Sistema Económico Latinoamericano y del Caribe
Latin American and Caribbean
Economic System
Sistema Econômico Latino-Americano e do Caribe
Système Economique
Latinoaméricain et Caribéen
Follow-up report on the application of the Helms Burton Law during the year 2006
XXXII Regular Meeting of the Latin American Council Caracas, Venezuela 28 to 30 March 2007 SP/CL/XXXII.O/Di Nº 4 - 07
Copyright © SELA, March 2007. All rights reserved. Printed in the Permanent Secretariat of SELA, Caracas, Venezuela.
The Press and Publications Department of the Permanent Secretariat of SELA must authorise reproduction of this document, whether totally or partially, through [email protected]. The Member States and their government institutions may reproduce this document without prior authorisation, provided that the source is mentioned and the Secretariat is aware of said reproduction.
SP/CL/XXXII.O/Di Nº 4-07 Follow-up report on the application of the Helms Burton Law during the year 2006
CONTENTS
FOREWORD
I. BACKGROUND 3
II. ENFORCEMENT OF THE U.S. ECONOMIC SANCTIONS AGAINST CUBA AND OF THE HELMS BURTON ACT 4
III. EASING OR TIGHTENING OF SANCTIONS? 5
IV. IMPACT OF THE HELMS-BURTON ACT AND THE ECONOMIC SANCTIONS AGAINST CUBA 9
V. THE EXTRATERRITORIALITY OF THE U.S. ECONOMIC SANCTIONS AGAINST CUBA 13
ANNEX I: LEGISLATIVE INITIATIVES ON THE HELMS-BURTON ACT AND THE ECONOMIC SANCTIONS AGAINST CUBA 17
ANNEX II: STATEMENTS AT INTERNATIONAL MEETINGS 19
ANNEX III: UNITED NATIONS GENERAL ASSEMBLY RESOLUTION 21
SP/CL/XXXII.O/Di Nº 4-07 Follow-up report on the application of the Helms Burton Law during the year 2006
FOREWORD
This report of the Permanent Secretariat of SELA summarizes the most important aspects concerning the enforcement of U.S. economic sanctions and the Helms-Burton Act against Cuba from mid-2005 through 2006.
The mandate given by its Member States to the Permanent Secretariat to submit to the Latin American Council an annual report on this problem has its roots in its negative implications for one Member State of SELA, but also in the fact that – as several organizations have recognised – it imposes certain rules and standards on the international community on how to conduct economic relations with Cuba
This document is an update of the preceding report with the same title, which was submitted to the XXXI Regular Meeting of the Latin American Council (November 2005). The descriptive approach and the structure of the reports are similar.
After discussing the enforcement of the sanctions and whether the U.S. restrictive measures have eased or tightened, the document makes a summary of the impact of the Helms-Burton Act and other economic sanctions on Cuba – in the opinion of Cuban authorities. Finally, the report presents some evidences of the extraterritorial implications of the U.S. legislation on Cuba.
Follow-up report on the application SP/CL/XXXII.O/Di Nº 4-07 of the Helms Burton Law during the year 2006 3
I. BACKGROUND
The economic sanctions imposed by the government of the United States against Cuba for more than four decades now have been criticized by the international community, through practically unanimous resolutions of UN General Assembly in 14 consecutive occasions. In 2006, 183 nations urged the U.S. to put an end to the sanctions and once again rejected their extraterritorial application, in defence of the principles and norms of the International Law.
Among other limitations, as a result of the economic blockade, Cuba cannot export any goods to the U.S. or to import any products from that country at all; 1 neither can it trade goods with U.S. companies’ affiliates operating in third countries. It cannot receive American tourists or use the U.S. dollar in its foreign transactions. It does not have access to credits from financial, multilateral, regional or U.S. institutions and is not allowed to operate with them. In addition, its ships and airplanes cannot enter U.S. territory.
Moreover, the U.S. government has increasingly applied legal provisions against Cuba that are considered to have an extraterritorial effect. They involve restrictions to international trade which have intensified in the last few years, affecting commercial operations that otherwise could have been conducted with Cuba.
Nevertheless, it should be noted that the U.S. government maintains the suspension of the enforcement of Title III of the Helms-Burton Act – which has been widely criticized by many U.S. allies as it authorizes legal actions against those companies dealing with properties confiscated in Cuba. Former President William J. Clinton, who suspended enforcement throughout his second term, explained that his decision to continue the suspension was based on his conviction that “this action will enhance efforts by the United States to strengthen international cooperation aimed at promoting a peaceful democratic change in Cuba”.2
Title III has been repeatedly suspended for six-month periods by President George W. Bush since he took office. In his declarations announcing his decision to continue with the suspension, the President has acknowledged that real differences remain between the United States and our allies concerning the best methods for pursuing change in Cuba. However, he has shown himself to be a decided defender of economic sanctions against the island. However, one of the recommendations made by the “Commission for Assistance to a Free Cuba” in his second report was to start to apply Title III of the Helms- Burton Act to those countries allegedly supporting Cuba.
Regardless of these decisions about Title III, the remaining titles of the Act (I, II and IV) are in force, and although Title III is considered to contain the core provision of the Act, several international firms and corporations claim to have been affected by the Act or to have been pressured by the U.S. authorities following the enactment of this legislation.
1 Since late 2001, and under strict conditions, the U.S. government has allowed the sale of foodstuff to Cuba, as mentioned later in this report.
2 See Public Diplomacy Query (PDQ), Clinton extends suspensión of Títle III of the Helms-Burton Act, 17 January 2001 (Electronic version: http://usinfo.state.gov).
