U.S. May Be Considering Dropping Cuba from Terrorist Country List
Posted by Clif Burns at 5:01 pm on February 21, 2013
Category: Cuba Sanctions
It appears that the Department of State may be considering removing Cuba from the list of state sponsors of terrorism. The immediate impact of this will be howls of outrage from the rabid Babalú crowd and other die-hard supporter of Cuba sanctions. Of course, of more interest to the readership of this blog will be the practical impact of such a removal, if it occurs, on exports to Cuba.
If you think that the removal of Cuba from the list will permit unlicensed exports of food, medicine and agricultural goods to Cuba, think again. Although section 7205 of the Trade Sanctions Reform and Export Enhancement Act of 2000 (“TSRA”) does indeed impose a license requirement on shipments of these goods to state sponsors of terrorism, it also directly imposes that restriction on TSRA exports to Cuba. So a license will still be required even if Cuba is removed from the list.
Section 40 of the Arms Export Control Act prohibits granting licenses for the export of items on the United States Munitions List to state supporters of terrorism. So there is a theoretical possibility, I suppose, that if Cuba is removed from the list, the arms embargo against Cuba might also be lifted. Right. When pigs fly.
Then we have Section 6(j) of the now-defunct Export Administration Act as allegedly extended in force by various executive orders. That provision requires that certain licenses for exports of goods on the Commerce Control List to state sponsors of terrorism be notified to Congress. Since licenses for CCL items are rarely granted in any event for Cuba, and seem unlikely to be granted even if Cuba is removed from the list, this doesn’t seem to an area in which Cuba’s removal would have much impact.
In sum, removal of Cuba from the list seems largely symbolic and with little practical effect. At most, it could presage a liberalization of the embargo down the road, particularly if the current Cuban government gnaws on this bone a little rather than simply regarding it with disdain.
Don’t Forget Palau
Posted by Clif Burns at 3:21 pm on November 13, 2012
Category: Cuba Sanctions
As reliable as the appearance of fall foliage and jack-o-lanterns, another fall ritual took place earlier this afternoon in New York City. The United Nations voted, yet again, to condemn the U.S. ban on exports to Cuba, as it has reliably done for the past 21 years. This year the vote was 188-3 against the embargo; last year it was 186-2. The countries voting against this year were the United States (duh!), Israel and Palau. Last year Palau chose to abstain, but as the former U.S. possession appears set to elect a new President, perhaps they thought it wise to curry a little U.S. favor.
Ronald Godard spoke before the Assembly on behalf of the United States defending the embargo, and he did so with a curious argument. Rebutting Cuban claims that the sanctions caused economic injury to Cuba, Godard blamed the island’s financial woes on the “economic policies that Cuban government has pursued for the past half century.” But wait, if the sanctions aren’t having any financial impact on Cuba, what exactly is our purpose for imposing them? We can’t take Cuba’s cake and have them eat it too.
Another Way Cigars Are Bad for You
Posted by Clif Burns at 6:22 pm on August 15, 2012
Category: Cuba Sanctions
If for some reason or other you were thinking that perhaps the next time you were in Dunhill’s in Paris or London you might just slip a few Cubans into your briefcase and bring them back to the U.S., think again, particularly if you’re a lawyer and want to stay that way. The Illinois Attorney Registration and Disciplinary Committee just recommended the disbarment of an Illinois attorney because, among other things, he was convicted of violating the Trading with the Enemy Act in connection with boxes of Cuban cigars that he brought with him into the United States.
Now, admittedly, Richard S. Connors, the attorney in question, did just a teensy bit more than stuff a few Cohibas in his blazer jacket and try to slip them past Customs. According to the Seventh Circuit Court of Appeals, which upheld his criminal conviction, Connors was caught with 46 boxes of cigars in four suitcases in his automobile’s trunk while crossing the Canadian border and apparently more were carried back when returning from approximately 30 other trips to Cuba. Connors was also convicted of filing a false passport when, after Customs yanked his passport in connection with the cigar smuggling, he applied for a new one, stating only that his previous passport was missing. The Illinois Committee also noted that Connors had been previously suspended for misappropriation of client funds and had still not reimbursed those funds.
