By:
Preston Brown
Washington, D.C.
On March 12, 1996, the President signed into law legislation intended to tighten the U.S. embargo against Cuba. As a consequence of recent tensions between the United States and Cuba, the legislation contained two sets of provisions which had been deleted by the Senate from the earlier House version of the bill (See Int'l Report Nov. 1995) and which are now the subject of considerable international controversy.
The first set of provisions is contained in Title III of the statute, which gives U.S. nationals with an interest in property confiscated by the Cuban government the right to sue persons "trafficking" in such property. Many questions surround the definition of trafficking and other key provisions of the statute, which will have to be resolved by the courts in the many cases that are likely to be filed thereunder. The statute also contains equally controversial provisions for treble damages in certain cases.
The section of the legislation giving U.S. nationals this right of action becomes effective August 1, but there is a further three-month grace period to permit persons to wind down their trafficking activities.
The President may suspend the application of this section of the legislation for successive six-month periods if, with respect to each such period, he certifies that such suspension is in the U.S. national interest and will expedite a transition to democracy in Cuba. The conference committee was of the strong opinion that the President could not, in good faith, make the requested determination currently:
In the judgment of the committee of conference, under current circumstances the President could not in good faith determine that suspension of the right of action is either "necessary to the national interests of the United States" or "will expedite a transition to democracy in Cuba." In particular, the committee believes that it is demonstrably not the case that suspending the right of action will expedite a transition to democracy in Cuba, inasmuch as suspension would remove a significant deterrent to foreign investment in Cuba, thereby helping prolong Castro's grip on power. Conference Report, Report 104-468, pp. 65-66.
The second set of controversial provisions is contained in Title IV of the statute, which requires the Secretary of State to deny a visa to and the Attorney General to exclude from the United States certain aliens involved in the trafficking of property confiscated by the Cuban government in which U.S. nationals hold an interest. As in the case of Title III, Title IV has provoked critical response from America's trading partners, who are reportedly considering possible challenges to them under GATT, NAFTA.
Apart from the above-mentioned provisions, the legislation includes a number of other provisions of interest, among them the following:
The United States is directed to vote for keeping Cuba out of international financial institutions and to take actions to discourage those institutions from providing assistance to Cuba;
The legislation enacts the Cuban Sanctions Regulations as they existed on March 1, 1996 (31 C.F.R. § 515 et seq., the "Regulations") into law -- at least until the President can certify that a transition government is in power in Cuba. By codifying the Regulations, the legislation deprives the President of his customary flexibility in administering an economic sanctions program; he will no longer be able to lift or relax the embargo by Executive Order without the participation of Congress.
The new law amends the Cuban Democracy Act of 1992 to include in the definition of assistance to Cuba any favorable treatment of a debt owed by Cuba to a foreign country in return for an equity interest in a property, investment or operation of the Government of Cuba, its agencies or nationals of Cuba. Under the Cuban Democracy Act, a country providing assistance to Cuba will not be eligible (a) for assistance under the Foreign Assistance Act of 1961 or the Arms Export Control Act or (b) under any program to reduce or forgive debts owed by other countries to the U.S. government.
The legislation prohibits the knowing extension of any financing by U.S. persons to any person for the purpose of financing transactions involving any confiscated property the claim to which is owned by a U.S. national on March 12, 1996 (except for otherwise permitted financings by the U.S. national owning that claim).
The law requires the U.S. Department of Commerce, within 90 days of the enactment of the legislation and by January 1 of each year thereafter, to submit a report to various committees of Congress, requiring, in part, a description of all "joint ventures completed, or under consideration by foreign nationals or business firms involving facilities in Cuba, including an identification of the location of the facilities involved and a description of the terms of agreement of the joint ventures and the names of the parties that are involved" -- as well as a determination whether any such facilities are subject to a claim by a U.S. national.
