The Battle Between U.S. and Canadian Policies Over Trade With Cuba – To Trade or Not to TradeSeptember 12, 2011 – Articles Bloomberg Law Reports - Corporate Counsel
The United States government has opposed the presence of the socialist government in Cuba since its establishment in 1959, and has passed numerous measures throughout the years, including an economic embargo against Cuba, in what had been until recent years, a continuingly escalating effort to sanction the Cuban government. The U.S. Congress even went so far as to take the novel approach of attempting to extend its policy against Cuba outside of its territory to countries such as Canada through the enactment of certain extraterritorial laws. Canada, however, has taken a diametrically opposed position. Canadian political and economic policy towards Cuba sharply conflicts with that of the United States. Since Fidel Castro opened Cuba to foreign investment in 1991, Canadian companies have invested billions of dollars in Cuba, in ventures such as hotels, utilities and other business formerly controlled by American citizens. Canada is, in fact, one of Cuba’s largest trading partners. As such, Canada quickly responded to U.S. attempts to control Canadian trade with Cuba by enacting its own laws that make compliance with U.S. extraterritorial laws a crime. On their face, these conflicting U.S. and Canadian policies make compliance for U.S. companies operating in Canada and Canadian companies operating in the United States difficult. As a practical matter, however, the United States has continually delayed implementation of the extra-territorial provisions of its laws, causing substantial confusion. This confusion could potentially cause a company whose business plan might not violate either country’s laws to take improper actions by mistake. Companies who operate in both countries need to fully understand the inter-play between U.S. and Canadian regulations on this subject so as not to run afoul of either.