Permanent Secretariat Globalization 4
II. ENFORCEMENT OF THE U.S. ECONOMIC SANCTIONS AGAINST CUBA AND OF THE HELMS BURTON ACT
The report submitted by the government of Cuba to the Secretary General of the United Nations in August 2006 once again emphasizes that the blockade is fully in force, and that U.S. authorities have increased pressures on the financial system, as well as their follow-up of any economic of commercial operation conducted by Cuban in various markets; while hardening the prohibitions and restrictions to travels, money remittances and academic exchanges in various areas, as well as their punitive actions against investments and tourism in Cuba.
Since the creation of the “Commission for Assistance to a Free Cuba”, whose first report was approved by President George W. Bush on 6 May 2004, the U.S. policy has further tightened the application of the economic sanctions against Cuba.
After the approval by President Bush of the report drafted by the “Commission for Assistance to a Free Cuba”, which was submitted to the White House on 6 May 2004, a series of new measures to tighten the sanctions and encourage the “transition to democracy” in Cuba entered into force on 30 June 2004. The report recommended “firm enforcement” of the sanctions contained in Title IV of the Helms-Burton Act – which prohibits the granting of U.S. visas to foreign investors in Cuba – and urged U.S. authorities to conduct a rigorous study to evaluate if the enforcement of Title III is contrary to U.S. interests, or if its enforcement could speed up the fall of the Cuban regime.
Thus, after the approval by President Bush of the report drafted in May 2004 by the “Commission for Assistance to a Free Cuba”, a series of new measures to tighten the sanctions and encourage the “transition to democracy” in Cuba entered into force on 30 June 2004. The report recommended “firm enforcement” of the sanctions contained in Title IV of the Helms-Burton Act – which prohibits the granting of U.S. visas to foreign investors in Cuba – and urged U.S. authorities to conduct a rigorous study to evaluate if the enforcement of Title III is contrary to U.S. interests, or if its enforcement could speed up the fall of the Cuban regime.
On 10 July 2006, the U.S. government submitted the second version of the plan to promote the change in Cuba. The plan identifies new measures which entail more economic sanctions, stronger follow-up to activities of Cuban companies, greater retaliations against those persons conducting business with Cuba, and an increase in the amounts of financial and material support to civil groups, which according to the government of Cuba, are carrying out activities to subvert the constitutional order in that country.
The Commission’s new report recommended: to establish an inter-agency Cuban Nickel Targeting Task Force to reinvigorate the nickel import control regime; to reinforce the Cuban Assets Targeting Group; to prohibit medical equipment sales that would be destined to be used in large-scale medical programs that cater foreign patients, medical training or aid to other countries; to impose sanctions to companies collaborating in oil exploration and production; and to start applying the provisions of Title III of the Helms- Burton Act to those countries supporting Cuba.
According to conservative estimates of Cuban authorities, the direct cumulative economic damage to Cuba caused by the blockade surpasses US$ 86,108 million – a yearly average of US$ 1,832 million.
Follow-up report on the application SP/CL/XXXII.O/Di Nº 4-07 of the Helms Burton Law during the year 2006 5
The official report of the Cuban government to the UN Secretary General indicates that, in 2005, at least 38 countries were affected by the extra-territorial provisions of the blockade against Cuba.
The fines applied by the Office of Foreign Assets Control (OFAC) to American citizens for travelling to Cuba and buying Cuban articles were increased by 54%. In 2005 the number of Cubans residing in the U.S. who travelled to Cuba directly from that country decreased by 54% as compared to 2003, before additional restrictions started to be applied on 30 June 2004.
In the first half of 2006, the U.S. State Department rejected 73% of the visas requested by Cuban officials to travel to the U.S. for various work reasons.
In addition, Cuban authorities underscore that only during the fiscal year 2006, the U.S. government allocated more than US$ 37 million for illegal radio and television broadcasts to Cuba – up about US$ 10 million compared with 2004. This amount could be further increased in accordance with the actions proposed in the second version of the Plan of the Commission for Assistance to a Free Cuba.
III. EASING OR TIGHTENING OF SANCTIONS?
In the follow-up reports on the enforcement of the Helms-Burton Act in the last few years, the Permanent Secretariat has made reference to the measures announced by President Clinton on 5 January 1999 on trade policy toward Cuba, which set up facilities for U.S. individuals and companies to expand their economic and commercial ties. The reports also mentioned signs of renewed interest during 2000 in easing U.S. commercial policy toward Cuba through companies and businesspersons, state authorities and agricultural and livestock producers, consumer groups and the tourism sector. However, for a group of representatives from U.S. business circles, these facilities were insufficient because the bans remained in place on U.S. firms taking part in trade and business fairs, appointing agents or setting up agencies in Cuba, and on vessels entering U.S. ports after stopping off in Cuban ports or transporting Cuban goods, along with the ban on funding or insuring exports to Cuba.3
In May 2000, the Appropriations Committees of the House of Representatives and the Senate approved provisions to remove sanctions on the sale of food and medicine to Cuba, Iran, Libya, North Korea and Sudan, which were added to the draft legislation on agricultural spending for 2001. Later, in June 2000, the U.S. Congressional conference on agricultural appropriations also gave its approval. According to Representative George Nethercutt, joint author with Senator Byron Dorgan of the proposals to lift the ban, there was “a dramatic shift in American foreign policy, because we have established an unmistakable tenet – food and medicine will not be instruments of diplomacy”.4
According to the provisions approved, all the unilateral sanctions preventing the sale of food and medicine to the countries mentioned above were lifted; a new category of
3 See Permanent Secretariat: Follow-up reports on the application of the Helms-Burton Act in 1999 (SP/CL/XXV.O/Di Nº 1-1999) and 2000 (SP/CL/XXVI.O/Di Nº 8-2000), pp 3-6.