But the story gets better (or worse, I suppose, if you are Mr. Connors). The feds were tipped off to his Cuban cigar shenanigans by his wife during a messy divorce proceeding. In fact, according to Connors in his unsuccessful appeal, she “reconciled” with him only to get into his house to get information to turn over to federal investigators, something Connors claimed, without success, violated his Fourth Amendment rights. Oh, and about that house, the feds seized it because he kept the cigars there and used the proceeds from the sales of his cigars to pay his mortgage.
One other interesting tidbit: the Communist regime in Cuba was not toppled upon the end of Mr. Connor’s cigar business. Fidel and Raúl are doing fine; Mr. Connors, not so much.
Firm Sues Florida Over State Sanctions on Cuba, Syria
Posted by Clif Burns at 5:17 pm on June 5, 2012
Category: Cuba Sanctions • Syria
Odebrecht Construction, Inc., a U.S. subsidiary of the Brazilian firm Odebrecht S.A., filed suit on Monday in federal court asking the court to declare as unconstitutional a Florida law which prohibits the award of state and local contracts to companies with business in Cuba or Syria. The law, signed by Governor Scott last month, goes into force on July 1.
Odebrecht S.A. is currently involved in a massive renovation project for the port in Mariel, Cuba, which is destined to take all the commercial traffic from the port at Havana when the project is completed. The Florida subsidiary has been responsible for, among other things, improvements to the Miami International Airport in Florida.
Of course, the sustainability of the Florida law is in serious question after the U.S. Supreme Court’s decision in Crosby v. National Foreign Trade Council, 530 U.S. 363 (2000). In that case, the Supreme Court struck down, on preemption grounds, a similar law passed in Massachusetts. The court’s analysis focused in large part on the extent to which the Massachusetts law was broader than existing federal sanctions, specifically noting that the federal sanctions only covered new investments while the Massachusetts law targeted existing investments as well. Here, the U.S. sanctions do not cover the activities of Odebrecht, S.A., which is a non-U.S. person, while the Florida sanctions would reach those activities.
The press reports on the Odebrecht complaint indicate that the company is making a constitutional challenge to the law, which is an argument based on Congress’s exclusive power to make U.S. foreign policy. The Crosby court dodged the constitutional issue and was decided solely on the basis of preemption. I have to assume that the Odebrecht complaint makes the preemption argument as well or at least will be ultimately amended to make that argument.
Panamanian Company Fined For Violating U.S. Embargo on Cuba
Posted by Clif Burns at 2:46 pm on May 25, 2012
Category: BIS • Cuba Sanctions
The Bureau of Industry and Security (“BIS”) issued a press release today announcing a consent decree between the agency and Ericsson de Panama S.A. in Panama City, Panama. Under the consent decree, Ericsson’s Panamanian subsidiary agreed to pay $1.753 million to settle charges that it violated the U.S. embargo on Cuba. BIS’s press release alleges that Ericsson de Panama imported mobile telephones from Cuba into Panama for repair. The company is then alleged to have re-packaged the telephones to conceal their Cuban origin. The phones were sent to the United States for repair and then returned by the company to Cuba once the repaired phones had been received back from the United States. The press release noted that the company avoided criminal prosecution, notwithstanding the “egregious” nature of the violations, because the matter had been voluntarily disclosed and the company had cooperated with the agency’s investigation.
The agency could assert jurisdiction over a Panamanian company here because the Panamanian company imported and exported the Cuban phones from and to the United States. This is different from situations, such as we discussed in our last post where none of the activity at issue occurred in or had any nexus with the United States.
Of even more significant interest, the press release indicates that the agency required, and the company consented to, a “company-wide export audit conducted by an independent third party of all transactions connected with Cuban customers.” Unlike other cases where BIS has permitted part of the fine to be allocated to compliance costs, it appears that in this case the cost of the audit will be a cost to the company above and beyond the hefty monetary fine exacted by BIS.
Finally, it should be noted that the items involved here are personal communications devices that since 2009 have been eligible for export and re-export to Cuba. However, the exports in questions occurred between 2004 and 2007, before the new rules were in effect. The new rules also apply only to donated mobile phones, and it seems doubtful that all the phones involved in this case had been donated to people in Cuba.