department of agricultural. And i wondered if you might speak more to what while theyre not currently authorized in cuba, how would you envision the usdas programs Going Forward . And creating opportunities and tools for american agriculture . Well again, if we were allowed to use our Marketing Programs such as our Market Access program, its an area where we work with our cooperators to go in to do the trade missions to look at ways to develop markets and what the actual needs are through the market assistance program. Help our producers, help the different commodity groups make end roads into establishing markets in that country the foreign Market Development program is where we actually work with the cooperators to do studies on what the demands are for different products. So if we were allowed to use these products and as well as do it, a trade mission to cuba, i think it would go a long way in getting back much of the market that we have lost in the past. The lack of the ability to use these programs as well as our inability to extend credit is the main issue why weve lost our market share since 2008. The economist at the university of florida did a study and what their studies showed was that the biggest loss or the reason for the most loss in our market share there was our inability to extend credit. As our competitors, eu, brazil and others are doing. So the Playing Field right now is not level, senator. A level Playing Field theyre going to buy the best products from the United States. We heard that over and over again, as well. We heard over and over again, same thing with the foreign minister, Foreign Relations talking about the lack of credit. When we look at how we get through that and youve all spoken to it. I wonder if anyone wants to comment further on the specifics of what we need to do to make sure that process is open. The president has taken the first step taking out the intermediary, being allowed to make payment, not before the shipment leaves but at a later point when it is in process and arrives. But we all know that the issue of credit, whether its using usda, Credit Opportunities, other Credit Opportunities is a serious issue for us. What do we need to do . To be able to make that happen . Is this all about lifting the embargo completely . Or are there other things that we should be doing . I could start out an answer is at least one provision that is at issue is the provision of the statute that prohibits any financing of goods agricultural goods and others to go to cuba other than third country financing or payment by cash in advance. So were not allowed to offer any kind of payment deals payment terms, other than going through a third country to receive that financing or to pay the cuban importer in advance of the goods being turned over. And i think thats what my colleague has indicated is necessary to be able to extend credit, we would need to be able to remove that statutory prohibition. I would also add that clarity on the provision that appears to require an individual license for any ag export to cuba to change that or make it clear that we could allow it by license exception would facilitate ag exports to cuba. Thats what weve heard from exporters. Right. And undersecretary, those two things specifically . Or is there anything else from the usda standpoint that we need to be changing to create opportunities for you to fully provide assistance . Well, again, i think those are the biggest changes that we need to be have made so that we could use, again our marketing money as well as the commodity groups where their check all funds. Theyre not allowed to use them for promotions in cuba either. So those changes would allow us to do marketing in cuba as well as give us the ability to extend credit, again, to put us on a level Playing Field with our competitors. Thank you. Mr. Chairman, as you know theres a hearing going on in finance. Im going to step over there for a moment and come back. And so be on your best behavior while im gone. I will try to do that. And well urge you to do the same on behalf of a good trade bill. Thank you. Senator . Thank you, mr. Chairman. Thank you, all for holding this important hearing. I believe that the way that you change the world is through personal relationships. And if were serious about really bringing real change to cuba, we need to expose the cuban people to america. Were not only trading our products, but were trading our democratic ideals. Cuba represents a remarkable opportunity for American Farmers. But its also an opportunity for cubans to gain access to safe, affordable and highquality Agricultural Products from the United States. Im encouraged by recent steps to reform the u. S. cuba relationship boosting our commercial ties would have significant benefits for both of our economies. In my state its estimated that easing finance and travel restrictions with cuba will result in an increase in over 35 million in agricultural exports annually. Lets talk, again, a little bit about what percentage of the food that cuba consumes is actually grown in cuba . According to the World Program or world food program, 80 of the food is imported. What and what countries you mentioned vietnam, i believe. Vietnam is providing half the rice. If you look at corn corns coming from brazil and argentina. If you look at wheat, wheats coming from the European Union kp canada. Our sales from the United States to cuba, currently, 50 of our sales are poultry products 25 of our sales are made up of soybean meal and soybeans. That makes up 3 4 of the sales from the United States. What about the quality of like a vietnam rice compared to an american rice . Well senator im real partial to u. S. Products. You answered correctly. I said earlier you know, i think our farmers and ranchers produced the very best products to be found anywhere in the world. And im going to stick to that. Said very well. Exactly. And, again i do think that is important in the sense that, you know, its not only an opportunity, but it is an