WORLD TRADE WT/L/228
3October 1997
ORGANIZATION(97-4195)
Original: English/French/Spanish
CONSIDERATIONS OFCUBA INRELATION TOTHE INCLUSION OFNEW DISCIPLINES
INTHE MULTILATERAL INVESTMENT AGREEMENT (MIA)
UNDER NEGOTIATION INOECD
Communication from Cuba
Thefollowing communication, dated 2October 1997andaddressed totheDirector-General,
hasbeenreceived from thePermanent Mission oftheRepublic ofCuba withtherequest thatitbe
circulated toMembers.
_______________
I. INTRODUCTION
Inthelastfewmonths, theUSAdministration hasbeennegotiating withtheEuropean Union,
seeking toinclude newdisciplines intheMultilateral Investment Agreement currently inpreparation
attheOECD.
Within thecontext ofthose negotiations, some ofthemeasures being considered mayaffect
Cuba because oftheinterpretation thatUSnegotiators aretrying togivetothenationalization ofUS
property undertaken attheendofthefifties andthebeginning ofthesixties.
Oneoftheobjectives ofthisdocument istoavoid thedistortion ofthehistorical process and
theconditions under which suchnationalization tookplace. Asecondary objective would betowarn
therestofthenations about theimplications thattheaforementioned scheme mayentail.
What isatstake withtheHelms-Burton Actgoeswellbeyond thebilateral conflict between
Cuba andtheUnited States, showing howthispowerful country views thereordering oftheinternational
relations withitsownallies, thedeveloping countries andthemultilateral institutions.
Bybrewing upconfusion andresorting todeceit, aplotagainst Cuba isbeing concocted, which
canbeusedagainst other nations inthenearfuture.
II. BACKGROUND
Aftersixmonths offutilewarnings tohavetheHelms-Burton Actrepealed, last3October 1996,
theEuropean Union asked theWorld Trade Organization (WTO) toappoint anExpert Panel toexamine
andadopt decisions about theinfringements oftheregulations ofthatorganization resulting fromthe
Helms-Burton Act. Canada, Mexico, Japan, Malaysia andThailand escorted theEuropean Union as
Third Parties totherequest.WT/L/228
Page2
TheUSAdministration threatened tocome upwithNational Security reasons inorder toimpose
theextraterritorial measures contained inthatAct,which would seriously andirresponsibly undermine
WTO initsorganizing functions concerning international trade andworld economy.
On11Aprilofthisyear,theUnitedStatesandtheEuropeanUnionreachedan“Understanding,”
anditwasreported thattheUSAdministration undertook tocontinue suspending thelawsuits under
TitleIIIofHelms-Burton andnegotiate withtheUSCongress thepossibility ofamending theActin
question towaive TitleIV.Besides, commitments weremade toworktowards anagreement concerning
theIranandLibya Sanctions Act(ILSA).
TheEuropean Union, pursuing thecommon objective ofnotweakening WTO, temporarily
suspended theproceedings before WTO ’sPanel.
Based onthis"Understanding", thenegotiation process relating totheHelms-Burton Actwas
referred from WTO totheOECD, theorganization where, since 1995, aMultilateral Investment
Agreement isbeing prepared.
Twoyears ago,theMinisterial Meeting oftheOECD adopted thefollowing guideline when
itsetuptheNegotiation Group which would drafttheMultilateral Investment Agreement:
"TheMIAshould provide awidemultilateral structure forinternational investments, withhigh
standards fortheliberalization ofinvestment regimes andinvestment protection, andcontaining
effective procedures forthesettlement oflawsuits."
Initstwoyears ofwork, theNegotiation Group hasonlytaken uptheissueofnationalization
offoreign property interms ofexceptional cases which could appear inthefuture. Atnostage in
thepreparation oftheMIAwasanyreference made toprevious nationalization. Thatisrecorded in
theInformative Note oftheOECD dated March 1997 concerning thedevelopment oftheMIA:
"Rapid progress hasbeenmade indrafting theMIAprovisions oninvestment protection. This
canbeattributed tothewideexperience acquired byOECD countries innegotiating Bilateral
Investment Protection Treaties (BITs). TheMIAprovisions arelargely based ontheprinciples
enshrined inthese Agreements ."
Explicitly, thatsame Note explained howtheissue ofnationalization would bedealtwith:
"ii)Expropriation
Expropriation, oranyothermeasure having similar effect, whether directly orindirectly, would
bepermitted onlyifitisinthepublic interest, onanon-discriminatory basis, against payment
ofprompt, adequate andeffective compensation, andinaccordance withdueprocess oflaw."
