Download CUBA – ARTICLE XV:6 OF THE GENERAL AGREEMENT

WORLD TRADE
WT/L/742
8 December 2008
ORGANIZATION
(08-6030)
Original: Spanish
General Council
18-19 December 2008
CUBA – ARTICLE XV:6 OF THE GENERAL AGREEMENT ON
TARIFFS AND TRADE 1994
Report by the Government of Cuba under the
Decision of 15 December 20061
The following communication, dated 3 December 2008, is being circulated at the request of
the delegation of Cuba.
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Pursuant to the provisions of Article IX.4 of the Agreement Establishing the World Trade
Organization (WTO), the Republic of Cuba submits herewith the second annual report on the
extension of the waiver approved on 20 December 2001 and renewed on 14 December 2006. This
waiver was granted to Cuba under the Decision of 14 October 1996 in relation to Article XV:6 of the
General Agreement on Tariffs and Trade 1994 (GATT 1994).
The reason for the renewal of the extension of the waiver is the continued existence of the
conditions which gave rise to its approval in 2001, albeit worsened by a further strengthening of the
measures constituting the economic, commercial and financial blockade imposed on Cuba by the
Government of the United States of America, in the form of increased economic sanctions and the
targeting of Cuban business activities and international financial transactions, including operations
designed to pay Cuba's membership dues to international organizations, squatting on Cuban
trademarks and reprisals against natural and legal persons with links to or which trade with Cuba,
which make it impossible for Cuba to sign a special exchange agreement with the Members of the
World Trade Organization (WTO).
The blockade measures seek to:
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Deprive our country of its goods and services export earnings: Losses suffered by
Cuban goods and services exports as a result of the blockade amounted to
US$1,745.6 million in 2007.
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Increase the costs of Cuban imports: Cuba has been forced to geographically relocate
its trade and therefore incurs additional expenditure as a result of the increased prices
of products purchased from remote markets, the use of intermediaries, higher freight
and transport insurance costs and more onerous financing conditions. Damage to
imports during this period totalled US$956.2 million. Total damage to Cuban foreign
trade in 2007 exceeded US$2,701.8 million.
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Prevent or obstruct the country's access to external sources of funding: In the period
since the submission of Cuba's most recent report last year, the United States has
stepped up its targeting of all the country's international bank transactions and
commercial operations. The monetary and financial sector was severely hit by the
ban on the use of the US dollar in Cuba's external transactions and by the implications
of the country risk concept for the financing of Cuban foreign trade operations, given
that, inter alia, the country has no access to funding from US banks or to international
sources of financing.
The extraterritorial scope of the blockade measures encroaches on the sovereignty of third
states and harms the legitimate interests of entities and individuals under their jurisdiction. These
measures prohibit:
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Subsidiaries of United States companies established in third-country markets from
trading or carrying out any form of transaction with Cuban entities;
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third-country companies from exporting to the United States any product of Cuban
origin or product containing Cuban inputs;
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third-country companies from selling to Cuba goods or services using technology that
contains more than 10 per cent of United States components even where their owners
are third-country nationals;
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ships carrying goods to or from Cuba from entering United States ports, irrespective
of the country of registration;
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third-country banks from handling US dollar accounts for Cuban legal or natural
persons or from carrying out financial transactions in that currency with Cuban
entities or persons.
The Government of the United States of America is thus pursuing the objective of harming
the mainstay sectors of the Cuban economy to the greatest extent possible, reinforcing restrictions and
implementing regulations designed to impede Cuba's economic development. Nevertheless, the
Cuban economy was up 7.3 per cent in 2007 on the previous year, that is to say, the average annual
growth rate as of 2000 is 6.3 per cent or 6.2 per cent in per capita terms. Almost all activities that
make up GDP have seen generalized economic expansion (with services, which generated
74.3 per cent thereof, being worthy of special mention), which confirms the process of economic
recovery under way as of 1994. Fiscal policy displayed further proof of strength and strict
management. In the midst of unfavourable conditions, the State Budget continues both to support the
country's social policy and to contribute to economic growth.
The monetary policy pursued by the Central Bank of Cuba has been directed towards the use
of financial instruments to regulate the money supply. The main monetary variables, such as inflation
and the exchange rate, are stable, thereby bolstering confidence in the Cuban financial system.
Great efforts were made in 2007 to secure strategic development objectives without affecting
the social programmes designed to raise the standard of living of the population. The most relevant
social indicators of the year were:

The infant mortality rate reached its lowest level in history of 5.3 per thousand live
births.
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
Life expectancy at birth continued to be 78 years.

