WORLD TRADE
ORGANIZATIONWT/L/370
20 November 2000
(00-4938)
General Council
7 and 8 December 2000Original:  Spanish
CUBA – ARTICLE XV:6
Report of the Government of Cuba under the
Decision of 14 October 1996 1
The following communication, dated 6 November 2000, has been received from the
Permanent Mission of Cuba.
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Pursuant to Article IX:4 of the Agreement Establishing the World Trade Organization
(WTO), Cuba transmits herewith the fourth annual report on the waiver granted on 14 October 1996
in relation to Article XV:6 of the General Agreement on Tariffs and Trade 1994.
The Government of Cuba reports that in 1999 Cuba's economy grew by 6.2 per cent, an
indicator that reflects the economy's dynamism in the Latin American and Caribbean context but does
not compensate for the impact of the cumulative downturn during the period 1989-1993.
The activities which showed the highest rate of growth were agriculture, forestry, hunting and
fishing, although in absolute terms the manufacturing industries and trade made the major
contribution to the GDP, amounting to US$4,594.9 and 3,370.2 million respectively.
In 1999, the sugar industry ceased to be the only activity left out of the economic recovery
and total production amounted to 3,783.3 thousand tonnes for the 1998-1999 harvest.  Industrial
activities saw an increase in the indicator of physical volume of production, growing by 7.3 per cent
in comparison with the previous year, corresponding to the growth in 16 non-sugar activities out of a
total of 21.  There was also an increase in the extraction of crude petroleum and natural gas.
During the period under review, the economic efficiency indicators improved and included
5.4 per cent growth in productivity;  a 5.4 per cent reduction in energy use;  and an 8.8 per cent
increase in return on investment;  a fall of 2.8 per cent in foreign currency spending for each dollar of
gross income;  and an increase in the number of profitable enterprises amounting to 29 per cent in1993 and 74 per cent in 1999.
Investment continues to play a vital role in economic development policy and rose by
9.4 per cent.  A total of 4,310 rooms for the international tourism sector were terminated;  2.1 million
tonnes of crude petroleum were extracted and 460 million cubic meters of natural gas were produced.Other investment covered the installation of 48,800 new telephone lines, the modernization of a
number of thermoelectric plants and a programme to replace motors for transport, which saves energy
and lubricants.
                                                     
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At the social level, 163,400 new jobs were created.  The percentage of women in total
employment was around 37 per cent.  The unemployment rate fell by 0.2 percentage points in
comparison with the previous year.  Overall, salaries increased by 7.3 per cent in 1999 in comparison
with the previous year, mainly due to the wage increases in a number of sectors such as health and
education, where the average increase in wages was 30 per cent.
At the end of 1999, the rate of population growth in Cuba was 3.6 per thousand inhabitants.
Social policy continues to be one of the Governme nt's priorities.  The following are some of the
indicators which reflect these results:
• Infant mortality:  6.4 per thousand live births;
• life expectancy at birth:  74.8 years;
• average number of the population per physician:  172, a figure which covers 98.2 per
cent of the population;
• number of pupils per teacher:  15.2;
• school attendance index:  99 per cent;
• 58 universities, institutes, faculties and independent sectors in higher education;
• 30,000 workers in the scientific and technological sectors.
Price stabilization continued and there was a 2.9 per cent decrease in the consumer price
index in domestic currency.  This was due to better supply of products in high demand.
With regard to fiscal and monetary policy, the strategy of keeping the imbalance between
income and expenditure at manageable levels continued, thus avoiding the need for physical
adjustments prejudicial to social needs.  As far as monetary policy is concerned, the application of a
number of regulatory measures meant that the monetary supply only increased by 2 per cent.
In 1995, the Banco Nacional de Cuba, which until 1997 functioned as both a central and
commercial bank (today it is only a commercial bank following the establishment of the
Banco Central de Cuba in May 1997) abolished the various exchange rates for Cuban currency
existing in Cuba, where the rate for the United St ates dollar differed according to use, and a single
rate for exchanging Cuban pesos into foreign currency was fixed, called the official exchange rate,
with the same value as the United States dollar, to be used in all official transactions where foreigncurrency is changed into Cuban currency and vice versa and in recording such transactions.
In October 1995, a licence was granted to the firm Casas de Cambio S.A. (CADECA), a
Cuban entity with its own legal status, to assist  natural persons in exchanging and changing back
foreign currency into convertible Cuban pesos or Cuban pesos through institutional channels, anactivity that had hitherto only been between individuals, which was a source of various types of
problem.