opportunity for the cuban people. Mr. Spieth youve talked about easing financing and things like that. Out of the things were doing whats the most important thing we need to be doing . Well, i think when you started out you talked about travel between the American People and cubans. I think that is right that as the president said, and i think youve said is that the best ambassadors for america can be ordinary americans going to travel and embodying our ideals. I think we have generally licensed our authorized travel within the 12 categories that we have. Congress has prohibited any further opening for tourist travel under the statute. So thats a statutory prohibition and we also have a statutory prohibition with respect to not only private assistance to cuba for exports agricultural exports but also u. S. Government exports. Very good. Do you agree with that . I certainly do. And one other thing. Theres also a prohibition on u. S. Government export promotion. That limits the Commerce Departments ability to carry out the kind of trade promotion Market Analysis work that it does in virtually every other country of the world. And, again, you guys can jump in. Even with the changes we made is it fair to say that the majority of the restrictions regarding trade are still in place . It is correct that most trade, most imports, most exports, most other transactions remain prohibited. So weve got a good step in the right direction. Weve got a long way to go. You know, weve talked about financing, are you aware of any other countries that go through the financing scheme that americans have to go through . You mean to get products . No, im not aware of any other country that has those type of restrictions and, senator, we do trade in approximately 200 countries around the world. Good. So, america is unique in that regard. So, very good. In dealing with the cubans how does cuba differ from other major export markets in terms of how normal commercial operations work . As i pointed out earlier, were restricted to dealing with one stateearned cooperation access to export of u. S. Products. So thats unique and it does present its own problems. My understanding is for virtually all imports regardless of the product category into cuba they have to go through some cuban government import agency. Correct. The other difference is the financing terms. As weve talked about and in most other contexts, the exporter could get financing of some kind either from the u. S. Or from the importer that can occur here. Thank you, mr. Chairman. Thank you all very much for being here. Senator donnelly. Thank you, mr. Chairman. Id like to thank all the witnesses. Im a big supporter of increasing american exports to World Markets and am intrigued by the possibility of opening the cuban market, not only for hoosiers but for all of our country to export the things we build and produce. But the concern is i want to make sure that the cuban people actually benefit from it. And what can we do from a policy perspective to better ensure that the benefits of trade reach the cuban people . As opposed to all the products going into one agency and then they be divvied out . What do you see as keys to making sure the cuban people actually benefit from this . Senator, i think that by normalizing relations, by breaking down the restrictions that we currently have for trade, the cuban people are going to benefit from this right away. If you look at just the cost in transportation, again, rice coming from vietnam. You look at the cost of that. Corn coming from argentina. Wheat coming from the European Union. We have a tremendous advantage in logistics and being able to supply them top quality products at what i would believe would be a more reasonable price than what theyre currently paying for products shipping from those countries all over the world. So i think that there would be an immediate benefit. Could there be additional benefits if in fact we are treated like other countries and dont have to go through one stateowned corporation for our products, which i believe and hope would happen, then i think there would be additional benefits. One of my concerns is just what you referred to which is having to go through allen port, the state agency there. We talk about the higher quality. I have been to my friend senator bozemans home state, the extraordinary rice they produce there. The pork products produced in my home state and all of us. We talk about the benefits of lower price, easier transportation, all of those things. And the question is how do we make sure that that lower price actually gets passed on so theyre not paying the cuban people are not paying the same and that this group who will set it in effect, if you know what i mean. Yeah. I understand the concerns. But again, hopefully once relations are normalized and trade is liberalized, again, i would hope that we would be treated like the other countries that are currently trading with cuba so they dont have to go through one stateowned corporation for those products. This would be for any of you. When canadian products are sent to cuba, how are they entered into the country . Who are they distributed through . Do you know . I dont know. Do they have to go through allen port . To the best of my knowledge, no. It is the United States has to go through allen port. So thats one of the points id like to make, is as you talk to state, as you move forward with this, one of my concerns i know a lot of my colleagues concerns is that we be treated the same as everybody else. Thats the way the cuban people benefit, is that our products are able to go directly to the cuban people, that were treated the same. And i think that much of what we look at as we move forward will be dependent on that being incorporated into any agreement that comes through. Thank you, mr. Chairman. We thank you, senator. Senator hoeven. Thank you, mr. Chairman. I actually want to pick up on a point that senator donnellys making, and that is, i think there has to be a carrot and a