The unemployment rate dropped to a record low for the country of 1.8 per cent.

Around 44,700 students graduated from higher education institutions: 51.4 per cent
in educational sciences, 18.8 per cent in medical sciences and 9.3 per cent in technical
subjects.

Primary and secondary education for all has been guaranteed and the number of
pupils per classroom fell to 20 in primary education and to 15 in secondary education.

Over the last four years, art teacher-training colleges have produced
13,359 graduates, who will disseminate art and culture throughout the country and to
all echelons of society.
In addition to such endeavours at national level, Cuba continued to extend its cooperation and
support programmes in favour of broad-based social programmes in a considerable number of
developing countries, basically in the areas of health and education. Three million people in more
than 27 countries have learned to read and write through the Cuban literacy programme. Cooperation
in health care, involving around 37,500 Cuban doctors, technicians and health workers, has been
extended to more than 70 countries.
This policy was maintained in spite of the difficult external conditions which the Cuban
economy had to face in 2007 in the wake of the international financial crisis triggered by the collapse
of the US real estate sector, the marked devaluation of the dollar and the rise in oil and food prices,
which led to a significant deterioration in the terms of trade.
Cuba, a net food-importing country, closely monitors international fuel and food price
developments. The rise in food prices on the world market – as a result not only of the unprecedented
hike in crude oil prices but also of the demand for grain for industrial use and speculation – has forced
the country to make major financial sacrifices to ensure domestic food security, while the overall
increase in commodity prices has not benefited those giving greater weight to their exports.
Furthermore, climate change and Cuba's exposure to natural disasters has meant that its
economy has a high level of vulnerability in the face of increasingly frequent and devastating
weather-related catastrophes. Between September and November 2008, Cuba was hit by
three hurricanes, which caused substantive damage to the population and losses to the domestic
economy estimated at more than US$10,000 million – particular damage being suffered by the road
transport, electrical and communications infrastructures, housing and the agricultural sector – and it is
likely that this will have negative impact on economic growth.
In addition to the foregoing are the detrimental effects of the blockade on the health and food
sectors. The adverse effects of the embargo measures on the production of food for domestic
consumption in 2007 and early 2008 are estimated at over US$174 million. In turn, damage to the
public health sector is calculated at more than US$25 million, given the increased costs involved in
the purchase of products and equipment from more remote markets and the use of intermediaries for
such purposes.
The economic losses caused by the blockade up to December 2007 amounted to more than
US$93 billion, adversely affecting all sectors of the domestic economy and hindering the normal
development of the country's external financial flows. The international community has condemned
the US policy towards Cuba for 17 consecutive years. In October 2008, the United Nations General
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Assembly adopted a new resolution condemning the blockade which, as in other years, had the
support of the overwhelming majority of the Members of that Organization, with 185 votes in favour
to three against and two abstentions.
Given its scope, its objectives – both officially declared and veiled – and the means used and
action taken to achieve these, the blockade violates the purposes and principles of the Charter of the
United Nations, the principles of international law governing relations between sovereign states, and
the principles of freedom of international trade and navigation enshrined in numerous international
legal instruments, including the WTO rules. The blockade is, without a shadow of doubt, Cuba's
major development constraint.
In these special circumstances, the application of the provisions of Article XV:6 of the
GATT 1994 would involve serious legal and practical difficulties for Cuba – the same as those which
gave rise to the extension of the waiver granted to the country in December 2001 and renewed in
December 2006.
Cuba hereby attests that none of the measures adopted during this period is at variance with
the principles and objectives of the General Agreement or has impaired the rights of other
WTO Members. Cuba confirms its willingness to continue to comply with the principles laid down in
the General Agreement.
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