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Economic embargo against Cuba: legal or illegal under trade rules?

Two premises: (1) Cuba and the United States are both members of the World Trade Organization (WTO), actually, original signatories of the old GATT 1947. (2) One of the core principles of the WTO is that one of non-discrimination i.e., countries cannot discriminate between their trading partners and between imported and locally produced goods. Thus, is the US committing an illegal act under trade rules by imposing and retaining the economic embargo against Cuba? If so, why Cuba has not brought a case before the WTO against the US trade embargo?

cuba embargo

The Cuban Revolution brought about intense moments such as the Cuban Missile Crisis and the Bay of Pigs Invasion but also brought about a myriad of anti-Cuban American legislation. After Cuba’s ties with the Soviet Union were firmly established, US President John F. Kennedy issued a proclamation in February of 1962 which imposed a complete economic embargo on Cuba by authorizing a total halt on the importation of Cuban goods.

More recently, the US Congress passed the Cuban Liberty and Democratic Solidarity Act of 1996 (the Helms-Burton Act) extending the territorial application of the initial embargo to apply to foreign companies trading with Cuba, and penalized foreign companies allegedly “trafficking” in property formerly owned by US citizens but expropriated by Cuba after the Cuban revolution.

Surprisingly or not, Cuba was not the country raising complaint against the Helms-Burton Act before the WTO, but the European Union. Under the grounds of the obligation of non-discrimination, the EU has sought formation of a panel under the WTO concerning alleged violations of the GATT, but has suspended further proceedings pending additional negotiations.

As a counterargument, the US has indicated that, if it must defend the Helms-Burton Act before the WTO panel, it will defend on the basis of the “national defense” exception. The security exception allows governments free reign for actions taken in the name of national security. In particular, it states that a country cannot be stopped from taking any action it considers necessary to protect its essential security interests.

As experts in the field argue that the EU complaint may find success in the illegality of the Helms-Burton Act under the GATT rules, it is also true that the “national defense” exception is quite strong and it will be extremely difficult to see a WTO panel refusing to grant this defense.


Image source: Flickr

Daniela Gomez Altamirano

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