Business leaders are warning that the Trump administration’s threat to tighten the U.S. embargo on Cuba could side-swipe Canadian companies that are doing business on the Caribbean island.
The Canadian Chamber of Commerce says it is worried that the United States could enact a never-before-used section of the 1996 Helms Burton Act that would allow Americans to sue foreign companies linked to Cuban properties that were confiscated after its 1959 revolution.
“It’s an administration that’s not afraid to break with what are considered to be the normal ways of doing business in international diplomacy,” said Mark Agnew, the chamber’s director of international policy.
Case in point: an insistence in the Trump White House that Canadian steel and aluminum exports remain subject to tariffs imposed on dubious national-security grounds, even though it has been months since the two countries and Mexico joined in signing a new North American trade pact.
Agnew said the chamber is especially concerned about the potential impact on Canadian mining, financial services and tourism companies with operations in Cuba.
“They’re not afraid to go out and take a fairly bold stance that isn’t necessarily in the interest of the business community,” he said. “I think you need to take the threat quite seriously that they would go through actually make it happen.”
Canadian businesses should brace for the activation of the Title III section of Helms Burton, even though it has essentially remained dormant for 23 years, said Mark Entwistle, a business consultant in Cuba who served as Canadian envoy to Havana in the 1990s.
There is strong opposition to activating Title III among the U.S. business and agricultural leaders, but that might not be enough, Entwistle said.
“All the rules of the game have been changed. We have to be prepared for the president not to further waive Title III.”
Last month, the U.S. State Department extended the Title III exemption by only 30 days, linking it to Cuba’s ongoing support of Venezuelan president Nicolas Maduro. The U.S., Canada and other western countries want Maduro to resign and make way for opposition leader Juan Guaido as the legitimate leader of a country in the throes of an economic and political crisis.
Several foreign countries, including Canada, have invested in Cuba during the more than 50 years since the U.S. froze relations and imposed an economic embargo. Obama relaxed the embargo and began normalizing relations with Cuba, but Trump has rolled that back.
Toronto-based resource company Sherritt International is long established in Cuba, and its executives are banned from travelling to the U.S. or doing any business there under existing provisions of Helms Burton. Other countries, such as Britain, France and Spain, have companies active in rum, cigars and tourism ventures in Cuba.
Title III allows Americans to use their courts to sue foreign entities who may have “trafficked” in property confiscated by the communist Castro regime after it overthrew Cuba’s U.S.-backed government in 1959.
Agnew said U.S. courts have never been asked to rule on what constitutes trafficking.
“It could affect any company which has any, any relationship with Cuba,” said Agnew.
“It could be a financial transaction that has a point of connection with someone in Cuba, which is now the owner of the property that we nationalized in 1960. It could be a financial, a trade operation. It could be investment – it could be anything.”
Without naming companies, Agnew said it is conceivable that Canadian tourism operators or resource companies could be at risk. “We’re talking to our government as well as our business counterparts in the U.S. and Europe. The overall message is we don’t want this to come into effect.”
Josefina Vida, Cuba’s ambassador to Canada, said she has been urging Canada to push back against Trump, warning that the latest escalation is making it difficult to attract much-needed Canadian investment to her country.
“It is a very obvious clear violation of international law, of the rules of international trade and the sovereignty of states.”
In 1996, Canada, the European Union and Mexico reacted “in a very strong way” to Title III, which helped encourage then-president Bill Clinton to postpone it, she said.
Canada has been actively engaging with the U.S. government on the issue, including speaking directly to Secretary of State Mike Pompeo, said Adam Austen, spokesman for Foreign Affairs Minister Chrystia Freeland.
“We continue to raise our concerns about the possible negative consequences for Canadians – concerns which are long-standing and well-known to our U.S. partners,” said Austen.
“She has also been in contact with Canadian businesses to reaffirm that we will fully defend the interests of Canadians conducting legitimate trade and investment with Cuba.”