Hopes rise for summit deal to end Cuba sanctions dispute

Date: 07/05/1998

By Mark Turner

EUROPE and the US will take a significant step towards a coordinated foreign trade policy this month if they sign an ambitious agreement aimed at defusing the long-running Helms-Burton sanctions dispute.

A two-part draft deal begins with a political commitment by the two blocs to act whenever possible in tandem against countries which contravene accepted international standards, by sharing intelligence and holding early consultations.

The second part lays down detailed, though not legally-binding, "disciplines" or ground rules determining how the signatories should deal with states which expropriate private property.

If the agreement is signed at the EU-US summit on 18 May as hoped, it would be a major victory for the Commission and the UK presidency of the Union, ending two years of bitterly-fought disputes over the 1996 US extra-territorial ban on companies investing in Cuba.

But officials on both sides of the Atlantic are cautious about overstating the chances of a breakthrough given the extreme sensitivity of the proposals. "There are many, many details which still have to be sorted out," said one EU source.

"Nonetheless, everyone hopes a deal can be reached in time for the summit."

Washington officials are equally wary. "We are in the middle of negotiations, and it is very difficult to predict where and when they will end. We could easily go to the wire on this," said one.

Although Brussels and Washington appear to accept the basic trade-off European guarantees to stop investments in expropriated property in return for an end to US extra-territorial trade measures against EU companies, many details remain contentious.

The political text calls for "early consultations" between the Union and the US wherever there is an "evident risk" that the actions of a third party violate international norms, and lays down a progressive list of actions which could be taken against a dissenting country.

Those include public statements, political démarches, the removal of governmental support and commercial assistance and, in the last resort, economic sanctions, which should be multilateral if possible. An independent panel would be set up to intervene when unilateral action gave rise to disputes.

But divisions remains over how firmly the two sides should focus trade sanctions purely on their primary target; the US only "seeks to avoid" unwanted side-effects while the EU is looking for cast-iron guarantees that no other parties will be involved.

It is also unclear whether the commitment by both sides not to invest in expropriated property should be fully retroactive, as the US wants, or only cover future investments, as the EU insists.

As a matter of principle, the Union argues retaliatory measures should be determined on a case-by-case basis, while the US is calling for more general action against states which demonstrate a pattern of expropriation.

Most controversially, the Union is adamant that a permanent EU exemption from US extra-territorial legislation must be a central feature of the deal, while Washington officials say that they need an agreement on expropriation before they ask Congress for a permanent waiver.

A number of these issues have even split Union governments, with Spain demanding that only future expropriations should be covered, a proposal which would make compromise with the US very difficult.

Several European countries are also unsure they have the necessary legislation to stop their companies investing in foreign property.

Settlement reached at EU-US Summit, London, 18.5.98.