WORLD TRADE WT/DS38/2
8October 1996
ORGANIZATION(96-4095)
Original: English
UNITED STATES -THE CUBAN LIBERTY AND
DEMOCRATIC SOLIDARITY ACT
Request fortheEstablishment ofaPanel bytheEuropean Communities
Thefollowing communication, dated 3October 1996, fromthePermanent Delegation ofthe
European Commission tothePermanent Mission oftheUnited States andtheDispute Settlement Body
iscirculated attherequest oftheEuropean Communities.
_______________
On3May1996theEuropeanCommunities,actingonitsownbehalfandonbehalfofitsMember
States, (hereafter together referred toastheEC)requested consultations withtheUnited States of
America (US) pursuant toArticle 4oftheUnderstanding onRules andProcedures Governing the
Settlement ofDisputes (DSU), Article XXIII:1 oftheGeneral Agreement onTariffs andTrade 1994
(GATT 1994) andArticle XXIII:1 oftheGeneral Agreement onTrade inServices (GATS) concerning
theCuban Liberty andDemocratic Solidarity (LIBERTAD) Actof1996 (Libertad Act), andrelated
measures. Thisrequest wascirculated toMembers oftheWTO on13May1996 (WT/DS38/1).
Consultations were held with theUSon4June and2July1996 inGeneva andon
23September 1996 inWashington. These consultations, which alsoinvolved written exchanges of
questions andanswers, haveallowed abetter understanding oftherespective positions buthavenot
ledtoasatisfactory resolution ofthematter.
Theprincipal USmeasures towhich theECobjected are:
(a) theextraterritorial application oftheUSembargo oftrade withCuba insofarasit
restricts trade between theECandCuba orbetween theECandtheUS.Thisembargo isapplied by
virtue oftheCuban Assets Control Regulations (CACR) of1962, which arenowcodified inpart515
oftitle31,Code ofFederal Regulations. Itisconfirmed, codified andreinforced bySections 102
and110Libertad Act;
(b) denial ofaccess totheUStariff ratequota forsugar byvirtue ofSection 902(c) of
theFood Security Actof1985, repeated inSection 110(c) oftheLibertad Actwhich prohibits the
allocation ofanyofthesugar quota toacountry thatisanetimporter ofsugar unless thatcountry
certifies thatitdoesnotimport Cuban sugar thatcould indirectly finditswaytotheUS.Several Member
States oftheECarenetimporters ofsugar andhavebeenunable toexport sugar totheUSunder the
quota because ofthisprovision;
(c) denial oftransit byECgoods andvessels ofMember States oftheECthrough ports
intheUSpursuant toArticle 6005(b)Cuban Democracy Actof1992(CDA). Thisprovision prohibits
(except incaseofaspecial license from theUSTreasury Department):WT/DS38/2
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- vessels carrying goods orpassengers toorfromCuba orcarrying goods inwhich Cuba
oraCuban national hasanyinterest from entering anyUnited States port; and
- vessels which haveentered aCuban portfortrade ingoods orservices fromloading
orunloading freight inUSportswithin 180daysafterhaving departed fromtheCuban
port;
(d) theprohibition pursuant toSection 103Libertad Actoftheprovision of"anyloan,
creditorotherfinancing"(whichincludessuchmattersasprovisionofperformanceguarantees,insurance
andsome payments) byUSpersons toanyperson forthepurpose oftransactions involving any
confiscated property theclaim towhich isowned byaUnited States national;
(e) under TitleIIIoftheLibertad Act,thecreation ofarightofaction infavour ofUS
citizens tosueECpersons andcompanies inUScourts inorder toobtain compensation forCuban
properties towhich these USnationals haveaclaim, incases where theECpersons orcompanies
concerned have"trafficked" insuchproperty thatwasconfiscated bytheCuban Government from
persons whowere orarenowUSnationals;
(f) under TitleIVoftheLibertad Act,thedenial ofvisasandexclusion fromtheUS(or
threat thereof) ofpersons involved inconfiscating or"trafficking" inconfiscated property aclaim to
which isowned byaUSnational andpersons whoarecorporate officers, principals orshareholders
withacontrolling interest ofanentity which hasbeeninvolved in"trafficking" etc.insuchproperty.
Spouses, minor children andagents ofsuchpersons arealsodenied visas andexcluded from theUS
under thisprovision.
Pursuant toArticle XXIII ofGATT 1994, Article XXIII ofGATS, andArticles 4and6of
theDSU, theEChereby requests thatapanel beestablished atthenextmeeting oftheDispute Settlement
Body scheduled for16October 1996.
TheECwillinparticular request thatthepanel consider andfindthat:
(i) themeasuresdescribedinpoint(a)aboveareinconsistentwithArticleXIofGATT1994;
(ii) themeasures described inpoint (b)above areinconsistent withArticle XIIIofGATT
1994;
(iii) themeasuresdescribedinpoint(c)aboveareinconsistentwithArticleVofGATT1994;
(iv) themeasures described inpoint (d)above areinconsistent withArticle XIofGATS;
(v) themeasures described inpoints (e)and(f)above areinconsistent withArticles II,
III,VI,XVIandXVII ofGATS andthemeasures described inpoint (f)arealso
inconsistent withparagraphs 3and4oftheGATS Annex ontheMovement ofNatural
Persons;
(vi) evenifwholly orpartly notinconflict withGATT 1994, themeasures described in
points (a),(b),(c),(d),(e)and(f)above nullify andimpair benefits which theEC
could expect tohaveaccrued toitdirectly orindirectly under GATT 1994. Thebenefits
which theECcould haveexpected aretheunrestricted export ofCommunity goods
toCuba andtotheUSwithout suchexports giving risetoorbeing subject toor
providing anopportunity forunwarranted legalaction andexclusion ofpersons from
theUS;WT/DS38/2
Page3
(vii) evenifwholly orpartly notinconflict withGATT 1994, themeasures described in
points (a),(b),(c),(d),(e)and(f)above impede theattainment ofanobjective ofGATT
1994. Theobjectives which arebeing impeded arenotably theexpansion ofproduction
andtrade, theoverall balance ofrights andobligations between WTO Members, in
particular theright ofaccess tomarkets, andtheprinciple, recognized inGATT
jurisprudence, thatWTO Members should nottrytoforce other WTO Members to
change theirsovereign policies through trade sanctions;
(viii) even ifwholly orpartly notinconflict withanyoftheprovisions ofGATS, the
measures described inpoints (d),(e)and(f)above nullify andimpair benefits which
theECcould reasonably expect tohaveaccrued toitunder thespecific commitments
oftheUSandCuba under GATS. These benefits aretrade inservices between the
ECandtheUSandbetween theECandCuba unhindered bytheinterruption offinancial
services, thethreat ofseizure ofassets forthepurposes ofsatisfying compensation
claims inrespect of"trafficking" andbytheharassment ofitscitizens through thedenial
ofvisas andexclusion from theUS(orthethreat thereof).
Theabove summary isdesigned tobriefly describe thelegalbasis ofthecomplaint sufficient
topresent theproblem clearly butisnottobetaken asrestricting thearguments which theECmay
develop before thepanel.
TheECrequests thatthepanel beestablished withthestandard terms ofreference orsuch
other terms ofreference asmaybeagreed pursuant toArticle 7DSU.