Inanamazing move, theUSAdministration istrying totransform itsposition, going from
theDefendant 'sseatitoccupied atWTO tosetting down newmeasures onInternational Lawwithin
theframework oftheOECD, bymeans ofwhich itattempts todefine intheMIAas"illegal andagainst
International Lawthenationalization ofproperty undertaken" from theendofthefifties. Oneofthe
goals ofthisscheme would betodeem illegal thenationalization ofUSproperty undertaken byCuba.
Inpractice, itintends tointernationalize Titles IIIandIVoftheHelms-Burton Act,under theumbrella
ofamultilateral treaty issued bytheOECD. Another goalwould betoapply these measures toother
nations, inaccordance withtheconvenience oftheUSAdministration andCongress.WT/L/228
Page3
After theUnderstanding inApril, theUnited States managed, initsnegotiations withtheEU,
toisolate the13other member countries oftheOECD.
Itisobvious thatinapartially secret environment andwithcompartmentalization ofinformation
atthepolitical levels oftheOECD member countries, USnegotiators willtrytotakeadvantage of
those conditions toachieve theirobjectives. IntheUnited States proper some voices arerequesting
information about thedecisions made inthenegotiations oftheMIA because there havebeenvast
information gapsinthisrespect.
TheUSendeavours toreorder anInternational Agreement withthesolepurpose ofserving
itsforeign policy. TheUnited States isactually taking advantage ofitslong-standing economic war
against Cuba touseitasitstestlabforfuture action withtherestoftheworld.
TheUSviolated allrules byenacting theHelms-Burton Act,climbing above therecognized
regulations ofInternational Law. Butitrefuses tobeheldaccountable forsuchaction. Itisdangerous
toallow itnotonlytobreak ruleswithimpunity buttoimpose itspower onceagain, taking concessions
away from other nations. Thiswillpoise athreat tothefuture; astepfurther intheaccumulation of
unilateral actsdonebyWashington lately, suchasself-defining areduction initsfinancial obligations
totheUN;pre-defining thereforms tobeundertaken bythatinstitution; andsetting itself upasthe
supreme attorney which “certifies ”thegood orbadbehaviour ofother countries intheinternational
struggle against drugtrafficking, human rights andother issues.
III. THE DANGERS AND CONTRADICTIONS RESULTING FROM THE SCHEME
CONCOCTED BYTHE UNITED STATES
Inthelastfouryears, theUSenacted 61executive lawsanddecisions toapply unilateral trade
sanctions against 35nations, which account for40%oftheworld population.
Theinconsistency oftheUSpolicy goestosuchextremes thatthePresident ’sExport Council
issuedareportadvisinghimtorestricttheuseofunilateralsanctions,eliminatingextraterritorialsanctions
andsecondary boycotts. Thisreport exemplifies thisinadequate policy through theHelms-Burton
andtheD’Amato-Kennedy Acts, andthecomplications brought about intheinternational andtrade
fields.
Itisinteresting tonotethattheExecutive Director ofthePresident ’sExport Council isthe
Under Secretary ofStateStuart Eizenstat, whoinoneinstance advises torestrict theuseofunilateral
andextraterritorial sanctions and,ontheother, spearheads thetaskforcesetuptoturntheHelms-Burton
Actintoaninternational affair.
Alan Larson, USAssistance Undersecretary ofState andVice-chairman oftheNegotiation
Group incharge oftheMIA since itsinception, isthesecond manincommand inthisnegotiations
withtheEuropean Union.
TheUSistrying toimpose disciplinary measures which “prohibit ”investments inproperty
nationalized orexpropriated byanycountry without compensation andenvisages sanctions forthose
violating itsrules. Itattempts toapply suchretrospective measures totheactsofexpropriation carried
outattheendofthefifties. Thepredefinition oftheperiod from which itplans toconsider the
nationalization issimilar toanIdentikit picture ofCuba.
After theendofWorld WarII,several tendencies andmovements became stronger inorder
todecolonize many African, Asian andCaribbean nations. InLatin America, those forces withsome
sense ofnationalism grewatafastrate.Several wereinterested inretrieving andpreserving itsresourcesWT/L/228
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andwealth, andothers, likeCuba, triedtobuild amore righteous system, getting ridofthehegemony
ofitspowerful neighbour.
Allthose forces undertook anationalization process spanning aquarter ofacentury, from1950
to1976. Those years were witness totheintervention oftheSuezCanal; theChinese, Vietnamese
andCuban actsofexpropriation; theArab andPeruvian nationalization ofoilindustries during the
firsthalfoftheseventies; thenationalization process inAfrica inthesixties andseventies, inaddition
tothenationalization thattookplace inPortugal intheearlyseventies. Theyear1976, when Venezuela
nationalized itsoilcompanies, wasthelastoftheeraofmajor actsofnationalization. Thenew
privatization wave thathasswept theworld inthelast15years, hasincluded many enterprises which
werepreviously nationalized. Itislikely thatthese newmeasures theUSAdministration istrying to
include intheMIA willbring about unforeseen complications withother countries andenterprises,
which hasnotbeenconsidered bythose inWashington hatching upthisplan. These complications
willnothaveanything todowithCuba.
