WORLD TRADE
ORGANIZATIONWT/L/496
29 November 2002
(02-6585)
General Council
10-11 December 2002Original:  Spanish
CUBA – ARTICLE XV:6 OF THE GENERAL AGREEMENT
ON TARIFFS AND TRADE 1994
Report by the Government of Cuba under the Decision of 20 December 20011
The following communication, dated 20 November 2002, has been received from the
Permanent Mission of Cuba.
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1. Pursuant to the provisions of Article IX.4 of  the Agreement Establishing the World Trade
Organization (WTO), the Republic of Cuba transmits herewith the first annual report on the extension
granted on 5 October 2001 of the waiver approved on 14 October 19962, in relation to Article XV.6 of
the General Agreement on Tariffs and Trade 1994 (document G/C/W/308).
2. In 2001 the Cuban economy continued to recover and grew by 3 per cent (at constant 1997
prices).  This result, like the results of previous years, was based on the great sacrifices made by the
Cuban people and State.
3. However, although the Cuban economy is steadily continuing along the path of recovery that
began in 1994, the results have still not overcome the accumulated decline stemming from the
economic contraction between 1989 and 1993, due to the loss of 85 per cent of our markets throughthe collapse of the USSR and the disappearance of the socialist camp, and with the persistence of
conditions that restrict our economic potential.
4. Growth in 2001 took place against the background of an unfavourable international economic
and financial situation, aggravated by the events of 11 September, which affected tourism and
international trade.
5. During that period, the country also suffered from the continuation of the strict blockade
imposed by the United States and the disastrous effects of hurricane "Michelle", the most devastating
of the last 50 years.  Total estimated losses from the hurricane amounted to 1,866 million pesos and
affected several sectors of the economy, principally agriculture, the electricity services and
communications.  In all, these losses represented 6.4 per cent of GDP.
6. The Gross Domestic Product nonetheless increased in volume terms and production  achieved
higher levels of efficiency.  In 2001 labour productivity rose by 1.6 per cent, energy use fell by 3 per
cent and the foreign currency spending for each dollar of gross income declined by 3 per cent,
indicators that underpin the consolidation of the process of economic recovery.
                                                     
1 WT/L/440.
2 WT/L/182.WT/L/496
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7. With regard to fiscal policy, 2001 displayed further proof of strength and strict management
within the context of the reforms initiated in 1994.  In the midst of unfavourable conditions, the State
Budget continues both to support the country's soci al policy and to contribute to economic growth.
8. The budget deficit/GDP ratio was 2.5 per cent, maintaining the stability of the last five years
with levels of between 2.0 and 2.5 per cent, lower than  the deficits forecast for each year (3 per cent).
9. Price stabilization continued during 2001, so that the year closed with a 1.4 per cent fall in the
Consumer Retail Price Index as compared with the year 2000.
10. The monetary policy pursued by the Central Bank of Cuba has been directed towards the use
of financial measures to regulate the money supply on the basis of an analysis of the Monetary Base
and Monetary Aggregates.
11. In view of the special characteristics of the Cuban economy, it has been particularly important
to monitor the monetary aggregate M1A, which measures the behaviour of the liquid assets held bythe public and includes the cash in circulation, savings accounts payable on demand and current
accounts.  This aggregate increased by 16.4 per cent owing to the rise in economic activity and the
injection of liquidity caused by the decrease in the value of the Cuban peso against the United States
dollar in the exchange market for the population in the last quarter of the year, but without any
inflationary effects on the economy.
12. Deposit rates in the banking system, in the different currencies, remained stable and the
policy pursued maintained the objective of encouraging saving in the national currency.  At the close
of 2001, for time deposits the rates for United States dollars fluctuated between 1.5 and 2.75 per cent
depending on the length of time of deposit, which ranged from three to 36 months;  in the case of
deposits in convertible pesos they were between 3 and 5.5 per cent and for Cuban pesos between3.5 and 7.5 per cent.