The gradual recovery in the Cuban peso's value led to a lowering of the exchange rate with
the United States dollar in the market in which CADECA S.A. operates, falling from the very highlevels reached in 1994 of around 150 pesos per dollar to the present stable value of between 21 and
22 pesos per dollar.WT/L/370
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Regarding external finances, there was a deterioration in the trade balance for goods due
inter alia  to an unfavourable situation in the terms of trade, although there was a favourable balance
in services and current transfers.  During the year, total foreign investment was 205 million pesos.  At
the end of 1999, 374 international economic associations were in operation with partners from
46 countries.  This year alone 58 new economic associations have been set up.
As part of the policy already put into effect, the Cuban banking system was strengthened:  the
Banco Exterior de Cuba was established;  five representation licences were granted to five financing
institutions.  At present, Cuba has a central bank, eight commercial banks, 15 non-banking financial
institutions, 13 agencies of foreign banks and four agencies of non-banking financial institutions.
In the external sphere, several agreements on rescheduling and restructuring the short-term
debt were reached with official export credit insurance agencies in a number of countries.
Despite the foregoing, Cuba continues to encounter obstacles which limit its economic
development possibilities on the basis of its potential.  The recent growth in GDP has been achieved
in the absence of external medium-term and long-t erm financing and at considerable financial cost
due to the high interest rates.
One of the main causes for the limitations on the development of the Cuban economy has
been the economic war waged by the Government of the United States of America against Cuba since
1959.  Its most obvious manifestation is the conti nuous blockade, which has had a far-reaching effect
on all sectors of Cuban society for over 40 years, leading to a loss of over US$67 billion for Cuba.
In addition, this policy has prevented the signing of export contracts with third countries;
made access to the closest markets impossible, leading to higher freight costs;  increased the price of
imports by making Cuba into a risky market, thereby affecting Cuba's capacity to pay and reducing itspurchasing power for items of vital importance such as fuel and foodstuffs.
Following the implementation of the Torricelli Act in 1992, the trade and financial economic
blockade against Cuba became even worse because its provisions include sanctions against countries
which grant economic assistance, trade or maintain relations with Cuba, increase the sanctions against
shipping companies which transport freight to or from Cuba and prohibit trade with subsidiaries of
United States companies situated in third countries, with which 90 per cent of the trade wasessentially in medicines and foodstuffs.
Subsequently, in 1996, the Helms-Burton Act was enacted, designed to bring to a halt Cuba's
policy of opening up to foreign capital.  Its implementation has prevented the possible conduct of
business and has intimidated potential foreign investors wishing to provide financing by consideringthis to be economic aid to Cuba.  As a result of this  intimidation, there have been delays in supplying
products to sectors that are essential for the development of Cuba's economy.
More recently, in October 2000, the United States Congress approved the Agriculture
Appropriations Act for 2001, in which Title IX establishes new restrictions against Cuba bypreventing United States exporters from using public and private credit for alleged sales of foodstuffs
to Cuba, which would have to be subject to a licence to be issued by United States Government
agencies, thus making them subject to political considerations;  it reinforces the prohibition on access
by Cuban goods and services to this market, making even more unlikely any prospect of mutually
advantageous trade;  it gives the status of law to restrictions on the right of United States citizens totravel to Cuba, which until now had been a prerogative of the Executive, with the intention of
stopping at all costs this natural source of income generation for the Cuban economy.WT/L/370
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It should also be pointed out that Cuba is prohibited from using the dollar in its external trade
and financing transactions, which obliges it to use the currency of third countries, even though our
major products are quoted in dollars on the global market.  This situation causes substantial losses due
to the rise and fall in the currency in question for our major trading partners and causes instability in
enterprises due to the twofold exchange risk.
Another reason for the reduced margin of ma noeuvre of the Cuban authorities as far as
economic policy is concerned has been the downward trend in the price of sugar on the global market.
It is estimated that this commodity lost one third of its average 1998 value last year, causing Cuba a
loss of US$265 million in export earnings, whereas the price of industrial products such as fuel has
tripled, leading to additional spending of over US$500 million.  This has led to even further
deterioration in the terms of trade for countries which, like Cuba, do not have access to any othersources of financing.
For the reasons set out above, we consider that the conditions which led to the granting of the
waiver given to Cuba in relation to Article XV:6 of the General Agreement on Tariffs and Trade 1994
continue to exist.
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