The Helms-Burton Act: A Case Study

The key issue that prompted the European Union to take the Helms-Burton dispute to the World Trade Organization occurs when Fildel Castro government took control of most private firms of which some of those assets were owned by individual and companies of America. Consequently America president imposed a trade embargo on Cuba, the embargo was later made stricter by Helms Burton Act which stipulated that foreign countries and companies will be penalized for doing business with Cuba. Major trading partners from countries around the world saw the Helms Burton Act as a violation of the laws of international trade. While supporter were of the belief that the “effects doctrine” of international law permits a nation to take “reasonable” measures to protect its interests when an act outside its boundaries produces a direct effect inside its boundaries. It was at this point the European Commission intervened by proposing legislation

As the United State was Cuba’s most important trading partner due to its close proximity, its located 90 miles from the US which enabled Cuba to access goods at a cheaper cost. When the embargo came into effect Cuba had to source new trading partners hence many European companies saw this as an opportunity to build trade relations with Cuba. The Cuban economy also became more lucrative to investors when the US dollar was legally accepted, as a result Cubans were able to spend US dollars in stores causing many companies to move into Cuba which has contributed somewhat to the economic development of Cuba. Some investments were substantial. Three thousand new hotel rooms were added by Spain’s Grupo Sol Melia and Germany’s LTI International Hotels. Both companies were taking advantage of the Cuban government’s goal to increase tourism. Also Italian and Mexican companies were snapping up contracts to repair the country’s telecommunications