4 See Public Diplomacy Query (PDQ), Congressional commissions approve the lifting of sanctions on food and medicine, 12 May 2000, and Congressional conference approves the reform of food sanctions against five countries, 10 June 2000 (Electronic version: http://usinfo.state.gov ).
Permanent Secretariat Globalization 6 travel authorizations was created for sales of agricultural products; and granting of licenses was eased, authorizing the president to lift bans on U.S. financing and humanitarian aid to Iran, Libya, North Korea and Sudan. Also, with the exception of Cuba, these countries could receive private sector funding.
The measures agreed on agricultural spending were added to other legal provisions and passed as law by President Clinton on 28 October 2000. However, apart from keeping in place the complex tangle of laws, regulations and decrees on the blockade against Cuba, and subjecting the country to more discriminatory treatment than the other countries included in the measure, pressure from an important conservative group opposed to the easing of relations with Cuba managed to prevent the broader proposals from being approved, and even imposed additional restrictions, entailing more stringent sanctions against the country.5
However, in late 2001, as a gesture of goodwill by the U.S. Administration in the wake of the severe impact of hurricane Michelle6 on the Cuban economy, the Bush administration did not object to the sales of certain quantities of food products to Cuba, which have taken place since late 2001 up to the present time.
This move generated a perception that a path tending to the gradual elimination of economic sanctions against Cuba had finally been taken. However, the Cuban authorities – also recognised by several media organizations and U.S. businessmen – stress that purchases have to be made under strict licenses granted by the Department of the Treasury in cash, with no financing, and transportation can only be on U.S. or third party vessels; which means that the basic restrictions imposed by the economic blockade persist. 7
As a result, the Cuban government has repeated that, regardless of these sales, “the blockade was still in place, unchanged”.8
On the same issue, President Bush emphatically stated in an address at the White House on 20 May 2002 – on the occasion of the Republic of Cuba’s hundredth anniversary – that the United States would continue to enforce the economic sanctions on Cuba.9
As detailed in the 2006 Report of the Government of Cuba to the UN Secretary General, while Cuba continued to purchase U.S. food products in 2006, Cuban imports are subject
5 See Cuba’s Report to the UN Secretary General. 2001, page 8. Ministry of Foreign Affairs (MINREX), Havana, August 2001. This report is summarized in the official UN document A/56/213, “Necessity of ending the economic, commercial and financial embargo imposed by the United States of America against Cuba”. Report of the Secretary-General, 14 August 2001, pp. 24-36.
6 And the continuous pressure from the agribusiness lobby, which has a powerful influence in several key states and also at federal level.
7 Furthermore, U.S. exporters must previously submit a notification with detailed information to the Department of Commerce, particularly the Bureau of Export Administration (BXA), which is then referred to other U.S. government agencies, such as the Department of Defense, the Department of State and, in some cases, the National Security Council.
8 Cuba’s report to the UN Secretary General on Resolution 56/9 of the UN General Assembly, 2002. Ministry of Foreign Affairs (MINREX), Havana, August 2003. This report is summarized in the official UN document A/57/264, “Necessity of ending the economic, commercial and financial embargo imposed by the United States of America against Cuba”. Report of the Secretary-General, pp. 12- 34.
9 “President Bush announces Initiative for a New Cuba” (http://www.whitehouse.gov/news/releases/2002/05/).
Follow-up report on the application SP/CL/XXXII.O/Di Nº 4-07 of the Helms Burton Law during the year 2006 7 to severe restrictions and complex procedures. Cuba must make the payments in cash and in advance, with no possibilities of obtaining financing credits – not even from the private sector. Sales and transportation of goods require the granting of licenses for each one of the operations. Cuba cannot use its own merchant fleet for transporting goods, which can only be transported on U.S. or third-party vessels. The payments must be made through banks in third-party countries, since direct banking relations with the U.S. are prohibited.10
As stated above, according to Cuban authorities, since the measures included in the report of the “Commission for Assistance to a Free Cuba” were approved in May 2005 – but particularly since the entry into force of the plan set forth in its second report – the U.S. blockade has tightened. The most recent report submitted by the Cuban government to the United Nations points to some examples that evidence such tightening of the sanctions:11
• On 2 June 2005, the Coordinator of the Office of Cuban Affairs of the U.S. Department of State, Kevin Whitaker, said that the “Commission for Assistance to a Free Cuba” had made significant progress in the tasks set out and more were planned for the future. He added that since August 2004 the number of trips made by Americans to Cuba had decreased, the country’s income had fallen by almost 60% and that weekly television broadcasts from aircrafts had been made – which according to the Cuban government are aimed at encouraging subversion and violate international treaties on the use of electronic radio space.
• On 27 July 2005, the then Assistant Secretary of State for Western Hemisphere Affairs, Roger Noriega, cynically highlighted the fact that US$ 8,900,000 would be granted by 2005, along with another US$ 15 million by 2006, to be used to implement the recommendations of the “Commission for Assistance to a Free Cuba”.
• On 11 August 2005, the U.S. Department of Justice announced that the Foreign Claims Settlement Commission had established a second program on Cuba for American corporations and citizens who have fresh claims against the Cuban Government for property nationalized after the previous programme came to an end on 1 May 1967.
• On 4 October 2005, the Bureau of Hemisphere Affairs of the Department of State published a press release regarding the main initiatives developed by the Bush Administration in the Americas, including the adoption of a new policy to deny U.S. working visas to Cuban artists, whose activities – according to the report – would bring financial benefits to the “Castro regime”.
• In October 2005, Caleb McCarry, appointed by the Department of State as “Cuba Transition Coordinator”, said that in the months following the implementation of the Plan outlined by the Commission, “the reinforcement of the economic embargo caused a total US$ 500 million worth in losses to the Castro regime.
