Monday, June 12, 2006

U.S. joins list of Cuba's Top 10 trading partners

The Toronto Star

Canadian and foreign companies in the Caribbean nation cry foul and accuse Washington of playing `very unfair games'

Jun. 12, 2006. 01:22 AM

HAVANA—Canadian businesspeople in Cuba are steaming mad about what they say are unfair U.S. trade practices, as American exporters steadily increase their market share in a country Washington officially regards as an enemy state.

"This is a serious, serious problem," said Sam Raina, president of the 52-member Canadian Business Club, an association of Canadian companies operating in the Caribbean country. "The Americans are playing very unfair games."

Raina says pressure from the U.S. Treasury Department recently caused his Canadian banker — HSBC Bank Canada — to close his corporate and personal accounts and to cancel his credit cards, because he lives and does business in Cuba. He says he is not alone.

"There's no bank in the world that would defy the U.S. Treasury," he said during a recent interview at his office in western Havana, less than a block from the shiny, mirror-like façade of the Karl Marx Theatre. "This has all of a sudden become an issue because U.S. trade with Cuba is getting higher and higher and stronger and stronger. This is the story."

Raina is the Cuba-based representative of First Caribe Trading Corp., an export agent.

What angers him and other Canadian businesspeople in Cuba is not only that U.S. trade sanctions are being imposed upon them but that the same measures are waived for American firms that now do business with Cuba.

The United States broke formal diplomatic ties with Cuba more than 40 years ago and has maintained a trade embargo against the Communist-ruled country since 1963.

But, after Hurricane Michelle ravaged the island in November 2001, Washington okayed the sale of food and medical supplies to Cuba, albeit on a cash-only basis. Since then, the United States has gone from nowhere on the list of Cuba's major trading partners to a position somewhere in the top 10.

Molly Millerwise, a spokesperson for the U.S. Treasury Department, confirmed that banking and transport restrictions that Washington seeks to impose upon foreign firms doing business with Cuba are suspended for American companies that export their products to the island.

"It's okay for Americans to get Cuba transactions," said Mario Simonato, Havana-based director of King City Equipment Inc., of King City, Ont.

"It's okay for them to do this. Meanwhile, they're putting pressure on Canadian companies and European companies. It's blatantly unfair."

It's also just a tad complicated, as Washington seems to be tightening up its restrictions on Cuban trade in some areas while loosening them in others. The reasons are both political and economic, but the consequences so far chiefly benefit American businesspeople while penalizing their foreign competitors.

Recently, the fear of running afoul of U.S. economic sanctions against Cuba has caused some foreign banks to review their policies toward doing business with the island. Canadian businesspeople in Cuba say it's no coincidence that this is happening just as U.S. exports to Cuba are on the rise.

"It's by design," said Simonato. "The Americans think they own the world."

According to Josefina Vidal, the Cuban foreign ministry's assistant director for North American affairs, Canada is currently the island's second-largest foreign investor when measured by number of joint ventures — Spain is number one — and the largest when measured by volume of capital. Canada is also the island's fourth-largest trading partner and its single largest source of tourists.

Canadian businesspeople in Cuba give high marks to the Canadian embassy here, but they have harsh words for the Department of Foreign Affairs and International Trade in Ottawa, which they say has not defended Canadian interests on the island and has even hampered their ability to run their businesses, by kowtowing to American pressure.

Sharon Wilkes, a spokesperson for HSBC Bank Canada, confirmed in an interview that the bank has recently restricted its dealings with Cuba and several other countries in order to bring itself into compliance with U.S. Treasury Department sanctions against what Washington labels as terrorist or rogue regimes.

"It's a fairly recent change," she said of the bank's new wariness about doing business even at second-hand with Cuba. She could not say what triggered the new policy.

`There are some services we are not able to provide to residents of Cuba' Sharon Wilkes, spokesperson for HSBC Canada.

Citing confidentiality rules, Wilkes would not comment specifically on Raina's complaint that HSBC Bank Canada closed his accounts and cancelled his credit cards, but she confirmed that such steps could have been taken.

"There are some services we are not able to provide to residents of Cuba," she said.

Two other Canadian businesspeople in Cuba who were interviewed recently by the Toronto Star declined to identify either their Canadian employers or their Canadian bankers for fear of meeting the same misfortune that has befallen Raina.

Simonato said his Canadian bank is the Toronto Dominion Bank and that he has so far encountered no problems — "touch wood."

By far the largest Canadian investor in Cuba is Sherritt Industries of Toronto, which has large interests in Cuban nickel and cobalt mining as well as oil and gas projects and other enterprises. It says it is doing business as usual.

"Sherritt has not encountered any particular problem with the banking institutions that it deals with," company spokesperson Michael Minnes wrote in an email to the Star. "Sherritt has been investing and doing business in Cuba for over 10 years, and we continue to grow our businesses there."

In a telephone interview, Millerwise at the U.S. Treasury Department denied that her agency has recently stepped up pressure on foreign banks or other companies to cut back on business with Cuba, despite at least some evidence to the contrary.

In February, for example, a four-star Sheraton Hotel in Mexico City ejected the members of a Cuban trade delegation who were staying there, after the hotel's U.S. parent company received a warning letter from the U.S. Treasury Department's Office of Foreign Assets Control.

The decision set off a firestorm of protest in Mexico.

Speaking privately, a U.S. government official confirmed to the Star that foreign banks and other businesses do risk being cut out of the U.S. financial sector if they flout American financial sanctions against Cuba or other countries.

Two years ago, UBS, a Swiss bank, paid a $100 million (U.S.) fine to the Federal Reserve after conducting U.S. banknote transactions with several prohibited states, including Cuba.

This year, a branch of the Bank of Nova Scotia in Kingston, Jamaica, informed one of its clients — the Cuban embassy in Jamaica — that it would no longer conduct U.S.-dollar transactions on the embassy's accounts. Scotiabank cited Washington's anti-terrorist Patriot Act as the reason for its decision. Drafted in the wake of the Sept.11 attacks, the law seeks to bolster American defences against terrorism on a range of fronts.

It contains only one passing reference to Cuba.

In response to the Scotiabank decision, the Cuban embassy in Jamaica cancelled all its dealings with the Canadian bank.

In addition to imposing restrictions on Cuban access to U.S. currency, Washington maintains a variety of other economic sanctions against the island.

The United States denies the use of its territory to companies wishing to transport goods to or from Cuba — a policy that mainly penalizes Canadians — and also refuses docking privileges at U.S. ports to commercial vessels that have visited the Caribbean island during the previous six months.

Like the banking restrictions, these measures are not applied in the case of U.S. exporters shipping their goods to Cuba.

In 2004, Iberia, a Spanish airline, was obliged to pay a fine to U.S. authorities after transporting Cuban goods through the United States.

"From time to time, we have problems," said a European diplomat in Havana. "We are concerned about it."

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