stick to what were doing here. We want to expand ag trade. Thats good for our farmers, hopefully thats good for the cuban people. But at the same time we want to put more pressure on the cuban government to change its policies on human rights. So what can we do as we work here on ag trade to make sure that were doing that. How do we get these products down to the Small Businesses and the entrepreneurs that are actually trying to make something happen in terms of Free Enterprise in cuba, and how do we at the same time create some pressure on the on the cuban government on the castro regime to change and to particularly change in regard to human rights. Id like to hear from each one of you on that. Senators, you well know coming from the big ag states that youre from, agriculture throughout history has been a way to break down some of the barriers that we have faced. If we can open up trade with cuba and if because theyre only supplying 20 of what they currently consume but the demand is certainly there. There is a way to help build the Agricultural Sector in that country which would create jobs, which would create income, which would create more demand. And as that happens, i think youre going to see an awareness. Just opening up the country and normalizing relations, there will be an awareness of the people that i dont believe that currently exist. So i think this is a really good first step in to helping the cuban people. Our policies over the last 50 years have not been one that has provided that openness, that transparency and the education that about the United States that i think normalizing relations and opening up trade will. Mr. Borman, you and i talked specifically before the meeting about how do we make sure these restaurants and other Small Businesses that people in cuba are trying to get going, how do we support that effort as we do this . Several ways. One is of course the folks who make the exports from the United States know who theyre intended for and they typically know those individuals because theyre often relatives running the bed and breakfast or the auto repair shop. If the items dont get to them, theyll hear about that. We have a good working relationship with a lot of our exporters on the enforcement side to make sure our items going where theyre supposed to go. Thats right on the mark. Now youre talking about helping people with entrepreneurship, business enterprise, hopefully things to incentivize these businesses to get going. Do you have way to enforce it to make sure theyre getting to the Small Businesses. And the other thing is payment. How are you sure people are paid for products they ship into that market. Right. So far we have not heard any complaints of u. S. Exporters not getting paid. Im sure we would thats because the policy was cash in advance. Youre changing that. But remember it is still cash on delivery. Cash when you change title. Delivery of the products are delivered. Which limits your ability to get it. Doesnt it . If that happens, well find about that quickly. You can go back to getting it to those Small Businesses. How do you enforce that . Again, first part is we make sure the folks want to make the exports understand what the Small Businesses are and what the limits are. Then, two, remember the cuban people are very aware of these changes. If over time they dont see any significant changes thats going to create more pressure on the government internally. But thats something we have seen already exports made say to the private sector agricultural coops in cuba. Weve seen that in the trade data. I think we can continue to focus on the cuban people as we make our changes. I think the recent round of changes that we made were very much focused on the ability of the cuban people and to strengthen the cuban people. We increase their ability to communications, for internet, for other things so that they can better understand the changes that are being made. We also increased the limits that can be given on remittances, the financial amounts that u. S. Citizens can give to cubans. We increased those amounts for support for the cuban people, humanitarian projects, and other things that would help Agricultural Development as well, including microfinancing activities so those are very much focused on the individual cubans, the small Cuban Development businesses that might want to grow. Thats was the focus of our change. And i think it is very important that you are focused on that area, including putting information in to that market every way you can. Because as we provide people with more information, i think that also helps with their efforts to try to force change from the inside as we try to force change from the outside. Final question for mr. Where what food products, Farm Products do you particularly see as opportunity, areas you said threefourths of our exports now are poultry and soybeans. What else do you see as good opportunities . I think weve got a great opportunity to export to increase our exports of corn. Theres no reason why European Union and canada have the wheat market. That market should also be ours. I think theres a great opportunity for us to have the rice business in cuba. And as i think i pointed out earlier in this meeting, there is a great opportunity for dairy and dairy products. Thank you. I thank the senator for his most pertinent comments. Thank the panel for responding. Thank you, mr. Chairman. Thank you for holding this meeting. Weve asked you probably three, four times now about al import. Yall said you hope that we will see this restriction lifted. I think i can remind you hopes not a strategy and were hopeful that you all hopeful that you all will take the concern that is being expressed today about al import back to your smaller groups as you discuss opportunities Going Forward. Weve long been concerned about the extension of credit for ag transactions and trade. Hopefully i think tomorrow were going to try and take a move in the right direction. I think you guys have highlighted