13. In the external sector there was a fall in the deficit on current account owing to a decrease in
the deficit on the balance in goods and the balance in income, together with an increase in current
transfers.  Foreign investment amounted to 38.9 mil lion pesos over the year and at the close of 2001
there were 400 international economic associations operating and 60 reciprocal investment protectionand promotion agreements.
14. In the labour market, the rate of unemployment stood at 4.1 per cent, a fall of 1.3 percentage
points as compared with the year 2000.
15. In general terms the Cuban banking and financial system continued to gain strength.  At the
end of 2001 it consisted of the Central Bank of Cuba, eight commercial banks, 17 non-bank financial
institutions, 12 offices representing foreign banks and four representing non-bank financial
institutions.
16. In addition, the country continued to move ahead in finding solutions to strategic
development problems, without affecting the social programmes designed to raise the standard of
living of the population.
17. The most relevant social indicators of the year were:
(a) The infant mortality rate reached its lowest level in history, at 6.2 per thousand live
births.
(b) Life expectancy at birth continued to be 76 years.WT/L/496
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(c) Deaths from respiratory diseases fell by almost 50 per cent compared with the
year 2000 and the mortality rate for diarrhoea diseases was 0.1 per cent per thousand
children.
(d) The average number of persons per doctor fell from 172 to 169.
(e) 17,136 students graduated in the various branches of higher education (technical,
medical, agricultural, economic, social and educational sciences, etc.) out of a total of
298,943 graduates during the years 1991-2001.
(f) Over 8,000 schools were equipped with a computer for every 50 pupils and 2002 will
see the completion of the process of providing each school with a television set for
each  classroom.
18. The steady growth of the Cuban economy over the last seven years has been constantly
threatened by the hostile policy of the Government of the United States, which has unceasinglyincreased its political and commercial pressure so as to isolate Cuba within the region and throughout
the world, causing severe restrictions in all sectors of the domestic economy, including:
(a) Impossibility of using the dollar in external commercial and financial transactions,
thereby causing heavy losses to the country owing to the appreciations and
depreciations against the American dollar of the currencies that Cuba uses.
(b) Obstacles to the signing of export contracts with third countries.(c) Sanctions against maritime agencies that transport cargoes to and from Cuba.
(d) Prohibition on the branches of United States companies located in third countries
from trading with Cuba.
(e) Impossibility of gaining access to sources of long-term financing under favourable
conditions, so that the country is forced to resort to short-term loans and higher rates
of interest.
(f) Obstacles to the flow of resources to finance development, as a result of the sanctions
against potential foreign partners interested in investing in Cuba.
19. This policy has led to a substantial increase in financial costs and serious difficulties in
financing the purchase of essential imports, principally foodstuffs, medicines and fuel, and this in turnhas had the effect of holding back economic development.
20. Even for sales of agricultural products by the United States to Cuba, authorized on a case-by-
case basis with specific licences, all these restrictions come into play and make the transactions less
effective.
21. Consequently, the country's efforts to integrate itself into the world trading system are being
made under particularly difficult conditions, the outcome of a policy which contradicts the principle
of free trade.
22. In addition to the great sacrifices it has been compelled to make to counteract the effects of
the blockade, Cuba has also had to face other highly unfavourable international economic conditions,
such as the deterioration in the terms of trade on account of the persistent weakness and vulnerabilityWT/L/496
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of commodity prices, as demand fell sharply after the events of 11 September, while oil prices, which
trebled between 1999 and 2000, are still rising.
23. Cuba is not a member of the IMF or of other international financial organizations and
consequently does not adopt the policies laid down by these institutions. Nor does it have access to
those important sources of credit from international funding agencies.
24. Owing to the above factors, the particular circumstances that gave rise to the extension of the
waiver granted to Cuba in October 2001 still exist.  Again, the use of the waiver has not had any
adverse effects on other WTO Members, who have not had any need to hold consultations in that
connection. Hence Cuba is showing that it has co mplied with its commitment to make use of the
waiver without thereby affecting the objectives of the General Agreement or harming or impairing the
rights of other Members.
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