WORLD TRADE
ORGANIZATIONWT/WGTI/W/35
20 April 1998
(98-1562)
Working Group on the Relationship
between Trade and InvestmentOriginal:  Spanish
COMMUNICATION FROM CUBA
The following communication, dated 30 March 1998, has been received from the Permanent
Mission of the Republic of Cuba with the request that it be circulated to Members.
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The purpose of this communication is to present Cuba's experience as a contribution to
consideration of the topics dealt with in Secretariat Notes WT/WGTI/W/24 (Availability of Statistics
on Foreign Direct Investment and of the Activities of Foreign Affiliates) and WT/WGTI/W/25
(Relationship Between Trade and Foreign Direct In vestment Originating in Developing Countries).
I. INTRODUCTION
1. Some 340 joint ventures are currently operating in Cuban territory, with a further
220 enterprises and firms in the three Free Zones.  In addition, scores of firms with Cuban equity
participation are operating in other countries.
2. It could be asked why Cuba, a country with substantial capital requirements for its own
development, has invested in other countries.  There is no single answer to that question, as the
reasons are varied.
II. CUBAN FIRMS IN OTHER COUNTRIES
3. Four decades ago, Cuba was not the major exporter of lobsters, prawns and other marine
products that it is today.  In those days, the few exports of those foods were directed to the United
States and purchased by companies in that country.  When the economic blockade prohibiting trade
with Cuba was established in 1961, it became necessary to set up a network of companies in Europe,
Asia and other parts of the world for the storage and marketing of such products.  Some were formed
as wholly Cuban-owned companies, others as joint ventures with local partners in the destinationmarkets.  Those companies proved to be successful and are now used for all fishery exports.
4. The same situation was repeated in other sectors of production, for the same fundamental
reasons.  Networks of companies were likewise established in various countries, many of them
developed, for the storage and distribution of other products.  A classic and well-known example of
this is the international network of firms located in more than 20 countries, which warehouse and sellCuba's famous Havana cigars.
5. One of Cuba's metal ore processing factories produces a sulphate of nickel and cobalt
(Ni+Co), an intermediate product with few possibilit ies for sale in international markets.  Its entire
output was previously refined in the Soviet Union.WT/WGTI/W/35
Page 2
6. After 1991, the nickel trade was suspended by the Russian Government.  Coincidentally, the
deposits of sulphur, nickel and copper used by a Canadian refinery were exhausted around the same
time.  In 1992, Cuban Ni+Co sulphate started being sent to the Canadian refinery, and in 1994 three
joint ventures were established, by virtue of which the Canadian company acquired half of the Cuban
plant and its deposits, and the Cuban firm assumed ownership of half of the Canadian refinery, whilea third jointly owned trading firm markets nickel and cobalt internationally.  If in 1992 it had been
decided to build a new sulphate refinery in Cuba, it would probably have been necessary to close the
nickel and cobalt plant while the new facility was being built and started up.  The Canadian refinery,
lacking minerals for processing, would also have ceased operating.  That is why this experience can
be taken as an example of foreign investment not representing a zero-sum operation, since it benefited
both parties.
7. Twenty years ago, Cuba launched an intensive programme to become one of the world
leaders in the field of biotechnology and genetic engineering.  As is well known, the programme
proved successful, and various products from this sphere of activity are currently being exported.  The
most appropriate way to make such exports competitive with the large multinational producers of
drugs and pharmaceutical products was to set up a business network in other countries, which could
satisfy each country's public health requirements and organize distribution and the necessary advisoryservices.  In specific cases, these companies were set up as joint ventures using local production
capacities and Cuban technology.
8. A Cuban firm specializing in veterinary and pest control products, Labiofam, developed an
efficient rodenticide for rat control and has set up various joint ventures in third world countries,
where there is strong demand for this type of product.
9. Marketing and after-sales services for Cuban sugar cane harvesters and other equipment for
tropical agriculture were organized by setting up companies with Cuban equity participation in
various third world countries.  Similar experiments have been developed by Cuban construction
companies in the countries concerned.
10. All the above examples are export-oriented, but it is also worthwhile in some instances to
establish import-oriented companies.  One such instance is a joint venture with Cuban equity
participation established in Uruguay last year, which will export meat products to Cuba and import
other processed Cuban foods.
11. Recently, the magazine Business Tips
1  in Cuba devoted an issue to Cuban firms abroad,
which will be distributed to the participants in this Working Group by the Cuban Mission to WTO, so
this note need not be a lengthy one.
III. FUTURE PROSPECTS12. The above-mentioned developments have served to build up a fund of experience in the
establishment and operation of companies in foreign countries.  Lack of capital for outward
investment is offset by the necessary products and technologies, and these are the basis for continuing
to develop new ventures of this kind in the future.  One of the points raised in the Secretariat
documents is the difficulty of obtaining information on the operations of affiliates in other countries.In the case of Cuba, a circumspect policy is made necessary by the aforementioned aggressive policy
                                                     
1 TIPS (Technological Information Promotion System) is a project run jointly by the United Nations
Development Programme (UNDP) and the NGO DEVNET, which has offices in various third world countries.
The TIPS office in Cuba publishes the magazine in question every month in eight languages, with a major topic
for each issue.WT/WGTI/W/35
Page 3
pursued by the agencies of the United States of America.  Pressure has been exerted to try to prevent
the establishment of affiliates (and to close down those already established).
- It is a known fact that the United States Government has maintained an economic
blockade against Cuba for nearly 40 years.  Its actions are not confined to the
commercial and economic relations between the two countries.
- It is a known fact that other countries are under pressure to isolate Cuba, contrary to
the aims of building broad and secure channels for world trade and international
investment flows.  This very decade has s een the enactment, in 1992, of the Torricelli
Act or Amendment, which prohibits affiliates of United States firms based in other
countries from trading with Cuba.
- It is a known fact that foreign investments in Cuba were insubstantial in 1992, which
is why the Amendment in question contained no specific reference to that topic.Forty months later, however, given the tr end of foreign investments in Cuba, the
Helms-Burton Act was adopted in 1996.  This Act is not accepted by any country
because of its extraterritorial and illegal nature.  Its main purpose is to halt and
reverse the process of foreign investment in Cuba.
13. On the basis of such recent experiences, there is cause for concern that some future
Administration or some committee of the United Stat es Congress might think of drafting another law
to prohibit Cuban firms from operating in third countries.  That possibility should not be ruled out
simply because it is irrational.
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