Itwould notbeasurprise tofindUSmultinationals thathaveacquired privatized enterprises
which werepreviously nationalized without compensation andwereformerly owned byBritish, French,
Dutch, Belgian, Italian orother countries companies. Could cases likethose come upinAlgeria,
Indonesia, Congo, Peru, Venezuela andeventheMiddle East?
Aboomerang effect would nothurtUSplanners forthefirsttime: bytrying toactagainst a
given country, theyunleash unforeseen situations which thenbackfire. Ithappened likethatwhen
from1959theCentral Intelligence Agency encouraged thehijacking ofCuban planes. TheCIAdid
notconsider thatmostplanes wereAmerican, andthatpractice theyabetted against Cuba soonspread
totheirownairlines.
Cuba would liketorecall that:
I-Thewillingness oftheCuban Government tonegotiate mutual claims hasalways existed,
including thecompensation process. InDecember of1996, upon enactment ofLawNo.80
(Cuba ’sclawback lawagainst Helms-Burton), itsetsdown:
Article 2
"Thedisposition oftheGovernment oftheRepublic ofCuba, implemented inthenationalization
lawsimplemented more than35years ago,inrelation toadequate andjustcompensation for
theexpropriated assets ofpersons andcorporations which hadUScitizenship ornationality
atthattime, ishereby reaffirmed."
II-TheUNGeneral Assembly inits47thSession approved itsResolution 47/19 titled:
"Need toputanendtotheeconomic, trade andfinancial blockade imposed onCuba bythe
United States ofAmerica,"
according towhich, allthemembers ofthatorganization should abstain from enacting and
applying lawsandregulations whose extraterritorial effects affect thesovereignty ofotherStates
andthelegitimate interests ofentities orpersons under itsjurisdiction, aswellasfreetrade
andnavigation.
Inconformity withthatsame resolution, thecountries applying thatkindofaction should take
allnecessary measures toeliminate orannul theeffect ofthose laws.WT/L/228
Page5
From 1992 todate, theUNGeneral Assembly hasapproved fiveresolutions requesting the
UStoabstain fromimplementing extraterritorial laws. InitslastSession, 137States reiterated
thatrequest.
ItisCuba’sdutytowarn andinsist about thefollowing:
- AlltheCuban nationalization laws contained provisions relating toadequate
compensation, bothtonationals andforeigners. Thus, under international practice,
CubanegotiatedandsignedseveralGlobalCompensationAgreements,payingallagreed-
uponamounts, except theoneowed toSpain (currently inimplementation because its
validity period is20years: 1988-2008). TheGovernments which submitted claims
infavour oftheircitizens wereserved and,accordingly, somecompensation agreements
weresigned withthem(France, Switzerland, theUnited Kingdom, Canada andSpain).
Several small claims were alsopaidofftoItalythrough theExchange ofNotes.
- Onmany occasions, theCuban Government hassuggested thattheUSGovernment
sitdown withittodiscuss thecompensation issuealong withother matters, therequest
being rejected allthetime.
- Throughout almost fourdecades, theUSAdministrations havenotbeeninterested in
receiving compensation fornationalized property. Thisistheconfusion theUSis
trying tospread among those working ontheMIA andtheOECD member nations.
TheUSGovernment isonly intent onoverthrowing andwiping outtheCuban
Revolution.
- TheHelms-Burton Actistotally unacceptable inallitsTitles, foritattempts, from
theUnited States ofAmerica, todetermine thepolitical, economic andinstitutional
order ofasovereign, independent state, anobjective which isnotinlinewiththeUN
Charter andviolates principles ofsovereignty andnon-interference intheinternal affairs
ofother states.
- Therecent action taken bytheUSCongress shows that,regardless ofthefinalform
adopted bytheForeign Service Reform Act,itwillalways beatcross purposes with
theunderstanding reached withtheEUinApril. Besides keeping TitleIVoftheHelms-
Burton Act,thenotion istospread ittotherestoftheworld, which willpoise aconstant
threat toallinvestors, including those unrelated toCuba. Thelackofanswers bythe
Legislative Power clearly shows thatthere isnointention tohonour theobligations
entered intowiththeEuropean partners.
- Ongoing negotiations arenotabout atrade dispute between theEUandtheUS,but
about apolitical issueaffecting thesovereignty oftheEUmember nations, which could
gobeyond thescope ofaction oftheCommission.
- Anyarrangement orunderstanding agreed uponwithprejudice toCuba within theglobal
framework oftheMIAmaybecome aperilous legalprecedent likely tobeapplied to
anycountry inthefuture. Cuba hasendured almost fourdecades ofblockade andacts
ofaggression. Other countries could nowfallpreytosuchaction.