You Say Embargo, I Say Bloqueo—A Policy Recommendation for Promoting Foreign Direct Investment and Safeguarding Human Rights in Cuba

Abstract

The United States is the only major industrialized nation that restricts trade with Cuba. Although President Obama issued several executive orders that have facilitated limited trade (and President Trump has scaled some back), an embargo remains in place, and by law, Congress cannot lift it until, among other things, the Cuban government commits to democratization and human rights reform. Unfortunately, the Cuban and U.S. governments fundamentally disagree on the definition of “human rights,” and neither side has shown a willingness to compromise. Meanwhile, although some U.S. investors clamor to join their European and Canadian counterparts in expanding operations in Cuba, many have an understandable concern regarding the rule of law and expropriation in a communist country. Bilateral investment treaties aim to address those concerns.

After discussing the legal and political barriers to lifting the embargo, I propose a partial solution to the stalemate on human rights, which will:

(1) facilitate foreign direct investment in Cuba;

(2) protect investor interests through a bilateral investment treaty; and

(3) require an examination of human rights impacts on the lives of Cuban citizens before investors can receive the protection of the treaty.

Specifically, I recommend the inclusion of human rights clauses in bilateral investment treaties (BITs) and investor-state dispute mechanisms as a condition precedent to lifting the embargo. My solution also requires “clean hands” so that investors seeking relief must provide proof that their business interests have not exacerbated or been complicit in human rights abuses, rebut claims from stakeholders that their business interests have not exacerbated or been complicit in human rights abuses, or both. Finally, I propose revisions to the 2016 U.S. National Action Plan on Responsible Business Conduct to incorporate human rights requirements in future BITs and other investment vehicles going forward.

Keywords: Cuba, human rights, bilateral investment treaty, enbargo, National Action Plan, United Nations, Trump