Text
05/05/98
18:01
CONG R NEAL
MA
i4J 002/006
PHlt.lP M. CRAN!;, ILLINOIS, Cl-lAIAMAN
BILL ARCHER, TeXAS, CHAIRMAN
$\JSC:OMr.t\'TT'EE CIN TRA.0£
COMMriTt' ON WA.VS ANO M[A.NS
B1U. T110h1AS, CAUFO"NtA
E. CLAY SKAW, Jll, Fl.OfUPA
AMO HOUOl'lTON, NEW YO~(
COMMITIEE ON WAYS AND MEANS
CAVE CA.t,\f', ),,11CHIGAN
Jf"11tAMSTAO, M!Nt.ltSOTA
JENNJFf;jl; C>UNN, WASMJNGTON
WA.1,1.V H£RGEP,, CALIFORNIA
.11"'1 NUSSLf. l(N/A
U.S. HOUSE OF REPRESENTATIVES
WASHINGTON, DC 20615
ROBERT t. MATSUI, c.AL!FORN1A.
A.I.- SINGLETON, CKU~F OF STAFf
THEVM J. ASKEY, :SUBCOMMITTEE STA,f.F PlFl€CTOJl
JAtue, t,IAVS:, MINOr:lTY C,tJEF COUNSEL
5. SRUC[ W1\.$0N, $1JBCOM"1!Tlff MJNO/\i'TY
CkAALE9 8. R.-.NG£l NEW YORK
IW;,u.RD E, NEAL /rllASSACHUS~
JIM M~PllRMOTT, WASl'IINOTON
SUBCOMMITTEE ON TRADE
MICHi.SL II, MCNULTY, NE'II' VOil(
W\\.UAM J. Jl'-.,fff!SON, LO\JlStANA.
£'1:0,t,CIOl
IIILLAACM[R. ~
May 4, 1998
Memorandum
TO:
Members of the Subcommittee on Trade
FROM:
Subcommittee Staff
RE:
May 7ili hearing on U.S. Economic and Trade Policy Toward Cuba
On Thursday, May 7, the Subcommittee on Trade will hold a hearing on U.S.
economic and trade policy toward Cuba. The hearing will take place in l l 00 Longworth
House Office Building and will begin at 1:00 p.m.
Background
Since the early l 960's, U.S. policy toward Cuba has consisted largely of
attempting to isolate the island nation through a comprehensive economic and trade
embargo. The authority for these sanctions was included in section 620(a) of the Foreign
Assistance Act of 1961 (P.L. 87-195). In 1992, the sanctions were strengthened with the
enactment into Jaw of the Cuban Democracy Act (P.L. 102-484). In particular, the Act
extends the prohibitions on transactions with Cuba to subsidiaries of U.S. firms in third
countries. At the same time, the Cuban Democracy Act directs the President to take steps
to end the trade embargo and to assist a freely and democratically elected Cuban
government, should one come 1to power. Another component of U.S. policy under the Act
consists of support measures for the Cuban people, including U.S. pirvate humanitarian
donations, U.S. Government support for democracy-building efforts, and U.S.-sponsored
radio and television broadcasting to Cuba (Radio and TV Marti).
In 1996, the Cuban Liberty and Democratic Solidarity Act (P.L. 104-114), often
referred to as the "Helms-Burton" legislation, was enacted to further strengthen U.S.
sanctions against Cuba. Among other things, Helms-Burton codified all Cuban embargo
05/05/98
18:01
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Page -2executive orders and regulations in force on March 12, 1996. In addition, the Act denies
admission into the United States to certain aliens involved in the confiscation or
trafficking of U.S. property in Cuba. Finally, the Act allows U.S. nationals to sue for
monetary damages in U.S. Federal court those persons who traffic in property confiscated
from such U.S. nationals. Under the Act, the President has the authority to waive this
provision·in periods for up to six months ifhe determines that such a delay would be in
the national interest and expedite a transition to democracy in Cuba. Since enactment, the
President has utilized this waiver authority four times, most recently on January 16, 1998.
In the President's July 16, 1996 waiver announcement, he indicated that the liability of
foreign companies under Helms-Burton would be established during the suspension
period and that legal action could be taken immediately upon the lifting of the suspension.
