The Helms-Burton Act

Today, President Bush enacted a six-month waiver of provisions of the 1996 Helms-Burton Act that would allow lawsuits against foreign companies who deal with Cuban businesses once claimed by U.S. nationals.

The Online NewsHours reports:
The act, sponsored by U.S. Sen. Jesse Helms (R-N.C.) and Rep. Dan Burton (R-Ind.), also formalized the U.S. trade embargo of the island nation, in effect by presidential order since the Kennedy administration.

Helms-Burton's lawsuit provision has been one of the act's most controversial components. It was meant to keep foreign investors away from nearly 6,000 formerly American-owned companies in Cuba brought under government control following the 1959 Cuban revolution. Those companies are now valued at over $6 billion.

President Clinton signed the legislation less than a month after Cuban air force jets shot down two American planes over international waters - dealing yet another blow to U.S. relations with Cuba. Four Cuban exile activists died in the incident.

Despite the broad powers in Helms-Burton, no one has ever filed suit under the law because former President Clinton suspended that portion of the legislation before it took effect in Aug. 1996. He renewed his suspension every six months, as the law allows, until the end of his term.

Opposition
Clinton's decision to hold off on the lawsuit proposals came after the European Union and Canada announced their opposition to the act. They argued the provisions violate international trade treaties by punishing foreign companies for business conducted outside U.S. borders. The E.U. brought its case to the World Trade Organization, but dropped its legal challenge in 1998. The U.S. and E.U. are still working toward an agreement on the issue.

Among the companies that could be affected are some Mexican and Italian firms with a stake in Cuba's telephone network -- originally built by an American company in the 1950s. Some executives from Canada's Sherritt International Corp., that invested in a nickel mine once operated by an American mining company, have already been prohibited from traveling to the U.S. in accordance with the act.

Large-scale foreign investment in Cuba is a relatively recent development. Canadian, Mexican and European firms moved in after Cuban President Fidel Castro opened the island nation to foreign investment in 1991. Foreign companies have invested billions of dollars in Cuba, much of it going into hotels, utilities, and other businesses formerly once controlled by Americans or Cubans now living in the U.S.

Provisions of the 1996 Helms-Burton Act

Title I: Formalizes the U.S. embargo on trade and financial transactions.

Title II: Outlines American policy and economic assistance towards a future transition or democratic Cuban government.

Title III: Allows lawsuits in American courts against foreign companies who invest in businesses once owned by Americans or by Cubans now living in the U.S. The president can suspend the lawsuit provision for 6-month periods.

Title IV: Authorizes the banning of executives of the foreign companies targeted in Title III from entering the U.S. Also allows denial of entry to the executives' families and the companies' shareholders.