WTO PROCEEDINGS ON THE
HELMS-BURTON ACT SUSPENDED
By:
Preston Brown
David A. Baron
Washington, D.C.
On April 14, 1997, just hours before the EU was scheduled to file its first submissions with the World Trade Organization ("WTO") dispute resolution panel that had been convened to hear the U.S.-EU dispute over the Helms-Burton Act, the European Union formally approved an agreement with the United States to suspend those proceedings. The agreement postpones, at least for now, a confrontation in the WTO that could seriously undermine the authority of the fledgling trade organization.
The United States had previously threatened not to appear before the WTO panel because it considers the Helms-Burton Act to be a foreign policy and national security matter that cannot properly be resolved by a WTO panel. The basis of the U.S. government's position is the view that the national security exception to the GATT's jurisdiction (Article 21) is self-defining. The EU's position has been that, although it agrees that article 21 of the GATT is self-defining, to the extent that the Helms-Burton Act imposes a secondary embargo affecting EU-U.S. trade relations, those trade relations are not a valid U.S. security concern and, thus, the Helms-Burton Act can be reviewed by a WTO panel. Under the "Understanding Between the United States and the European Union" (the "Understanding") the EU agreed to suspend the proceedings before the WTO panel until October 15, 1997. During this time the EU and the U.S. "agree to step up their efforts to develop agreed disciplines and principles for the strengthening of investment protection, bilaterally and in the context of the Multilateral Agreement on Investment or other appropriate international fora." (That Multilateral Agreement is currently being negotiated at the Organization for Economic Cooperation and Development in Paris.)
The Understanding similarly gives the U.S. Administration until October 15, 1997 to "consult with Congress with a view to obtaining an amendment providing the President with the authority to waive Title IV of the [Helms-Burton] Act once the bilateral consultations are completed and the EU has adhered to the agreed disciplines and principles." Because Helms-Burton has become law, however, any amendments or modifications to Title IV or any other provisions of the Act can be accomplished only by a further law that passes both Houses of Congress and is signed by the President. Title IV of the Helms-Burton Act authorizes the U.S. to deny entry visas to individuals who "traffic" (or whose employers "traffic") in property confiscated by the Cuban government. Visas can also be denied to their spouses and minor children.
Title III of Helms-Burton gives U.S. nationals with claims to property confiscated by the Cuban Government a right of action against persons who "traffic" in such property. Although President Clinton allowed Title III to come into force, the Helms-Burton Act gave the President the authority to suspend for successive six-month periods the right of potential plaintiffs to file suit if the President certifies to the Congress that a suspension is "necessary to the national interests of the United States and will expedite a transition to democracy in Cuba." President Clinton has exercised this right twice and the right to sue under Title III has been suspended until August 1, 1997. With respect to the President's continuing suspension of this portion of the Helms-Burton Act, the Understanding states: "The U.S. reiterates its presumption of continued suspension of Title III during the remainder of the President's term so long as the EU and other allies continue their stepped up efforts to promote democracy in Cuba. Each side will encourage other countries to promote democracy and human rights in Cuba."
The Understanding also deals with the Iran and Libya Sanctions Act ("ILSA"). The ILSA, which was signed into law on August 5, 1996, requires the President, unless waivers are granted as authorized in the legislation, to impose mandatory sanctions on persons who "invest" in the petroleum sectors of either Libya or Iran and on persons providing certain goods, services and technology to Libya's petroleum, military and aviation sectors. ILSA has also been a point of contention between the U.S. and the EU, as the EU views ILSA as also being impermissibly extraterritorial. In this regard, the Understanding provides that "[b]oth sides recognize that it is in their combined interests to work together to counter the threat to international security posed by Iran and Libya." The Understanding further provides that "[t]aking into account the measures taken by the EU, in particular those recently announced with respect to Iran, the U.S. will continue to work with the EU toward the objectives of meeting the terms for granting EU Member States [waivers under ILSA]." No official actions have yet been announced by the State Department under ILSA, although there is a small office working full time to review specific cases under the statute. Under the Understanding, however, the "EU reserves all rights to resume the panel procedure, or begin new proceedings, if action is taken against EU companies or individuals under Title III or Title IV of the Libertad Act or if the waivers under ILSA referred to above are not granted or are withdrawn."
If the U.S. Administration is successful in lobbying Congress to amend Title IV to permit the President to waive its application with respect to members of the European Union, presumably Canada and Mexico would also wish to sign the Understanding and receive similar waivers. According to Ambassador Eizenstat, the U.S. Undersecretary of Commerce for International Trade and special presidential envoy for the promotion of democracy in Cuba, such a waiver for Canada or Mexico could be problematic because of potential NAFTA challenges by both Canada and Mexico. Even if Canada or Mexico do not pursue those challenges, such Title IV waivers would also likely meet strong resistance in the U.S. Congress. In an April 11, 1997 press release in response to (and critical of) the EU-U.S. negotiations, Senator Helms stated: "I have a message for our friends in Canada and Mexico: Take no comfort from these negotiations [with the EU]. No matter what their outcome, unless and until you stop trafficking in stolen American property in Cuba, Helms-Burton will continue to apply to you."
