WORLD TRADE
ORGANIZATIONWT/WGTI/W/45
20 July 1998
(98-2861)
Working Group on the Relationship
between Trade and InvestmentOriginal:  Spanish
COMMUNICATION FROM CUBA
The following communication, dated 16 June 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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At its 47th session, the General Assembly of the United Nations adopted a resolution on the:
"Necessity of ending the economic, commercial and financial embargo imposed by the United
States of America against Cuba"
under which all members of that organization shoul d refrain from promulgating and applying laws
and regulations whose extraterritorial effects affect the sovereignty of other States and the legitimateinterests of entities or persons under their jurisdiction, as well as the freedom of trade and navigation.
In conformity with that same Resolution, countries applying that kind of action should take all
the necessary steps to eliminate or invalidate the effects of such laws.
Since 1992 the United Nations General Assembly has adopted six resolutions calling on the
United States to refrain from enacting extraterritorial laws.  At its most recent session, inNovember 1997, more than 150 nations reiterated this call, with only three votes against
(United States, Israel and Uzbekistan), in another similar Resolution.
Thirty three years before, in March 1964, the United States Supreme Court with a vote of
eight to one in favour of Cuba, in the so-called Sabbatino case, in a substantive judgement on the Actof State of Cuban nationalizations, ratified the doctrine of the Sovereign Act of State, which was the
Gordian knot in the whole dispute.
All the Cuban nationalization laws contained provisions on adequate compensation, both to
nationals and to foreigners.  Thus, in keeping with international practice, Cuba negotiated and signedseveral Global Compensation Agreements, paying all the agreed amounts.  Governments which
submitted claims for their citizens were heeded and, accordingly, compensation agreements were
signed with them - France, Switzerland, the United Kingdom, Canada and Spain (although the
Agreement with the latter country is over a period of 20 years:  1988-2008).  Several small claims
submitted by Italy were also paid off through the Exchange of Notes.
The Government of Cuba has always stood ready to negotiate mutual claims, including the
compensation process.  In December of 1996, when Law No. 80 (the Cuban law in reaction to the
Helms-Burton Act) was adopted, it stipulated:WT/WGTI/W/45
Page 2
Article 2
"The arrangement by the Government of the Republic of Cuba, as set out in the
nationalization laws implemented more than 35 years ago, in connection with just and
adequate compensation for the expropriated assets of persons and corporations that possessedAmerican citizenship or nationality at the time is hereby reaffirmed".
The Cuban Government has repeatedly proposed that the Government of the United States
should sit down with it and negotiate the issue of compensation for nationalized property.  In reality,
the Government of the United States is only interested in overthrowing and doing away with the
Cuban Revolution.
The Helms-Burton Act is totally unacceptable, in regard to all the Titles it contains, since it
seeks to determine the political, economic and institutional order of a sovereign independent State, an
objective that is not in keeping with the Charter of the United Nations and is in breach of the
principles of sovereignty and non-interference in the internal affairs of other States.
And now… a new Understanding
Last May, the European Union and the United States reached a new Understanding whereby
Title IV would not apply to European enterprises and all sanctions would be suspended (enterprises
from the Old Continent which had made investments in Cuba up to 18 May, the date of theUnderstanding, will not be subject to sanctions).  In the future, European Union Governments will
discourage investments by their enterprises in Cuba if they are made in property that was
United States-owned and was subsequently nationalized.
A register will be established for claims on property allegedly nationalized in contravention of
international law.  In accordance with the informati on provided by the claimants, it will be decided
whether investments in such property are to be di scouraged by European Governments, thus refusing
to grant credits, insurance and commerc ial assistance to European investors.
Both Parties undertake to convince the other 13 OECD member nations to include the
substance of the Understanding in the Multilateral Agreement on Investment when the Negotiating
Group resumes its work next October.
During his stay in Geneva, on 16 May, two days before the Understanding, Cuban President
Fidel Castro warned:
"The question Cuba is asking itself is whether the differences between the United States and
the EU over the extraterritorial Law are going to be resolved at Cuba's expense, since this
infamous law essentially maintains the criminal blockade imposed on Cuba for nearly
40 years, and precisely on the eve of the 50th anniversary of the WTO".