• On 27 January 2006, the Office of Foreign Assets Control (OFAC) began to audit travel agencies that offered trips to Cuba, with the aim of making the travel ban even
10 Cuba’s report on Resolution 59/11 of the UN General Assembly. Ministry of Foreign Affairs (MINREX), Havana, 15 August 2005.
11 Summary of Cuba’s report on Resolution 60/12 of the UN General Assembly. Ministry of Foreign Affairs (MINREX), Havana, August 2006.
Permanent Secretariat Globalization 8 stricter. The OFAC spokesperson, Molly Millerwise, announced that this Office would perform around 25 similar audits each year “in order to ensure that travel agents followed established stipulations to the letter, to teach them about the need to uphold the restrictions in force and to strengthen the provisions of the OFAC so as to fulfil the sanctions against Cuba.”
• On 13 February 2006, new OFAC regulations came into effect regarding the fining system for banking institutions that violate U.S. legislation regarding the sanctions imposed on several countries, including Cuba. The transgressors could undergo a civil investigation, an OFAC evaluation of how they violated said legislation, or a criminal investigation and trial.
• On 4 May 2006, the Cuban-American representative, Ileana Ros-Lehtinen (R-FL), presented draft law H.R. 5292 “To exclude from admission to the United States aliens who have made investments contributing to the enhancement of the ability of Cuba to develop its petroleum resources, and for other purposes." This project proposes to ban bank credits, specific licenses or export permits and to refuse to grant loans to foreign companies making investments in this field that are valued at 1 million dollars or over.
• On 11 May, the Cuban-American representative in the U.S. Senate, Mel Martinez (R-FL) introduced draft law S. 2795, with the same title and similar content as H.R. 5292, which was presented by representative Ros-Lehtinen (R-FL) a week earlier.
• In 2005 the OFAC fined eight companies and banking institutions a total of US$ 44,225 for allegedly violating various stipulations of the blockade on Cuba. It also fined 487 U.S. citizens or residents for a total of US$ 529,743 for violating the blockade and specifically the stipulations regarding visits to Cuba, which represents an increase compared to 2004, when 316 people were fined for a total sum of US$ 497,780.
• As a result of the in situ auditing program being applied by the OFAC on travel agencies that offer trips to Cuba, sixteen companies lost authorization to offer trips to Cuba in March 2006, and by the end of 2006 the figure reached twenty six. Four of those companies were fined for “flagrant violations” of the conditions established in their licenses, namely: Baby Envíos Travel, Fortuna Travel Services, Cubatur Express and La Estrella de Cuba.
• At the end of May 2006, the OFAC suspended the licenses of three of the main agencies providing travel and remittance services to Cuba, namely: La Perla del Caribe, Transeair Travel and Uno Remittance Inc. – the latter of which was specialized in family money remittances.
• On 22 November 2005, the U.S. Treasury Department refused to renew the license to travel to Cuba to the U.S. National Council of Churches.
• In December 2005, the U.S. Department of Commerce refused to grant the license requested by the American NGO USA/CubaInfoMed to donate 126 computers to Cuba for use in teaching and assistance work, compiling information and teaching televised classes in 5 Cuban hospitals.
Follow-up report on the application SP/CL/XXXII.O/Di Nº 4-07 of the Helms Burton Law during the year 2006 9
IV. IMPACT OF THE HELMS-BURTON ACT AND THE ECONOMIC SANCTIONS AGAINST CUBA
The harmful effects of the blockade on the economy and on the living conditions of the Cuban people are appreciable. Although all of the sectors, branches or economic activities have suffered the consequences of the blockade, it is in the fields of food, healthcare, education, sports and transport where the harmful effects of this policy on the Cuban population are most conspicuous.
In 2005, the direct economic damage to Cuba caused by the blockade exceeded US$ 4,108 million.
CUMULATIVE DIRECT DAMAGE CAUSED BY THE U.S. BLOCKADE BY THE END OF 2005 In million US$
Income not earned for exports and services 39,427.5 Losses arising from geographical relocation of trade 19,592.0 Damage to production and services 2,866.2 Technological blockade 8,483.2 Damage to services for the population 1,565.3 Monetary and financial damage 8,640.2 Impact of the brain drain 5,533.8
Total impact of United States embargo 86,108.2
Source: Report by Cuba on Resolution 60/12 of the United Nations General Assembly: “Necessity of ending the blockade imposed by the United States of America against Cuba”. August 2006.
As a result of the new U.S. trade policy measures, in 2005 the losses for Cuba in terms of foreign trade exceeded US$ 945,320,000, according to the Cuban government. This figure represents an increase of almost 15% in comparison to the previous year, and in absolute value, it accounts for US$ 122,720,000 dollars more than the amount recorded in 2004.
In 2005, the limited purchases of agricultural products – including food – from the U.S. caused economic damage to the sum of US$ 66,300,000. The restrictions and complicated mechanisms established by the U.S. government for the sale of these products to Cuba remained in place, which created additional expenses in the form of currency exchange, as transactions are carried out through intermediary banks; delays in the unloading of vessels as a result of the fact that payments made by the Cuban marketing entity were received late; and the increase in freight charges by approximately 20% due to fact that it is not possible to use the Cuban fleet to transport these products, and that vessels from the U.S. or other countries participating in these operations are prohibited from transporting loads to Cuba.
Added to this are the difficulties that accompany the issue of export licenses, as well as the most severe application of restrictions for issuing and renewing travel licenses to executives.
Permanent Secretariat Globalization 10
According to the Cuban government, the effects of the blockade have increased as a result of the intense and rapid process of international takeovers, mergers, and strategic alliances in the global context, in which the United States play a significant role. This situation intensifies the impact of the blockade on Cuba’s already reduced foreign economic space. Only in the period covered by the report, Cuba was affected at least by the takeover of 16 companies from third countries by U.S. companies, which meant a loss of markets in 8 countries for Cuba.
