International Trade Law News

Published by Jacobson Burton Kelley PLLC

Jake Colvin, director of USA*Engage, wrote the following op-ed piece on the recent sanctions-related events in Mexico. This article appeared in the Miami Herald and several other newspapers:

SANCTIONS CAN ALIENATE ALLIES

By Jake Colvin

Last weekend, the Mexican government and the Starwood Hotels and Resorts learned just how messy U.S. policy on Cuba can be when both were dragged into a dispute over a conference of Cuban officials and U.S. business delegates. To prevent future conflicts with important U.S. allies and to preserve the reputation of U.S. brands worldwide, the U.S. government should reconsider how it applies sanctions.

The controversy began when Starwood, the U.S. parent of Sheraton Maria Isabel Hotel in Mexico City, intervened at the request of U.S. officials and ordered a delegation of Cuban officials to leave its hotel. The Cubans were participating in a conference on energy issues with U.S. business representatives, including myself. A Starwood spokesperson said that the Cubans were asked to leave to comply with the terms of the U.S. embargo against Cuba.

Unintended consequences

This incident highlights the unintended consequences and capriciousness of unilateral U.S. sanctions. By applying U.S. law to a foreign corporation, the United States has strained relations with an important ally.

While the Mexico-based Sheraton hotel shares its name with a division of an U.S. corporate parent, the hotel is organized under the laws of Mexico, which Mexican officials and newspaper editorial boards have angrily noted.

This unnecessary irritant serves to undermine official cooperation on important security and economic issues and damages the goodwill of the United States among the broader population.

Extending U.S. sanctions to foreign corporations also puts these companies between a rock and a hard place by challenging them to comply with conflicting laws. In this case, the Mexican Congress passed a law, called a blocking statute, in response to the Helms-Burton Act passed by the U.S. Congress, which extended U.S. sanctions on Cuba to foreign corporations. This blocking statute prevents companies organized under Mexican laws from complying with these extraterritorial U.S. sanctions. As a result, the Sheraton Maria Isabel is put in the impossible position of having to comply with contradictory U.S. and Mexican laws.

Over the longer term, these sanctions put the reputation of U.S. brands at risk around the world. What conference organizer in his right mind would ever organize a meeting even remotely related to Cuba in a U.S.-branded hotel, let alone a Sheraton? Organizers will look toward companies such as the French-based Sofitel instead to hold future events.

More broadly, the application of U.S. sanctions to disrupt this conference is counterproductive as it limits our ability to project democratic values and advance U.S. foreign-policy goals. This conference provided a forum for dialogue on economic issues and introduced a delegation of American capitalists to Cuban officials. It is disappointing that the U.S. government, which advocates dialogue and engagement in so many other countries around the world, including China, would stifle discussions involving Cuba.

Take a critical look

While it is absolutely necessary to use all of the means at our disposal to advance U.S. foreign-policy goals, current U.S. policy toward Cuba is not making the impact that Congress or the president intended. At the same time, unilateral sanctions have caused unexpected problems with U.S. allies, are harming the reputation of U.S. companies and are being applied unevenly.

The U.S. Commission for Assistance to a Free Cuba, chaired by Secretary of State Condoleezza Rice, will reconvene in 2006 with en eye toward further strengthening sanctions against Cuba. A better idea would be to take a critical look at what the sanctions have really accomplished. This latest incident argues for new approaches, not more of the same.

Jake Colvin is director of the USA*Engage project of the National Foreign Trade Council, a trade association based in Washington.