Following the enactment of Helms-Burton, many U.S. trading partners, including
the European Union (EU), Canada, Mexico, and Japan, strongly criticized the legislation,
arguing that it constitutes an extraterritorial application of U.S. law contrary to
international principles. On November 20, 1996, the World Trade Organization (WTO)
agreed to a request from the EU calling for the formation of a dispute resolution panel on
Helms-Burton. The EU notified the WTO on April 21, 1997, that it was suspending the
dispute panel, pursuant to an understanding reached with the United States to develop join
disciplines on dealings in property confiscated by Cuba and other governments in
contravention of international law. Under WTO rules, dispute panels can be suspended
for only 12 months, after which time they lapse or must be reactivated. On April 21,
1998, the EU announced that it would allow its suspended case to expire but warned that
it would immediately file a new WTO complaint if companies in EU member states were
penalized under Helms-Burton or the Iran-Libya Sanctions Act (P.L. 104-172).
The visit of His Holiness Pope John Paul II to Cuba on January 21-25, 1998,
focused public attention on U.S. economic and trade sanctions against Cuba and their
effect on the Cuban people. At present, U.S. sanctions do not allow commercial food
exports to Cuba, and while commercial medical exports are allowed, there are several
restrictions on such exports as set forth in the Cuban Democracy Act of 1992.
Following the Pope's visit, President Clinton announced four changes in U.S.
policy toward Cuba on March 20, 1998. Specifically, the President announced: (1) the
resumption of licensing for direct humanitarian charter flights to Cuba (which had been
curtailed after the February 1996 shootdown of two U.S. civilian planes), (2) the
resumption of cash remittances up to $300 per quarter for the support of close relatives in
Cuba (which had been curtailed in August 1994 in response to the migration crisis with
Cuba), (3) the development of licensing procedures to streamline and expedite licenses
05/05/98
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14) 004/006
Page -3for the commercial sale of medicines and medical supplies and equipment to Cuba, and
(4) a decision to work on a bipartisan basis with Congress on the transfer of food to the
Cuban people.
Legislation in the 1Q';th Congress
In the 105th Congress, a number of bills have been introduced which would alter
U.S. economic and trade policy toward Cuba. Specifically, H.R. 284 was introduced by
Mr. Serrano on January 7, 1997, and was referred to the Committee on International
Relations, to repeal the Cuban Democracy Act of 1992 and the Helms-Burton legislation.
On June 18, 1997, H.R. 1951 was introduced by Mr. Torres, :tvlr. Rangel, Mr. McDermott
et alia to make an exception to the U.S. embargo on Cuba for food and medical exports.
The Committee on Ways and Means has received a sequential referral ofH.R. 1951 due
to the provisions of the bill which would amend the Internal Revenue Code of 1986 to
clarify that the denial of foreign tax credit in section 901 of the Code shall not apply to
Cuba with respect to income attributable to articles permitted to be exported to Cuba.
In addition, Mr. Nadler introduced H.R. 2904 on November 7, 1997, to make an
exception to the U.S. embargo on trade with Cuba for the export of medicines or medical.
supplies, instruments, or equipment. This bill has been referred to the Committee on
International Relations. On February 5, 1998, Mr. Rangel introduced H.R. 3173, the Free
Trade with Cuba Act, to lift the trade embargo on Cuba. This legislation has been
referred to the Committee on International Relations with sequential referrals to the
Committees on Ways and Means, Commerce, and Government Reform and Oversight.
In the Senate, Senator Dodd et alia introduced the Cuban Women and Children
Humanitarian Relief Act, S. 1391, on November 6, 1997, to authorize the President to
permit the sale of food, medicine, and medical equipment to the Cuban people. This
legislation has been referred to the Senate Committee on Banking, Housing, and Urban
Affairs. Another initiative, endorsed by Senator Helms, but not yet introduced as
legislation, reportedly would focus on expanding humanitarian aid to the Cuban people
by channeling such assistance through the Cuban Catholic Church.
