During the period analyzed, the US government has stepped up its policy of hostility, persecution and harassment targeted at the Cuban financial and banking sectors, and foreign financial and banking institutions with the objective to limit operations to and from Cuban banks —despite the fact that most of the transfers are made in Euros or other currencies—, arguing that Cuba is included in the “list of countries that sponsor terrorism.”
Although it is not always possible to quantify the economic impact, to site just one example, one of our commercial banks had 481,000 Euros worth of payments rejected, not to mention rejections in other currencies.
The main adverse effects caused to the banking-financial system are the following:
Increased financial costs due to having to resort to “double forex” to meet creditors’ demands in dollars. This results in losses due to fluctuations in exchange rates or from payments made to other foreign institutions to cover currency fluctuation risk, which is very costly.
Accounts closed in a significant number of foreign banks.
Refusal by correspondent banks to confirm or notify regarding letters of credit.
Refusal by some foreign banks to make payments from Cuban banking entities.
Forced to maintain minimum balances in Cuban accounts abroad because of the risk of seizure.
During the period being analyzed, more than 20 banks decided to close their accounts with Cuban banks, which were used by Cuban banking institutions to make payments.
The following are some concrete examples of the impact on Cuban banks during 2010 and 2011:
A European bank returned funds to a Cuban banking institution, citing that it did not accept payments from Cuba according to European laws. Another European bank rejected a payment made through a Cuban Bank for a letter of credit confirmation, citing it did not accept payments from Cuba. Another European institution refused to notify about a letter of credit related to credit offered by another European bank, without citing concrete reasons.
A Latin American bank sent a message regarding two payments made with letters of credit issued by a Cuban bank, informing that its Risk Committee decided to stop working with Cuba for an indefinite period and until further notice, beginning in May 2010.
Through the initiative of a European bank, the account and correspondent relationship that a Cuban banking institution had with the abovementioned European bank were closed. Similar situations had already occurred with other Cuban banks. The rupture with this correspondent bank closed the only operational entry door for family remittances sent from that European country, increasing the cost of every payment order since they had to be reimbursed through third banks.
A Cuban bank had to substitute a Latin American insurance company that was involved in an important investment project in Cuba, when more than 40% of the shares of the insurance company were bought by a US company.
3.4 Section 211 of the 1999 US Omnibus Consolidated and Emergency Supplemental Appropriations Act and new aggressions regarding patents and trademarks.
During 2010 and so far in 2011, the risk situation and potential impact continue from an incident that took place in 2009 when several plaintiffs brought cases against the Cuban State to try to appropriate Cuban trademarks and patents, as a means of compensation, using arguments based on the Terrorism Risk Insurance Act passed in 2002 and extended until 2014.
These attempts to appropriate these intangible assets linked to intellectual property are not new. A well-known case is that of the BACARDI company, which tried to seize the HAVANA CLUB rum trademark, based on a law that it had promoted earlier in the United States, Section 211 of the Omnibus Appropriations Act of 1998 regarding the registration, renewal or observance in the United States of trademarks, brewery names and commercial names related to assets nationalized in Cuba.
This section prevents Cuban owners or their successors-in-interest and foreign companies with interests in Cuba from being recognized and enjoying their rights in the United States regarding trademarks or commercial names registered and protected in Cuba.
In February 2011, nine years had passed since the Dispute Settlement Body (DSB) of the World Trade Organization (WTO) ratified that Section 211 violates national treatment and more-favoured nation obligations, contracted by the United States within the framework of the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement and the Paris Convention for the Protection of Industrial Property. At the time, the DSB also requested that the US Government modify this measure, whose incompatibility was established, to make it conform to the obligations set out in the TRIPS Agreement.
This pseudo-legal saga involving the Havana Club trademark in the United States continued in the Washington Court of Appeals which ruled (two judges in favour and one against) that the Office of Foreign Assets Control of the US Department of the Treasury acted correctly when it refused to renew the registration of the Havana Club trademark in the United States for a Cuban-French joint venture.
In contrast, the Supreme Court of Spain confirmed, in February 2011, that the property of the ‘Havana Club’ Cuban rum trademark belongs to the joint venture established between the French company Pernod Ricard and the Cuban Company Corporation Cuba Ron.
This was the third time that the Spanish court has rejected Bacardi’s attempts to question the rights over the trademark of this company that has its headquarters in Cuba. Bacardi first began its process to be recognized as owner of the trademark in Spain and to cancel the trademark registered on behalf of its competitor Havana Club Holding in the courts of Madrid in 1999.
The Cuban ownership of the trademark was first upheld by the Court of First Instance (lower court) in 2005, and later in an appeal before the Provincial Court of Madrid in 2007.
Attempts to appropriate the trademarks and patents of Cuban companies compromise international treaties regarding trademarks and patents and have a serious impact on international trade.
In accordance with International Law, the United States has the responsibility to ensure that their legal and administrative laws, regulations and procedures comply with their obligations under WTO Agreements and international treaties on trademarks and patents to which they are a State Party.