In the World Trade Organization, Cuba, for the eighth year in a row, denounced the application by the U.S. government of Section 211 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, which prevents Cuban titleholders or their successors, including foreign companies with interests in Cuba, from being able to acknowledge and enjoy their rights, in the United States territory, over brands or trademarks that are registered and protected in Cuba and associated with property that has now been nationalized by the Cuban government.
This measure was approved in October 1998 by the U.S. Congress, by way of a process which was very secretive and aimed at benefiting the Bacardi company. Therefore, according to Cuban authorities, the application of Section 211 has very negative implications, not only in terms of bilateral relations between Cuba and the United States, but also for multilateral relations.
With regards to bilateral relations, this measure prevents the development of foreign investments on the island, connected to the international marketing of Cuban products, whose brand names and trademarks have international prestige. Until Section 211 was passed both sides had continued to acknowledge the rights of natural and legal titleholders from both countries with regard to intellectual property.
The application of the aforementioned Section by a court in New York prevented a ruling in favor of a company with Cuban and French interests (Havana Club Holding) in a lawsuit that began in 1996; that is to say, before Section 211 was passed.
In January 2002, the Appellate Body of the World Trade Organization (WTO) decided, at the request of the European Union, that Section 211 violates the stipulations of the National Treatment and of the Most-Favoured-Nation Treatment of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), and urged the United States to adjust said legislation in order to meet these stipulations within a reasonable period of time. Nevertheless, the U.S. government has repeatedly put off complying with the verdict of the WTO Appellate Body.
On 28 July 2006, the Office for Control of Foreign Assets of the U.S. Treasury Department refused to grant a specific license to the Cuban company Cubaexport, which would have permitted this entity to renew the registration of the Havana Club brand name before the U.S. Office of Brands and Patents.
On 3 August 2006 the Office of Brands and Patents of the United States announced that they were going to cancel the registration of the Havana Club brand name by the Cubaexport company due to their inability to pay the rate required for the registration. Consequently, according to the Cuban government, if Bacardi sells rum under the brand of Havana Club, the company would be violating the U.S. and international legislation regarding brand names.
Follow-up report on the application SP/CL/XXXII.O/Di Nº 4-07 of the Helms Burton Law during the year 2006 11
A similar situation took place on 19 June 2006, when the Supreme Court of the United States refused to review the decision made by the Court of Appeal of the Second Circuit of New York, regarding the prestigious brand of Cuban cigars known as “Cohiba”. According to the arguments put forth by said Court of Appeals, in the case of Cuba, the rules that regulate the policy of the blockade take precedence over the international obligations of the United States.
The new report of the "Commission for Assistance to a Free Cuba" includes a number of measures which further tighten already existing restrictions on travels and the sending of money remittances to Cuba that are imposed on U.S. citizens and Cuban citizens residing in the U.S.
The additional measures included in the new version of the plan for Transition in Cuba include the following decisions:
• To instruct agencies responsible for implementing blockade regulations to carry out legal investigations and even institute proceedings against those who violate OFAC regulations, particularly those who have organized or facilitated trips to Cuba without securing a permit.
• To eliminate the use of credit cards in authorized trips to Cuba.
• To prohibit the direct sending of remittances through institutions in third countries and to demand that all remittances be sent through licensed U.S. companies.
• To apply a new set of criteria for granting licenses and establish new information requirements for trip and transportation service providers, including the requirement that these providers undergo a financial audit every year by an independent agency.
• To include those companies that promote the sale of Cuban products, trips to Cuba, the sending of remittances or other unauthorized transactions with the U.S. on the List of Specially Designated Nationals and Blocked Persons.
According to Cuban authorities, regulations designed to prohibit, block or impose conditions upon academic exchanges between the two nations, trips by students and teachers, the flow of scientific information through different channels, the dissemination of data and payment for different services in this area and the purchase of teaching and research supplies and instruments are an important part of the new blockade provisions imposed upon Cuba by the current U.S. administration.
But in spite of the tightening of U.S. sanctions against Cuba, the last two years have seen the emergence of an important sector on the U.S. political scene that advocates for a change in bilateral relations. Such activists favouring changes include renowned politicians, entrepreneurs, state government representatives, religious and NGOs leaders, who openly oppose the U.S. blockade.
On 21 July 2005, the House Appropriations Committee approved an amendment to the “Appropriations Act for the Transport, Treasury and Housing Departments, year 2006”, which prohibits the use of funds set aside to administer or implement the OFAC measure dated 22 February 2005, which made the concept of advanced payments for the purchase of food products from Cuba to the United States more restrictive. This proposal,
Permanent Secretariat Globalization 12 which was also approved in the Senate, was not passed as a law because President Bush threatened to veto it.
On 30 June 2005, the Democrat minority leader of the Senate Finance Committee issued a press release ratifying his decision to block any nominations for high ranking positions in the Treasury Department, as long as the U.S. Administration continued to impose restrictions on trade with Cuba.
On 8 July 2005, as proof of the growing interest of U.S. sectors to normalize commercial relations between the two countries, the USA-Cuba Trade Association sent a letter, signed by 62 national associations, organizations and agricultural companies based in 20 states, to more than 20 senators, including members of the Appropriations Committee, demanding that action be taken to ease the restrictions imposed on the sale of agricultural products to Cuba.
Between 1 and 5 November 2005, some 360 businessmen from thirty U.S. states travelled to Cuba to take part in the International Fair of Havana, representing 169 companies. Numerous state authorities also attended this event.