the number one thing that we think we can deal with, which is 908. I personally support lifting the embargo entirely. However, that may be a bridge too far for this congress. So weve got to take these baby steps. With that, i have a couple specific questions for you, under secretary. To date, the federal checkoff dollars have not been used with promotion for trade with cuba. Loose reasoning, i think almost an assumption, is that this is due to the language of tsra which precludes the use of any United States assistance including United States export assistance. Of course the checkoff dollars are not taxpayer dollars, theyre producer dollars. The federal Checkoff Program is set so that farmers elect a board who appears to decide how those checkoff dollars are used. It is not tax money. And as a result, does usda recognize the difference between your government assistance programs like map and fd fmd and producer raised and controlled checkoff funds and can producers utilize their own checkoff dollars for promotion for activities in cuba, and if not, why not. My understanding, senator, is that the federal checkoff funds cannot be used for trade promotion in cuba. Now if its im asking you why. Because my understanding is its because of the law current law thats in place. Im suggesting that maybe the current law is being broadly interpreted and you might want to go back and take a look to see if we can make that change without legislative changes. Okay. Well do that. But its also my understanding that if there is state checkoff money, that can be treated differently. But the federal dollars, the federal checkoff money cannot be used. But again, we will go back and take a look at just what the law says and if it can be used. Yeah. I think just to reexamine that policy. Mr. Smith, im out of time but i want to go back to the cash in advance original definition and other changes you are making to facilitate a more efficient and affordable exports to cuba. At this time do you feel like the administration has gone as far as legally possible . And in terms of the definition to open up opportunities. And were there other things on the table as you discussed the changes that you did make that maybe you said, well, maybe we cant do that. Are there other kinds of policy things that were abandoned that maybe we should reexamine . In terms of the restrictions on financing, the definition was the definition that had been in Appropriations Bills from congress that had been as far reaching as i had heard in terms of transfer of title and control. Its hard to imagine you can interpret cash in advance far beyond transfer of title because it is largely the last step before you actually turn over the goods. So there has been no other definition that i have heard that could meaningfully interpret that statutory term. So you mean cash in advance means cash in advance. Thats what i mean. Finally, i know that you dont have any boots on the ground in cuba, but do you have you do have folks in d. C. Who follow exports and our competitors closely. We believe we grow the highest quality products with the nearest market. Cuba obviously is a huge opportunity for my state and the states that are represented in the ag committee. Given that export assistance funding is prohibited by tsra, are you still allowed to place someone within the Havana Embassy that could make those contacts and begin to do that groundwork without crossing the boundary . And are you intending to do that at usda . Correct me if im wrong, i dont believe we have an embassy just yet. Well, were hopeful. Okay. So am i. We can put individuals in there on a shorttime basis for whatever assistance may need to be needed to look at different projects or to help them with different regulations that we may need. But thats only shortterm. Longterm, i would hope that when the it day comes that we have an embassy there, that we would work with the state department and we would be able to put staff in that embassy to help us facilitate trade and to move American Products into cuba. How many staff do you have currently in cuba . To best of my knowledge, we dont have any at usda. And do you believe that youre prohibited from having staff in cuba right now . You know, i dont know, to be quite honest with you. Again, to have fulltime staff in cuba i dont believe that we would have the need right now to have any fulltime staff until trade is actually opened. I think you get my intention, which is, we think that this is going to happen probably sooner rather than later. So we want to hit the ground running and we would appreciate it if you guys would take a look at what kind of opportunities you could avail yourself of today that would in fact, once we get things lined up, can in fact facilitate further trade. Senator, i believe that when that day comes well be able to act very quickly. Senator klobuchar. Thank you very much. Mr. Chairman thank you for holding this hearing. It is great to see you, under secretary. We love you in minnesota because you were willing to come out to a forum i held on cuba in february. That means a lot to us in minnesota and north dakota. As you know, we discussed at that forum you did a great job by the way, for the potential for the u. S. To export products to a country thats just 90 miles off our shores, 11 million people. When i went there a few months ago with senator warner and mccaskill i was able to see the new port thats being built which is a very big port. And its going to replace the port of havana which will be used for tourism. When i saw that port, i thought if theyre going to bring in goods and sell things here in cuba, we want them to be american goods. As you know, im carrying the bill to lift the embargo and i appreciate the support of senator enzi and flake and stabenow, durbin, leahy and paul. There are other senators. Were adding to our numbers. We know it is going to take a while to get done but that is truly the way, we think you would agree, to have some trade with cuba and actually sell our