1 Trade Sanctions: The U.S. Embargo with Cuba Zayabal Batjargal William Baynard

2 Outline History of U.S. trade sanctions Overview of the legislation governing the trade embargo with Cuba Major problems created by the embargo Global response to U.S. actions Policy Implications

3 U.S. Trade Sanctions Target Initial Year Type of SanctionsPrecipitating EventKey Changes to Sanctions North Korea 1950Comprehensive trade and financial. sanctions Korean War; possible acquisition of nuclear Weapons U.N. threatens trade and financial sanctions to forestall nuclear weapons acquisition ( ) Vietnam1954Denied MFN statusVietnam War and aftermath; personnel MIA Total trade embargo lifted; other restrictions remain (1994) Cuba1960Comprehensive trade and financial sanctions Castro-led takeover; interventions in Africa (1980s); Repress opposition Cuban Democracy Act restricts trade of U.S. subsidiaries abroad (1992), TSREEA (2000) Libya1978Comprehensive trade and financial sanctions; Air travel ban Gadhafi regime support for terrorism; bombing of Pan Am Flight #103 Limited U.S. export restrictions (1978); Lifted in 1999 and Codified by TSREEA USSR1980Grain & Oilseed EmbargoInvasion of AfghanistanLifted in 1981 Iran1984Comprehensive trade and financial sanctions Support for terrorism, opposition to peace process in Middle East, WMDs Total export embargo (1995); Lifted in 1999 and Codified by TSREEA Sudan1988Comprehensive trade and financial sanctions Civil war and human rights abuses; terrorism support Aid sanctions ( ); Lifted in 1999 and Codified by TSREEA Iraq1990Comprehensive trade and financial sanctions, limited oil sales under U.N. oil-for-food program Invasion of Kuwait; post- war discovery of extensive program to acquire WMDs Toppling of Saddam, Trade opened back up SOURCE: Institute for International Economics, Policy Brief 98-4 Sanctions-Happy USA, by Gary Clyde Hufbauer, July 1998

4 Cuba: 60 years as a US client 1880’s: U.S. is dominant trade partner with the Spanish colony of Cuba 1898: U.S. helps Cuba achieve independence from Spain in Spanish American War 1901: The Platt Amendment gives the US the right to intervene in Cuba 1959: The Cuban Revolution ends direct US influence in Cuba

5 Cuba: 60 years as a US client Before 1959 the U.S. was Cuba’s main trading partner. Florida was Cuba’s largest U.S. state trade partner. 85 percent of Cuba’s exports were transported to the United States

6 Cuba: 48 years as a US enemy 1959: Fidel Castro: The Cuban government passed the first Agrarian Reform Law 1960: President Eisenhower imposed a partial economic embargo 1962: President Kennedy expands embargo and prohibit travel to Cuba 1992: Cuban Democratic Act (Robert Torricelli Act) 1996: Cuban Liberty and Democratic Solidarity Act (the Helms-Burton Act) 2000: Trade sanction reform and export enhancement act (TSRA)

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8 Cuban-American Activists The Helms-Burton Act of 1996 and its predecessor the Cuban Democracy Act of 1992 were passed. These two pieces of legislation were guided by Cuban lobbies in an effort to secure the demise of Fidel Castro.

9 Major Problems Embargo’s failure to accomplish its goal. Prevention of access to medical supplies for Cubans. Prevention of the sale of agricultural and other goods to Cuba by U.S. producers. International scrutiny faced by the United States.

10 The State of Cuban Government The embargo has provided Castro with a scapegoat for domestic economic problems and engendered nationalist fervor among the people. Castro remains in power and his brother is poised to take over should he die.