On 3 March 2006, 105 members of the U.S. Congress sent a letter to the Secretary of the Treasury, questioning the measures taken by this Department to “prevent several religious organizations from visiting Cuba”. Some days later, important American religious leaders sent communiqués to the Secretary of State and the Secretary of the Treasury, “expressing their profound objection to the new OFAC policy of refusing to renew the licenses to visit Cuba to national churches and ecumenical agencies”.
On 6 April 2006, Alabama State Legislature passed the HJR Joint Resolution, “urging Congress to eliminate trade, travel and financial restrictions on Cuba”.
On 13 April 2006, a seminar called “Doing Business in Cuba” took place in Orlando, Florida. It was attended by 54 representatives of American companies interested in embarking on or increasing trade relations with the island. The event was organized by the USA-Cuba Commercial Association (USCTA) with the aim of officially establishing a section in Florida.
During the 29th Annual Legislative Conference of the National Black Caucus of State Legislators (NBCSL), a Resolution was passed “demanding that President Bush lift the embargo on Cuba and requesting that diplomatic relations be re-established” with Cuba.
On 11 May 2006, Draft Law S.2787, Western Hemisphere Energy Security Act 2006, was presented to the Senate. The bill would allow U.S. citizens or foreigners with permanent residence in the U.S. to take part in the exploration and extraction of hydrocarbons anywhere within the foreign maritime exclusive economic zone, contiguous to the U.S. exclusive economic zone; to export any equipment necessary to explore and extract hydrocarbons without the need for licenses; and allows persons involved in the aforementioned activities to travel from and within Cuba.
On that same day, Draft Law H.R. 5353, “Western Hemisphere Energy Security Act”, was introduced to the Chamber of Representatives, which also demands that the blockade be eased in terms of the restrictions placed on trips and investments related to the energy sector in Cuba.
Follow-up report on the application SP/CL/XXXII.O/Di Nº 4-07 of the Helms Burton Law during the year 2006 13
Despite the increase in travel restrictions, many political representatives, businessmen, religious leaders and other personalities visited Cuba between late 2005 and mid-2006. In this period, Cuba received visits from 2 Governors, 2 Vice-Governors, 1 Senator, 1 Representative, 2 Congress assistants, several State figures and more than 360 businessmen representing more than 30 U.S. States.
V. THE EXTRATERRITORIALITY OF THE U.S. ECONOMIC SANCTIONS AGAINST CUBA
According to the oficial report of the Cuban government to the UN, during the period 2005-2006, the extraterritorial application of laws related to the blockade on Cuba continued to affect States, citizens and companies from third countries. This policy prohibits:
• Subsidiaries of American companies in third countries from carrying out any kind of transaction with Cuban companies.
• Companies from third countries from exporting products of Cuban origin or products containing any Cuban component part to the U.S.
• Companies from third countries from selling goods or services to Cuba whose technology contains more than 10% of U.S. component parts, even though the owners are nationals of these countries.
• Vessels transporting products from or to Cuba from entering U.S. ports, regardless of the country of registration.
• Banks from third countries from opening accounts in U.S. dollars with legal or natural persons from Cuba or from performing financial transactions in said currency with Cuban entities or persons.
• Businessmen from third countries from performing investments or business agreements with Cuba in properties which are subject to claims from U.S. citizens or persons born in Cuba who have been naturalized.
With the new regulations adopted by the OFAC at the beginning of 2006, aimed at financially monitoring Cuban assets, the application of sanctions on third countries which violate its provisions was made a standard procedure through the U.S. bank regulatory bodies.
During the period covered by this report – from late 2005 to late 2006 – there was an increase in the pressure on foreign banks to cut correspondence relations with Cuban banks. According to Cuban authorities, these are some examples:
• In October 2005, the Union Bank of Switzerland (UBS) discontinued the current account in dollars and Swiss francs that it provided to the Cuban banking system and began to reject all operations with the country’s banks out of fear that the new U.S. sanctions would be imposed on it.
• In September 2005, the London-based bank HSBC took the unilateral decision to close the dollar account that the Banco Metropolitano had opened with them. This
Permanent Secretariat Globalization 14 bank’s branch in Canada returned payments to the sum of one million Canadian dollars and 819,900 euros sent by way of the Banco Internacional de Comercio S.A. (BICSA), citing the reasons for this action as being the anti-Cuban regulations of the OFAC. In February 2006, this bank refused to process a transfer of 15,500 Canadian dollars to Cuba for the same reasons.
• On 7 November 2005, the Natexis Banques Populaires of France informed the Banco Internacional de Comercio S.A. that they were unwilling to notify a non-confirmed letter of credit for a sum of 903,900 dollars, payable in euros, which brought about the cancellation of credit and forced the bank to transfer it to another bank.
• The Republic Bank, whose central office is based in Trinidad and Tobago, phoned the BICSA to inform that they were unwilling to continue to process the payments that Cuba makes to U.S. farmers, for sales made by this country to the island, which affects transfers made by Cuban importation company ALIMPORT to American exporters of payments duly authorized by license.
• On 21 February 2006, the Deutsche Bank Trust Company Americas of New York confiscated a remittance of 330 dollars deposited in the Union National Bank of Abu Dhabi, United Arab Emirates, for a Cuban citizen, so that this person could carry out procedures to request a passport in the Cuban Embassy in Egypt, citing the provisions of the blockade as the reason for their action.
• In February 2006, the Argentinean company, FURBIA INTERNATIONAL S.A. (Export- Import) was forced to close its bank accounts in Discount Bank in Uruguay, as well as its accounts in the U.S., through which they had operated for more than 35 years. The reason for this was the banking entity was sent orders from the central office located in the U.S. It was claimed that the name of the President of the company was registered on the List of Specially Designated Nationals due to his long-standing commercial links with Cuba.
