Thursday, July 26, 2012

Analyze of Helms- Burton legislation

Basically Helms- Burton legislation strengthened the existed embargo by, prohibiting loans, credits, or financing by US citizens or residents for transactions to confiscated property and forces the United States to vote against admission of Cuba to international financial institutions until democracy is restored in Cuba. Also it allows US citizens to sue in the US court system anyone who "traffics" in property confiscated by Cuba, and extends this
right to people who were not US citizens at the time of the confiscation and blocks admission to the United States by foreign citizens (corporate officers, families, shareholders, and so on) involved in "trafficking" in confiscated property (Roy, 1997; pg 82).
            The key issue that prompted EU to take the Helms-Burton dispute to the WTO was because EU interpreted the law as a grave violation of international conventions, centering on the issue of extraterritoriality. They argued that the Helms-Burton law disrespects other governing party’s attitude toward sovereignty. Therefore, in a environment where EU and US had reach advanced stages of economic development, any practice or policy that restrains free trade (in theory) should be consider illegal. However US argued that Helms-Burton legislation objective is to promote “democracy” discouraging foreign investment in Cuba through the threat of lawsuits and the imposition of travel restrictions. According to Roy, (1999) the US law seeks to generate a deeper economic deterioration in order to accelerate the fall of the current Cuban regime.
            In this law the potential claimants against "traffickers" of confiscated property seem to be the major issue (Marquis, 1997), because it has produced uncertainty in business circles. Therefore, EU wants to protect the marketplace by forcing US to act under the laws and regulations established to promote fair competition.
            Helms-Burton definitely had a negative impact on the prospects for Cuban society by slowing new foreign investment and increasing the cost of external financing. Foreign companies probably will find another market in which to invest but the Cubans have no alternatives and they are the ones who suffer the most, they must stay there and struggle to live and survive day by day. Foreign investments in Cuba would help people to have job opportunities, it would help stimulate the economy and finally it would make possible for people to have access to goods and technology and maybe this could be the starting point for Cuba to open up to capitalism. However the American Helms-Burton law inhibited foreign investments and isolated a nation, making Cuban people are less encouraged to "empower" themselves and change the government because now they depend even more on the government.
            On other hand, Fidel Castro has not been affected by this law, actually it serves as a pretext for the Cuban government to justify itself in carrying on a repressive government. In fact, according to Robinson et al (1996), some dissidents have reported an increase in repression since the passage of the Helms-Burton Act. In 1998, Castro remains in power and the U.S. legislation was not successful in achieving its desired effects on the Cuban economy or on Fidel Castro's leadership position (Arendt, 1998). 
            Finally we would think that at least the U.S. government had benefited from the Helms-Burton law, yes? Actually not, the Helms-Burton Act has raised a conflict in the international community. The United States has faced retaliatory measures from several nations including the European Union (E.U.), Mexico and Canada.  Beyond these efforts to hinder enforcement of the Helms-Burton Act, nations also have taken actions to attack U.S. trade. For instance the E.U. has been working on compiling a "blacklist" or "watchlist" of U.S. companies who file suits against European businesses and has been threatening to deny visas to representatives of those U.S. companies (Arendt, 1998). ' The US government argues that “the conflict unchained by the EU's demand in the World Trade Organization does not benefit anybody" (Roy, 1997).  The fact is that Helms-Burton law doesn’t seem to benefit anybody.

Economic barriers would have to be overcome by a U.S. firm to conduct business successfully in Cuba.
            Since the economy system in Cuba is centrally planned socialism, the state has broad powers to serve the public interest. In Cuba the state makes most of the decisions about what goods and services are produced and in what quantities; consumers can spend their money on what is available. Therefore, the economic barrier created by this economic system would have to be overcome by a U.S. firm to conduct business successfully in Cuba. Companies mostly understand that the characteristic of centrally planned economy, where the government has ownership of most industries as well as individual enterprises. However because demand typically exceeds supply, in this kind of economy, the opportunities for foreign investment are high. If companies could explore areas where the government has less control, then they could be successful in their business deals in Cuba.
            The American companies have an advantage to be experienced superiority of market capitalism in delivering the goods and services that people need and want, which can led to its adoption in Cuba, as it happened in other socialist former countries (Keegan & Green, 2011). However, Cuba must engaged in economic reforms, in varying proportions, by increased reliance on market allocation and private ownership to promote a friendly environment for American Companies. This friendly environment, however, will be the very difficult to achieve because even if the economic reforms are made, Cuban politics are very different from American politics and this will create continuous friction. Additionally, years of embargos, plus the Helms-Burton law had made the whole Cuban society to suffer therefore the image of American companies has been seriously damaged by years of punishments from U.S. to Cuba. The fact is that even if the economic barriers been overcome, even if the politics change, people are still going to be there to remember and make their own assumptions.
Keegan, W. J., & Green, M. C. (2011). Global marketing: 2011 custom edition (6th ed.).   Upper Saddle River, NJ: Prentice Hall / Pearson.
MARQUIS, CHRISTOPHER.  (1997). " New test looms in wrangle over property Cuba seized," Miami He r a ld,  26 April.
Roy, Joaquin, (1997). The Helms-Burton Law: Development, Consequences, and Legacy for        Inter-American and European-US Relations. Journal of Interamerican Studies &     World Affairs, Fall97, Vol. 39 Issue 3, p77-108, 32p
Robinson, Linda et al. (1996), Cuba Takes a Stiff Belt, ("The debate over how best to change       Cuba -- more investment that would bring more foreign influence or more isolation in      hopes of toppling Castro -- has gone on for more than three decades"). U.S. NEWS &           WORLD REP., July 29, 1996, at 36, 37. 
Arendt, Michelle, (1998). The Cuban Liberty and Democratic Solidarity (LIBERTAD) Act of      1996: Isolationist obstacle to Policy of Engagement. Case Western Reserve Journal of            International Law, 00087254, Winter98, Vol. 30, Issue 1
United Nations. Distr.: General : 2 February 2011. Resolution adopted by the General       Assembly on the report of the Second Committee, International trade and development           (A/65/434/Add.1) 65/142. Retrieved at april 2012 from:

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