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Closed door to Cuba
Journal of Commerce / Dec. 2, 2002

By Larry Luxner

HAVANA — Nearly two years ago, the U.S. headquarters of Beckmann-Coulter Inc. banned its German subsidiary from sending a laser analyzer to Cuba, citing the 1996 Helms-Burton Act. The California-based company even threatened to remove the subsidiary's export license if the medical equipment was sent to Cuba.

Earlier this year, that same Helms-Burton Act thwarted the creation of a joint venture to produce fiberoptic and data transmission cables for sale in Cuba, Central America and the Caribbean. The venture could have brought Cuba tens of millions of dollars a year in badly needed revenues.

Those two examples are contained in a lengthy report presented last month by the Cuban government to the UN General Assembly. The report claims that the U.S. trade embargo has cost Cuba’s economy $70 billion since its imposition in 1962 — not including $54 billion in damages “caused by acts of sabotage and terrorism carried out by agents at the service of the United States.”

The 11,000-word complaint was submitted to the UN on Oct. 31. Two weeks later, the General Assembly voted 173-3 to condemn the embargo; only the U.S., Israel and the Marshall Islands opposed the measure.

Another four countries abstained: Ethiopia, Malawi, Nicaragua and Uzbekistan. It was the 11th year in a row that the world body had criticized the unpopular U.S. policy.

“The Cuban people continue to be victimized by the genocidal blockade imposed by the government of the United States in an effort to break the Cuban resolve to exercise self-determination and its willingness to preserve its independence, social justice and equality,” says the angry appeal, which contains a wealth of anecdotes illustrating how embargo has prevented U.S. and other companies from doing business with Cuba.

Even the Trade Sanctions Reform and Export Enhancement Act of 2000, which allows U.S. food sales to Cuba and is one of the embargo's few loopholes, is ridiculed in the report.

Under TSRA, U.S. companies may sell agricultural products to Cuba on a cash-only basis. Yet instead of seeking an end to the prohibition of U.S. financing of those sales, the business community now plans to push next year for an expansion of the types of products that can be sold to Cuba, including farm equipment and perhaps certain consumer goods like shoes and clothing.

"Clearly the business community is seeking to shift from permitting financing to expanding the range of products they’re allowed to sell," said John Kavulich, president of the U.S.-Cuba Trade and Economic Council in New York. "The argument will be, 'if you’re going to sell them dairy cows, why not sell them milking machines?'"

The Cubans claim that embargo-related damages to only nine sectors of the Cuban economy came to $643 million in 2001.

In the food sector, restrictive U.S. policies cost Cuba $233.7 million last year, because of price differentials, financial costs of operations and higher transportation costs.

“The fact that all operations must be carried out in only one direction, thus preventing any Cuban export to the U.S., implies the loss of potentially substantial savings as vessels could sail back carrying Cuban exports to that country,” it said. “In the case of bulk shipments, 36% of transportation costs could be saved, as average freight expenditures amount to $15.50 per metric ton, while the figure could be reduced to $10 a ton if vessels were able to take cargos back to the United States.”

The report also blames the embargo for depriving Cuba’s educational system of hard currency. During the 2001-02 school year, 50% fewer notebooks and pencils were distributed to children than in 1989. In 2001, imports of basic teaching aids came to $19 million.

“Items must be brought from far-off markets, which implied excessive freight charges estimated at 20% of the total value,” says the report, estimating that the savings could have allowed Cuba to import 37 million additional notebooks or 185 million additional pencils.

Under the Torricelli Act of 1992, vessels that call on Cuban ports may not call on U.S. ports. This so-called "black list" of freighters carrying goods to Cuba or on Cuba's behalf "violates basic norms of freedom of trade and navigation enshrined in international law and U.N. international agreements," says the report.

"Cuban port activity has been prevented from collecting $10 million a year for repair services in our shipyards, due to the limited arrival of ships in our ports as a consequence of the restrictions imposed by Torricelli Act," it claims. "Likewise, we lose approximately $1 million a year because of the impossibility of selling products such as catamarans and speedboats in the U.S. market."

Even though medicine is exempted from the embargo, Cuba may not purchase certain U.S. technologies, diagnostic kits, equipment and raw materials it deems crucial for its health-care sector.

For example, says the report, U.S. manufacturer Rashkind makes a balloon catheter used to treat infants with heart defects. Since Cuba may not purchase these devices in the U.S., it has to import them from Canada, causing the unit price to jump from $110 to $185. Likewise, if refurbished dialysis machines could be purchased in the U.S., Cuba could save 65-75% off the cost of a new machines.

Turning to exports, the report says Cuba’s economy suffered losses of $177.3 million last year because of its exclusion from the U.S. sugar market. Cuba would have placed some 918,180 metric tons in that market. The fact that it can’t sell nickel to the United States cost it another $5.4 million.

Some of the U.S. restrictions against Cuba seem downright petty.

In December 2001, the Swiss subsidiary of Xerox refused to renew the lease of a photocopy machine to the Cuban Embassy in Bern, Switzerland. The justification: a document containing U.S. Export Administration regulations, in which Cuba is listed among various countries banned from receiving computers, software and other various U.S. technologies.

And in June, an official of Texaco refused to sell gasoline to the Cuban Embassy in Belize, insisting that such sales would violate the Trading With the Enemy Act.

In another example, European Festival Cruise Lines based one of its largest vessels, El Mistral, in Havana harbor for weekly voyages between December 2001 and March 2002. As a result, says the report, the company “was subjected to enormous pressure to persuade it to cancel this itinerary, and was forced to include the warning, ‘These cruises cannot be offered in the United States’ in its May-December 2002 promotional materials.”

Likewise, when Carnival Corp. bought Costa Cruciere, an Italian firm, the company’s $62 million project to repair the Sierra Maestra cruise-ship dock was terminated at the insistence of the U.S. Treasury Department.

And in April 2002, Washington-based Airline Tariff Publishing Co. deleted all tariffs and regulations of Cuba’s state airline, Cubana de Aviación, from its database.

In a related matter, U.S. restrictions on civil aviation have cost Cuba $153.6 million. These include the impossibility of acquiring and renting high-performance planes; restrictions on the use by Cuban airlines of computerized reservation systems like Sabre, Galileo and Worldspan, and exclusion of Cuban airlines from the services of U.S. jet fuel suppliers.

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