Attachments
I. Tentative Witness List
2. CRS Issue Brief entitled "Cuba: Issues for Congress"
3. CRS Report entitled "Cuba: Initiatives to Ease Restrictions
on U.S. Food and Medical Exports"
18:01
CONG R NEAL
MA
i4J 002/006
PHlt.lP M. CRAN!;, ILLINOIS, Cl-lAIAMAN
BILL ARCHER, TeXAS, CHAIRMAN
$\JSC:OMr.t\'TT'EE CIN TRA.0£
COMMriTt' ON WA.VS ANO M[A.NS
B1U. T110h1AS, CAUFO"NtA
E. CLAY SKAW, Jll, Fl.OfUPA
AMO HOUOl'lTON, NEW YO~(
COMMITIEE ON WAYS AND MEANS
CAVE CA.t,\f', ),,11CHIGAN
Jf"11tAMSTAO, M!Nt.ltSOTA
JENNJFf;jl; C>UNN, WASMJNGTON
WA.1,1.V H£RGEP,, CALIFORNIA
.11"'1 NUSSLf. l(N/A
U.S. HOUSE OF REPRESENTATIVES
WASHINGTON, DC 20615
ROBERT t. MATSUI, c.AL!FORN1A.
A.I.- SINGLETON, CKU~F OF STAFf
THEVM J. ASKEY, :SUBCOMMITTEE STA,f.F PlFl€CTOJl
JAtue, t,IAVS:, MINOr:lTY C,tJEF COUNSEL
5. SRUC[ W1\.$0N, $1JBCOM"1!Tlff MJNO/\i'TY
CkAALE9 8. R.-.NG£l NEW YORK
IW;,u.RD E, NEAL /rllASSACHUS~
JIM M~PllRMOTT, WASl'IINOTON
SUBCOMMITTEE ON TRADE
MICHi.SL II, MCNULTY, NE'II' VOil(
W\\.UAM J. Jl'-.,fff!SON, LO\JlStANA.
£'1:0,t,CIOl
IIILLAACM[R. ~
May 4, 1998
Memorandum
TO:
Members of the Subcommittee on Trade
FROM:
Subcommittee Staff
RE:
May 7ili hearing on U.S. Economic and Trade Policy Toward Cuba
On Thursday, May 7, the Subcommittee on Trade will hold a hearing on U.S.
economic and trade policy toward Cuba. The hearing will take place in l l 00 Longworth
House Office Building and will begin at 1:00 p.m.
Background
Since the early l 960's, U.S. policy toward Cuba has consisted largely of
attempting to isolate the island nation through a comprehensive economic and trade
embargo. The authority for these sanctions was included in section 620(a) of the Foreign
Assistance Act of 1961 (P.L. 87-195). In 1992, the sanctions were strengthened with the
enactment into Jaw of the Cuban Democracy Act (P.L. 102-484). In particular, the Act
extends the prohibitions on transactions with Cuba to subsidiaries of U.S. firms in third
countries. At the same time, the Cuban Democracy Act directs the President to take steps
to end the trade embargo and to assist a freely and democratically elected Cuban
government, should one come 1to power. Another component of U.S. policy under the Act
consists of support measures for the Cuban people, including U.S. pirvate humanitarian
donations, U.S. Government support for democracy-building efforts, and U.S.-sponsored
radio and television broadcasting to Cuba (Radio and TV Marti).
In 1996, the Cuban Liberty and Democratic Solidarity Act (P.L. 104-114), often
referred to as the "Helms-Burton" legislation, was enacted to further strengthen U.S.
sanctions against Cuba. Among other things, Helms-Burton codified all Cuban embargo
05/05/98
18:01
CONG R NEAL MA
lilJ 003/006
Page -2executive orders and regulations in force on March 12, 1996. In addition, the Act denies
admission into the United States to certain aliens involved in the confiscation or
trafficking of U.S. property in Cuba. Finally, the Act allows U.S. nationals to sue for
monetary damages in U.S. Federal court those persons who traffic in property confiscated
from such U.S. nationals. Under the Act, the President has the authority to waive this
provision·in periods for up to six months ifhe determines that such a delay would be in
the national interest and expedite a transition to democracy in Cuba. Since enactment, the
President has utilized this waiver authority four times, most recently on January 16, 1998.
In the President's July 16, 1996 waiver announcement, he indicated that the liability of
foreign companies under Helms-Burton would be established during the suspension
period and that legal action could be taken immediately upon the lifting of the suspension.
