VANESSA ARRINGTON
Associated Press

HAVANA - New restrictions on trade with Cuba imposed by the U.S. government will mostly punish small and medium-sized U.S. businesses exporting food to the island, the chairman of Cuba's food import agency said Thursday.

The United State's long-standing trade embargo against the communist-run island has been repeatedly tightened under the administration of U.S. President George W. Bush.

A recent move to reinterpret how Cuba pays for American farm goods allowed under an exception to the embargo says the Caribbean nation must make full payment before the cargo leaves U.S. ports.

"These new measures go directly against American business people, and especially punish small and medium-sized businesses," Pedro Alvarez, chairman of the food import company Alimport, said while accompanying Louisiana Gov. Kathleen Blanco on her final day of a visit to boost trade with the island.

Alvarez said before the goods leave U.S. ports, Cuba will now have to now letters of credit guaranteeing payment and send the cash once the goods are on their way.

"We have no other alternative left to us," he said.

But because bank transactions for the letters of credit are complicated and expensive, small companies will suffer because it will be too hard to get them for small orders, Alvarez said.

"This stops small contracts," he explained. "A letter of credit for a boat with $5 million (in goods) is not the same as a letter of credit for a container with $20,000, or $25,000."

He predicted an uproar among the U.S. business community.

"I am certain that each day there will be more business people who are against this measure," he said. "This is going to create a very strong reaction ... in favor of eliminating the restrictions."

A 2000 law created an exception to the U.S. trade sanctions, allowing American farm goods to be sold directly to the island on a cash-only basis.

Cuba has contracted to buy more than $1 billion in American farm goods - including shipping and hefty bank fees to send payments through third nations - since first taking advantage of the law in 2001.

Despite the difficulties, Alvarez expressed optimism that business will continue with the United States.

"Cuba will fulfill its promises, not only for this year, but also in future years," he said.