Who's isolating whom?: Title III of the Helms-Burton Act and compliance with international law.

• Author: Arreola, Antroy A.

1. INTRODUCTION

   James Osborne's heirs want the White House back;(1) and because they are Canadians, they cannot run for president. But fortunately, Canadian Members of Parliament Peter Milliken and John Godfrey have introduced legislation that would allow the descendants of some 80,000 British loyalists to claim compensation for property expropriated during the American Revolutionary War.(2)

   Has Parliament lost its bearings? Did the authors consider the legislation's implications under international law? Did they consider Canada's obligations under the U.N. Charter, the North American Free Trade Agreement (NAFTA), or the World Trade Organization? In fact, the apparent lack of concern for these issues reflects Parliament's anger towards Congress(3) for failing to recognize U.S. international obligations in passing the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996.(4)

   The Helms-Burton Act, which seeks to deter foreign investment in Cuba,(5) has four Titles. Title I aims to strengthen the economic embargo over Cuba.(6) Title II promises generous aid to the free and independent Cuban government.(7) Title III, the most controversial and the inspiration for the Godfrey-Milliken bill,(8) allows U.S. nationals to sue individuals who "traffic"(9) in expropriated property in Cuba.(10) Lastly, Title IV denies admission into U.S. territory for all "traffickers"(11) and their families.(12)

   This Comment focuses on Title III's consistency with U.S. obligations to its neighbors in the Western Hemisphere. The discussion begins with the history and development of the Helms-Burton Act. Next, this Comment examines international reactions to Helms-Burton, especially the reactions of Mexico and Canada. This Comment then evaluates Title III's compliance with international standards regarding the extraterritorial application of domestic law. The final part of this Comment examines U.S. obligations under the NAFTA, the U.N. Charter, and the Charter of the Organization of American States (OAS) and questions Title III's compliance with those obligations.

2. THE ORIGINS OF HELMS-BURTON AND TITLE III

   The Helms-Burton Act is the most recent development in the U.S. boycott of Cuba. President John F. Kennedy started the embargo under the authority of the Foreign Assistance Act of 1961(13) and the Trading with the Enemy Act of 1917.(14) In 1992 anti-Castro groups pressured the United States to enact the Cuban Democracy Act of 1992,(15) which restricted trade between Cuba and foreign subsidiaries of U.S. corporations.(16) The legislation sparked a quick, negative response from the international community, which felt the law was an impermissible extraterritorial extension of U.S. jurisdiction.(17) The U.N. General Assembly voted to denounce the Cuban Democracy Act of 1992 on three separate occasions: November 24, 1992, November 3, 1993, and October 26, 1994.(18)

   While the United Nations was denouncing the Cuban Democracy Act of 1992, the Foreign Relations Committee in the U.S. Congress was drafting and debating what would become Helms-Burton.(19) The seeds of Helms-Burton lay in the collapse of communism in the former Soviet Union.(20) Prior to 1989, the Soviet Union provided between US$4-6 billion in subsidies each year for the Cuban economy.(21) But in the years following the cessation of the subsidies, Cuba fell into severe economic decline.(22) U.S. legislators feared that the Castro regime would seek to cure its capital crunch by selling properties expropriated from U.S. nationals.(23) Thus, Congress wrote Helms-Burton in part to "discourage persons and companies from engaging in commercial transactions involving confiscated property, and in so doing to deny the Cuban regime of Fidel Castro the capital generated by such ventures."(24)

   Before March 1996, the Clinton Administration had mixed feelings about Helms-Burton. The President worried that the bill constrained his authority to conduct foreign affairs.(25) Further, Under Secretary of State Peter Tarnoff told the congressional Western Hemisphere Subcommittee of the House International Relations Committee that the President was "concerned that a number of the bill's provisions could conflict with other important U.S. interests, including our compliance with major international trade and investment agreements, including GATT, NAFTA and Treaties of Friendship, Commerce and Navigation."(26) The Administration also worried that a ban on the importation of sugar products against countries that import Cuban sugar would be "viewed by others as a secondary boycott, similar to the Arab League boycott on Israel that the U.S. has vigorously opposed."(27) Ultimately, the State Department feared that "[i]f enacted, these provisions could prompt retaliatory measures [by trade allies] that would severely disrupt essential U.S. trade relationships."(28)