• In March 2006, the Jamaican branch of the Bank of Nova Scotia, Canada, informed the Cuban Embassy in Jamaica that it would be unable to maintain the account of this mission open or perform transfers of funds in U.S. dollars, in blatant violation of the Jamaican and Canadian legislation.
• A bank transfer for the amount of 2,154 euros made by NEDBANK (the Bank of Namibia and South Africa) on behalf of the Cuban company PESPORT, of the Ministry of the Fishing Industry, by virtue of the operations carried out with the Namibian company DRAGNAM, was withheld by an American bank.
• The research group, the Bird Ecology Group, of the Faculty of Biology of the University of Havana, was unable to receive the finance of 30,000 Sterling Pounds, awarded to them by the U.K. Non-Governmental Organization Whitley Fund for Nature, which would have been used to continue a project already underway. The first bank transfer of 15,000 Sterling Pounds was made via the HSBC Bank PLC of London, which sent funds by way of New York and never arrived at their final destination. The bank informed the NGO that these funds had been withheld by the U.S. Treasury Department.
Contributions made by Cuba to multilateral organizations have also been affected, according to Cuban authorities. During the first half of 2006, Cuba was unable to pay its fees to two international bodies based in Geneva: the International Union of Telecommunications (UIT) and the World Meteorological Organization (WMO) because
Follow-up report on the application SP/CL/XXXII.O/Di Nº 4-07 of the Helms Burton Law during the year 2006 15 the Swiss Bank UBS, which receives the accounts of both international organizations, refused to receive transfers from Cuba.
Similarly, several international officials from Cuba have received letters requesting that they close their accounts in U.S. dollars with the threat that they could be cancelled. Such was the case of officials hired by the World Health Organization (WHO), the Pan- American Health Organization (PAHO), the World Food Program (WFP), the United Nations Environmental Program (UNEP), the United Nations Population Fund (UNFPA), and the World Intellectual Property Organization (WIPO), among others.
Banks have taken these actions against Cuban officials hired as international officials as a result of the “Process for the application of economic sanctions on banking institutions”, publicly announced by the OFAC in early 2006.
Aside from banks and financial institutions, the extra-territorial impact of the U.S. measures against Cuba has been felt on other sectors:
• In February 2006, the Cuban business delegation participating in the Cuba-United States Conference on Energy, held in Mexico City, was ejected from the Maria Isabel Sheraton Hotel were they were staying. This facility is owned by the American firm, Starwood Hotels and Resorts Worldwide. The management of this hotel confiscated the deposit made by the Cuban delegation for their stay and sent it to the OFAC, adding it to the Cuban funds frozen by the U.S. government.
• The reparations that it was necessary to make to the Factory of the Moa Nickel Company S.A. were more costly than planned and the schedule was postponed due to the fact that the Brazilian supplier, Orion, had top pull out of the contract for the capital reparation of Turbogenerator No.1 as it was a subsidiary of an American company. As a result, Cuba had to turn to other suppliers to complete the work.
• Due to the fact that the Canadian company Cytec refused to sell the extracting reagent Cyanex 272, which was to be used in the new technology to improve the COREFCO nickel refinery in Canada, this project was delayed by 7 months and the cost of refinement increased by approximately 2.20 dollars per lb of Ni + Co.
• In July 2005, the company Dresser-Rand Group Inc., ordered its subsidiary in Brazil to halt negotiations with the Cuban-Canadian joint company Moa Nickel S.A., of the mining sector. This company, which is based in New York and produces turbines and compressors for the energy industry, publicly announced in April 2006 that it was very probable that sanctions would be imponed by the U.S. government as a result of the deals that its subsidiary made with the Cuban company.
• In October and November 2005, Spanish hotel chains, in particular Majorcan chains that manage or have invested in hotels in Cuba, began to receive notifications from the U.S. Department of State, informing them that as they were supposedly occupying confiscated property in Cuba and were financing it to their own ends, the owners of the company, the staff, shareholders and family members were prohibited from entering the country.
• A request to the Spanish company, ALCOA, for 2 000 tons of aluminium fixtures needed to make the doors and windows necessary to remodel Cuban polyclinics, hospitals and schools could not be answered as the head office of this company is located in the United States and it was thus unable to supply the material needed.
Permanent Secretariat Globalization 16
• The negotiations carried out in January 2006 with the Canadian branch of one of the four main independent record distribution companies in the U.S., within the framework of the MIDEM Fair in Cannes, France, were interrupted when the company’s legal department announced that a very costly “legal investigation was required to determine the mechanisms and legal aspects related to the possibility of selling the Cuban product in Canada, and especially in the United States”.
• A Cuban specialist who works for a foreign company with business in Cuba, and who when on a trip to Canada to receive training for the PLC 5 automated control systems used in his company, was expelled on his second day of training when his nationality was discovered. He was told that his participation in the course violated the “U.S. Export Administration Regulations”.
• Negotiations regarding the Flight Simulator, contracted for Cuba by the International Civil Aviation Organization (ICAO) on behalf of the Canadian firm ADACEL, could not be concluded as the General Manager and the Financial Manager of this firm, who were American, stated that the laws of their country prevented them from making any type of contractual agreement with Cuba. As there is no Simulator in Cuba, the Cuban Airport and Aeronautical Services Company (ECASA) is obliged to spend approximately 250,000 dollars a year on re-evaluate air transport controllers abroad.
• The Dutch entity that acted as the middleman through which the e-business, ePayment-Cuba, made their payments, announced in June 2005 that it was withdrawing from the business as the laws of the blockade prevented them from continuing to offer these services to Cuba.