Following the enactment of Helms-Burton, many U.S. trading partners, including
the European Union (EU), Canada, Mexico, and Japan, strongly criticized the legislation,
arguing that it constitutes an extraterritorial application of U.S. law contrary to
international principles. On November 20, 1996, the World Trade Organization (WTO)
agreed to a request from the EU calling for the formation of a dispute resolution panel on
Helms-Burton. The EU notified the WTO on April 21, 1997, that it was suspending the
dispute panel, pursuant to an understanding reached with the United States to develop join
disciplines on dealings in property confiscated by Cuba and other governments in
contravention of international law. Under WTO rules, dispute panels can be suspended
for only 12 months, after which time they lapse or must be reactivated. On April 21,
1998, the EU announced that it would allow its suspended case to expire but warned that
it would immediately file a new WTO complaint if companies in EU member states were
penalized under Helms-Burton or the Iran-Libya Sanctions Act (P.L. 104-172).
The visit of His Holiness Pope John Paul II to Cuba on January 21-25, 1998,
focused public attention on U.S. economic and trade sanctions against Cuba and their
effect on the Cuban people. At present, U.S. sanctions do not allow commercial food
exports to Cuba, and while commercial medical exports are allowed, there are several
restrictions on such exports as set forth in the Cuban Democracy Act of 1992.
Following the Pope's visit, President Clinton announced four changes in U.S.
policy toward Cuba on March 20, 1998. Specifically, the President announced: (1) the
resumption of licensing for direct humanitarian charter flights to Cuba (which had been
curtailed after the February 1996 shootdown of two U.S. civilian planes), (2) the
resumption of cash remittances up to $300 per quarter for the support of close relatives in
Cuba (which had been curtailed in August 1994 in response to the migration crisis with
Cuba), (3) the development of licensing procedures to streamline and expedite licenses
05/05/98
18:02
CONG R NEAL MA
14) 004/006
Page -3for the commercial sale of medicines and medical supplies and equipment to Cuba, and
(4) a decision to work on a bipartisan basis with Congress on the transfer of food to the
Cuban people.
Legislation in the 1Q';th Congress
In the 105th Congress, a number of bills have been introduced which would alter
U.S. economic and trade policy toward Cuba. Specifically, H.R. 284 was introduced by
Mr. Serrano on January 7, 1997, and was referred to the Committee on International
Relations, to repeal the Cuban Democracy Act of 1992 and the Helms-Burton legislation.
On June 18, 1997, H.R. 1951 was introduced by Mr. Torres, :tvlr. Rangel, Mr. McDermott
et alia to make an exception to the U.S. embargo on Cuba for food and medical exports.
The Committee on Ways and Means has received a sequential referral ofH.R. 1951 due
to the provisions of the bill which would amend the Internal Revenue Code of 1986 to
clarify that the denial of foreign tax credit in section 901 of the Code shall not apply to
Cuba with respect to income attributable to articles permitted to be exported to Cuba.
In addition, Mr. Nadler introduced H.R. 2904 on November 7, 1997, to make an
exception to the U.S. embargo on trade with Cuba for the export of medicines or medical.
supplies, instruments, or equipment. This bill has been referred to the Committee on
International Relations. On February 5, 1998, Mr. Rangel introduced H.R. 3173, the Free
Trade with Cuba Act, to lift the trade embargo on Cuba. This legislation has been
referred to the Committee on International Relations with sequential referrals to the
Committees on Ways and Means, Commerce, and Government Reform and Oversight.
In the Senate, Senator Dodd et alia introduced the Cuban Women and Children
Humanitarian Relief Act, S. 1391, on November 6, 1997, to authorize the President to
permit the sale of food, medicine, and medical equipment to the Cuban people. This
legislation has been referred to the Senate Committee on Banking, Housing, and Urban
Affairs. Another initiative, endorsed by Senator Helms, but not yet introduced as
legislation, reportedly would focus on expanding humanitarian aid to the Cuban people
by channeling such assistance through the Cuban Catholic Church.
Attachments
I. Tentative Witness List
2. CRS Issue Brief entitled "Cuba: Issues for Congress"
3. CRS Report entitled "Cuba: Initiatives to Ease Restrictions
on U.S. Food and Medical Exports"