11 Sanctions Political Value for Castro “For 45 years the United States Government violated these commitments [WTO commitments] with the imposition of a unilateral economic, commercial and financial blockade against Cuba which places serious constraints on the economic, cultural and social development of my country, creates obstacles to trade relations among states and jeopardizes the welfare of the Cuban people.” –Statement made by the Cuban representative to the WTO during the General Council meeting of May 2004

12 Access to Healthcare and U.S. Pharmaceutical Companies Although access to pharmaceuticals in Cuba is improving, the inability of U.S. firms to trade with Cuba limits the access to medicine for the Cuban people. The inability of U.S. pharmaceutical companies to do business in Cuba has given European and Asian producers easy access to the Cuban market.

13 U.S. Exports to Cuba An open market for U.S. agricultural products in Cuba could provide a great deal of revenue for U.S. farmers. The U.S. auto industry also stands to benefit from the removal of trade sanctions towards Cuba

14 Cuba and the Rest of the World EU officials recently hosted Cuban dignitaries in Brussels The Mexican government has a longstanding history of official support for the Cuban government Canada remains Cuba’s largest trading partner All three aforementioned parties wholeheartedly oppose the U.S. embargo

15 The Embargo and the Rest of the World The Helms-Burton act threatened U.S. subsidiaries. Mostly those operating in Europe, Canada and Mexico. It further stated that no ship could dock in the United States if it had previously docked in Cuba. The EU brought a case to the WTO. The Panel and AB ruled in favor of the EU regarding Section 211 of the Omnibus Appropriations Act of The U.N. General Counsel has officially voted to oppose the embargo 17 times.

16 Extraterritorial Implications “Title III allows US citizens to sue in the US court system anyone who "traffics“ in property confiscated by Cuba, and extends this right to people who were not US citizens at the time of the confiscation.” –Joaquin Roy, International Legal Scholar In face of a WTO case, the United States compromised with the EU on several provisions of Helms-Burton.

17 Remaining Problems The fact that the embargo remains in place disallows any united effort between the United States and any other meaningful party, particularly the EU, to address human rights issues in Cuba. The U.S. embargo distorts world trade and leaves the nation vulnerable to criticism in the WTO. As Cuba becomes less and less threatening to the United States it is likely that the “national security exception” may no longer apply. “As U.S. policy toward the region has moved on, so has Cuban mischief-making” –Cato Institute Report, in regards to U.S. Latin American Policy

18 Current U.S. Policy “I submit to you that foreign businesses will not flourish on the island as long as there is an active communist regime in control” –U.S. Commerce Secretary Carlos Gutierrez, 21 February 2007

19 Future Policy If business cannot function in Cuba, U.S. policy should allow this failure to occur on its own, rather than providing an excuse for the Cuban regime. The end of the embargo would provide the United States a stronger footing for future trade negotiations. Without the embargo, the United States could work multilaterally to address human rights issues in Cuba.

20 Trade Implications The current trade embargo not only restricts U.S. companies, but distorts the entire world trading system and undermines the spirit and letter of WTO regulations. The promotion of trade will do more to ensure national security than its denial.

21 Sources Nikolay Marinov “Do Economic Sanctions Destabilize Country Leaders?” American Journal of Political Science, 49 (3), 564–576. M2 Presswire. Coventry: Mar 27, pg. 1M2 PresswireMar 27, 2007 “On Cuba, Try Kindness,” The Boston Globe August 03, 2006 Thursday THIRD EDITION The Economist. London: Jun 23, Vol. 383, Iss. 8534; pg. 60The EconomistJun 23, 2007 “Change on Cuba: Time to end an anachronistic policy,” [EUROPE 1ST EDITION] Financial Times. London (UK): Dec 10, pg. 12 Financial TimesDec 10, 2003 Joaquin Roy, “The Helms-Burton Law: Development, Consequences, and Legacy for Inter-American and European-US Relations,” Journal of Interamerican Studies and World Affairs, Vol. 39, No. 3, pp Jonathan G. Clarke and William Ratliff, “Report from Havana: Time for a Reality Check of U.S. Policy toward Cuba,” Policy Analysis, no. 418 WTO Online Documents –General Council Report –Dispute Settlement Summary, DS 176