Follow-up report on the application SP/CL/XXXII.O/Di Nº 4-07 of the Helms Burton Law during the year 2006 17
A N N E X I
LEGISLATIVE INITIATIVES ON THE HELMS-BURTON ACT AND THE ECONOMIC SANCTIONS AGAINST CUBA
1. To amend the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 to require that, in order to determine that a democratically elected government in Cuba exists, the government... (Introduced in House)[H.R.525.IH]
2. Free Trade With Cuba Act (Introduced in House)[H.R.624.IH]
3. Cuba Reconciliation Act (Introduced in House)[H.R.217.IH]
4. Export Freedom to Cuba Act of 2007 (Introduced in House)[H.R.654.IH]
5. Baseball Diplomacy Act (Introduced in House)[H.R.216.IH]
6. Pursuit of International Education (PIE) Act of 2007 (Introduced in House)[H.R.177.IH]
7. Adoption Tax Relief Guarantee Act of 2007 (Introduced in House)[H.R.471.IH]
8. To amend the Internal Revenue Code of 1986 to make permanent the qualified tuition deduction. (Introduced in House)[H.R.686.IH]
9. To make the National Parks and Federal Recreational Lands Pass available at a discount to certain veterans. (Introduced in House)[H.R.652.IH]
10. Resolved, That the following named Members be, and are hereby, elected to the following standing committees of the House of Representatives: (Engrossed as Agreed to or Passed by House)[H.RES.45.EH]
11. To amend title 10, United States Code, to reduce the minimum age for receipt of military retired pay for non-regular service from 60 to 55. (Introduced in House)[H.R.690.IH]
12. To withhold United States funding from the United Nations Human Rights Council. (Introduced in House)[H.R.225.IH]
13. National Right-to-Work Act (Introduced in House)[H.R.697.IH]
14. Congressional Pardon for Border Patrol Agents Ramos and Compean Act (Introduced in House)[H.R.563.IH]
15. Amending the Rules of the House of Representatives to establish a minority bill of rights to require the House to be administered in a bipartisan manner and to require regular order... (Introduced in House)[H.RES.40.IH]
16. Health Care Freedom of Choice Act (Introduced in House)[H.R.636.IH]
Permanent Secretariat Globalization 18
17. Proposing a balanced budget amendment to the Constitution of the United States. (Introduced in House)[H.J.RES.1.IH]
18. To require additional tariffs be imposed on products of any non-market economy country until the President certifies to the Congress that that country is a market economy country, and... (Introduced in House)[H.R.571.IH]
19. Calling on the United Nations Security Council to charge Iranian President Mahmoud Ahmadinejad with violating the 1948 Convention on the Prevention and Punishment of the Crime of Genocide... (Introduced in House)[H.CON.RES.21.IH]
20. To amend the Horse Protection Act to prohibit the shipping, transporting, moving, delivering, receiving, possessing, purchasing, selling, or donation of horses and other equines to... (Introduced in House)[H.R.503.IH]
21. Establishing the House Democracy Assistance Commission for the One Hundred Tenth Congress. (Introduced in House)[H.RES.24.IH]
22. Expressing the sympathy of the House of Representatives to the families of women and girls murdered in Guatemala and encouraging the Government of Guatemala to bring an end to these... (Introduced in House)[H.RES.100.IH]
23. Transparency and Accountability in Security Contracting Act of 2007 (Introduced in House)[H.R.369.IH]
24. CLEAN TOWN Act of 2007 (Introduced in House)[H.R.304.IH]
25. Global Online Freedom Act of 2007 (Introduced in House)[H.R.275.IH]
26. Health Partnership Through Creative Federalism Act (Introduced in House)[H.R.506.IH]
27. Legislative Line Item Veto Act of 2007 (Introduced in House)[H.R.689.IH]
28. Lane Evans Veterans Health and Benefits Improvement Act of 2007 (Introduced in Senate)[S.117.IS]
29. Genetic Information Nondiscrimination Act of 2007 (Introduced in House)[H.R.493.IH]
30. DRIVE Act (Introduced in House)[H.R.670.IH]
31. Pharmaceutical Market Access and Drug Safety Act of 2007 (Introduced in House)[H.R.380.IH]
32. Fair Tax Act of 2007 (Introduced in House)[H.R.25.IH]
Follow-up report on the application SP/CL/XXXII.O/Di Nº 4-07 of the Helms Burton Law during the year 2006 19
ANNEX II
STATEMENTS AT INTERNATIONAL MEETINGS
XIV IBERO-AMERICAN SUMMIT IN MONTEVIDEO, URUGUAY 3, 4 AND 5 NOVEMBER 2006
SPECIAL COMMUNIQUÉ ON THE NECESSITY OF ENDING THE ECONOMIC, COMMERCIAL AND FINANCIAL BLOCKADE IMPOSED BY THE UNITED STATES OF AMERICA AGAINST CUBA, INCLUDING THE APPLICATION OF THE SO-CALLED HELMS-BURTON ACT”
Considering the references to the issue dealt with in previous declarations stemming from Summits of Ibero-American Heads of Government and State;
We reaffirm once again that, in defence of free exchanges and transparent international trade practices, the application of unilateral coercive measures that affect the well-being of the peoples and hinder integration processes is unacceptable.
We, once again, strongly reject the application of laws and measures contrary to the International Law, such as the Helms-Burton Act and urge the Government of the United States of America to put an end to it.
We request the Government of the United States of America to comply with the provisions set forth in 14 consecutive resolutions approved by the UN General Assembly and to end its economic, commercial and financial blockade against Cuba.
We firmly request the Government of the United States to immediately stop the application of the measures adopted over the last three years to tighten and deepen the impact of its economic, commercial and financial blockade policy against Cuba.
Permanent Secretariat Globalization 20
Follow-up report on the application SP/CL/XXXII.O/Di Nº 4-07 of the Helms Burton Law during the year 2006 21
ANNEX III
Permanent Secretariat Globalization 22