   Given external opposition from the international community and opposition from the State Department,(29) the Helms-Burton Act's future seemed dim. But on February 24, 1996, Cuban Air Force MiGs shot down two Cessna light civilian aircraft over international waters.(30) Four Cuban Americans were killed.(31) Presidential outrage was swift,(32) and Congress hastened to prepare Helms-Burton for the President's signature.(33) Senator Jesse Helms, cosponsor of the bill, bragged the "legislation will be on the [P]resident's desk before the blood dries on Castro's hands."(34) Seventeen days after the two planes were shot down, President Bill Clinton signed the Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of 1996 into law.(35) The President made clear that he did not interpret the Act as "derogating from the President's authority to conduct foreign policy."(36) President Clinton did not mention his prior misgivings about the possible international backlash,(37) nor did the President state the reasons for his change of heart.(38)

3. INTERNATIONAL REACTIONS

   The international community immediately denounced the passage of Helms-Burton.(39) While this controversial legislation sparked negative reaction from around the world, the sharpest criticism came from U.S. neighbors in the Western Hemisphere.

   1. Canada

      In addition to the satirical Godfrey-Milliken bill, the Canadian Parliament offered amendments to Canada's Foreign Extraterritorial Measures Act (FEMA) that could effectively counteract Helms-Burton.(40) The amendments, called Bill C-54, have three purposes. First, Bill C-54 gives the Canadian Attorney-General the power to identify foreign laws that infringe upon Canadian sovereignty and grants the power to deny nationals and governments of the targeted countries access to Canadian records that may be used in litigation or criminal prosecution.(41) Second, Bill C-54 blocks the enforcement of judgments rendered by courts of targeted countries and allows Canadians to recover court costs.(42) Finally, the amendments provide stiff fines, some as high as US$1.5 million, for Canadian companies that comply with the boycott laws of targeted countries.(43)

      Canadian investment in Cuba continues to grow.(44) Canada is Cuba's largest trading partner with commerce totaling about US$500 million.(45) While Canadian private industry prospers by investing in Cuban pharmaceuticals, nickel mines, and tourism,(46) the Canadian Government refuses to be left out, agreeing to finance the construction of a new terminal at Havana International Airport.(47)

   2. Mexico

      Helms-Burton has created the most ill will in Mexico, whose largest trading partner is the United States. Mexico's attitude towards the legislation is best exemplified by Mexico's reception of Under Secretary for International Trade Stuart B. Eizenstat, whom President Clinton sent on a worldwide mission to discuss Helms-Burton with trade allies.(48) When Under Secretary Eizenstat arrived in Mexico, he was pelted with eggs.(49)

      Mexico chose to resolve the matter locally rather than on an international level. In a vote of 317 to 1, Mexico's Chamber of Deputies adopted an "Antidote Law" to counter Helms-Burton.(50) The "Law for the Protection of Business and Investment from Foreign Regulatory Provisions that Contradict International Law"(51) applies to all people or legal entities that (1) are located in Mexico, (2) take actions which have effect in Mexico, and (3) submit to Mexican Law.(52) The law prohibits two types of activities. First, it forbids "acts that affect trade or investment, when those acts are a consequence of the extraterritorial effects of foreign laws."(53) Second, the Antidote Law prohibits individuals and companies from providing information to foreign governments or foreign courts if the information relates to proceedings under the extraterritorial foreign law.(54) Violators of the Antidote Law incur fines of approximately US$290,000 for actions in compliance with the invalid foreign law and fines of approximately US$145,000 for providing information to foreign courts.(55) The Antidote Law empowers as well as penalizes, having both a "blocking effect" and a "mirror effect."(56) Article 4 states that "National courts shall refuse the acknowledgment and enforcement of judgments, judicial requirements or arbitral awards issued on the basis of the foreign laws."(57) Article 5 contains the mirror effect. The Article awards damages in Mexican courts to those who have been affected by the foreign laws.(58) The statute awards the aggrieved individual a sum equal to the foreign judgment (hence the term "mirror effect") as well as other damages, economic losses, and court costs.(59) While the damages awarded under the Antidote Law are considerable, it is unclear whether this Mexican law will ever be implemented.(60)

   3. The Latin American Economic System

      The Latin American Economic System (SELA) issued a report disputing the legality of Helms-Burton under international law.(61) The 159 page report declares that the legislation "not only negatively affects Cuba's interests and its...