Three days later, in his statement at the WTO Plenary Session, he referred to the
Understanding, which had already been approved:
"The world has many reasons to feel humiliated and concerned, and the WTO must halt the
genocide.  Any difference between the United States and the EU in connection with the
Helms-Burton Act should not be resolved at Cuba's expense.  It would be an unthinkabledishonour for Europe.  The agreements announced yesterday in London are confusing,
contradictory, threatening to many countries and in no sense ethical".WT/WGTI/W/45
Page 3
The Cuban Government has compensated all foreign investors whose property was
nationalized in 1960s, except for American property, and in this case it is because the various
Administrations have never been ready to sit down and discuss the way to do it.
The Compensation Agreements signed by the Cuban Government specified that the
nationalization problems and related compensations were deemed to be solved once they were signed.
These included Lump Sum Agreements with three European Union nations – France, the United
Kingdom and Spain, whose citizens and enterprises have been compensated for the losses suffered.  It
must be really embarrassing for these three major EU member nations that from now on, in line with
the Understanding, they have to act against their own enterprises because of the alleged American
claims, whose validity has not been thoroughly checked by anyone and absolutely no one can take a
decision about their validity without Cuba's participation.
To date, Cuba has signed Bilateral Investment Treaties (BITs) with 33 countries, eight of
them members of the European Union.  These BITs have two main tasks:  investment protection, and
mutual promotion and facilities for foreign investment flowing from one country to the other.  But
under the Understanding of 18 May, those same eight European Union countries must hold back, notpromote, investment in Cuba.
The new Understanding is really very confusing.  Two days after the Understanding was
adopted, the German newspaper Handelsblatt said the following:
"From a second look it is clear that the EU has surrendered.  Never again will it enjoy any
credibility in facing up to Washington's sanctions laws.  It has stopped being the accuser.
Two weeks ago, it withdrew the complaint to the WTO Dispute Settlement Body, so as to
send Washington a signal of good will on the eve of the US-EU Summit.  The fact is that the
Libya-Iran Sanctions Acts, as well as the law against Cuba, are still there."
On 28 May the Madrid newspaper El País,  said that the Understanding is very contradictory
from the European standpoint, since several EU nations had signed BITs with Cuba but now an
agreement was being reached with the United States to discourage certain investments in the island.
But a more absurd situation is the fact that the legitimate claimants are not interested in
submitting claims.  On 12 March 1998 Michael Ranneberger, the State Department Coordinator forCuban Affairs, made a presentation to the United States House of Representatives Sub-Committee for
International and Commercial Policy:
"We have publicized our efforts with US claimants, including in the Cuban-American
community, through the radio, newspapers, US mail and the Internet, and have vigorouslysought information about foreign business invo lvement in US-claimed properties in Cuba.
However, in the past two years (since March 1996) we have received only one inquiry from a
certified claimant.  We have received more than 150 inquiries from potential non-certified
claimants, but when asked, only two provided documentation to support their claims, and
these involved the same case of possible trafficking."
The Understanding is confusing and creates uncertainty and fears.  Therefore, it discourages
some short-term investments, even though it cannot be fully implemented.  It is altogether absurd:
- The European countries which have signed international agreements in the past five
years to promote the flow of investments to Cuba now have to try to discourage or
inhibit their own companies;
- The American claimants of old properties do not want to claim, even though their
own Government is pressing them to do so.WT/WGTI/W/45
Page 4
In a previous submission in December 1997, the Cuban delegation said to this Working
Group:
"It is Cuba's duty to warn and to insist that  any arrangement or understanding reached to the
detriment of Cuba within the overall framew ork of the OECD MAI may become a dangerous
legal precedent that can be applied to any other country in the future.  Cuba has endured
almost four decades of blockade and acts of aggression.  Other countries could now fall prey
to such actions."
Probably, in the future the 18 May Understanding – and its intention to internationalize the
Helms-Burton Act – could well be a new boomerang, as has happened in the last 40 years.  History
shows that activities to encourage the hijacking of Cuban aircraft became an increasingly dangerous
practice and ended up by turning against American airlines.  The United States Government's
promotion of massive illegal emigration brought about a serious and unmanageable situation which,
in 1994, compelled that same Administration to seek  urgent assistance from the Cuban Government.
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