US to firms trading with Cuba: Watch it

This month, a Canadian became the first foreign national convicted of trading with Cuba.

Earlier this month, businessman James Sabzali was found guilty of violating the US trade embargo against Cuba. The case, tried in Philadelphia, passed unnoticed in most US cities. In Canada, however, the verdict has generated a public outcry.

Mr. Sabzali, a Canadian who sold water-purification products to Cuba from an office in Canada, is the first foreign national to be convicted under the United States Trading With the Enemy Act.

By prosecuting a Canadian – who was breaking no Canadian laws – the case underscores a tougher enforcement stance on the part of the Bush administration. And it highlights the diverging views between Canada and the US on how to deal with the Marxist regime.

Sabzali was convicted along with the two owners of Bro-Tech Corp., of Bala Cynwyd, Pennsylvania. From 1992 to 1996, Sabzali worked as a sales representative, selling chemicals to Cuba. In 1996, he was made marketing director of the company and moved to Philadelphia with his wife and two children. While in the US, he approved travel expenses for another Canadian to do business in Cuba.

Of the 21 charges of which Sabzali was convicted, eight occurred when he was living in Canada. Trade with Cuba is permitted under Canadian law. Other countries, such as England, Spain, and Mexico, also allow trade with Cuba. And many US companies do quietly trade with Cuba from foreign subsidiary offices outside the US.

But under the 1992 Cuban Democracy Act, US companies and their foreign subsidiaries are specifically forbidden to trade with Cuba.

"This has been really difficult for Canadians to understand," says David Robertson, a Toronto-based international trade lawyer who assisted in Sabzali's defense. "What's difficult is the apparent hypocrisy of singling out one nation that doesn't pose any significant military threat."

Sabzali might not have been prosecuted if he'd continued operating out of Canada. But he had clearly violated [US law] and then he moved to the US," says David Sharp, director at the Center for International Business Studies at the University of Western Ontario. "You can only wave the red flag for so long before the bull charges. Other people haven't been quite that blatant."

Though Canada and many European nations don't dispute the US's right to set its own foreign policy, many Canadians are concerned about what Mr. Robertson calls a "unilateral claim on jurisdiction" towards someone who was obeying Canadian laws.

Assistant US Attorney Joseph Poluka says the case involves no contradiction between Canadian and US law, because the bulk of Mr. Sabzali's work was related to the US.

"Order forms were processed here [in the US], some manufacturing was done here, the product was stored here, it was shipped from here and didn't enter Canada – so the notion that Canadian commerce is involved is wrong," says Mr. Poluka. "The only thing that was in Canada was the sales rep. What we have is a foreigner, who happens to be Canadian, helping to violate the embargo."

The Trading With the Enemy Act was introduced in 1917. The act gave the president power to prohibit any business transactions by groups from enemy countries who operate within the US. It was amended several times to strengthen the embargo against Cuba.

Though some see it as a relic of the past, others say it is a fixture of US law. "The Trading With the Enemy Act has been around since 1917 and looks like a permanent feature of our legal system," says Nancy Chang, senior litigation attorney at the Center for Constitutional Rights in New York.

It is not clear whether this verdict will lead to further prosecutions. Betsy Maclean, associate director of the Center for Cuban Studies in New York, says US policy has been ambiguous under the Bush administration. It has authorized some export of food and medicine to Cuba (though prohibits US financing of those exports).

But on the other hand, Ms. Maclean says, the Bush administration is increasingly cracking down on US tourists who visit Cuba illegally by issuing fines – something past administrations have turned a blind eye to.

The Sabzali verdict comes amid increasing pressure in Washington to resume ties with Cuba.

Last month, 34 US congressmen called for loosening the embargo and permitting US citizens to visit the island. The Bush administration is allowing former US president Jimmy Carter to visit the island in May, the first former president to do so.

Canada's long-standing approach to Cuba has been "constructive engagement." Canada has had an official trade policy with Cuba since 1945 and now is one of Cuba's biggest trading partners. Canadian tourists account for the largest percentage of visitors to the Caribbean isle.

US officials say they don't expect the case to hurt relations between Canada and the US. "We had a few phone calls from Canadians in the first day or two saying they shouldn't have convicted him, but it's dropped back down again," says Buck Shinkman, a spokesman for the US Embassy in Ottawa. "I don't see this affecting diplomatic ties."

Foreign affairs officials for the Canadian government say they're "reviewing the verdict very carefully" before making a response.

They're also waiting until Sabzali is sentenced or files an appeal. Though a maximum penalty is 205 years in jail, Poluka says a "conservative estimate" of Sabzali's sentence is a jail term of 41 to 51 months.

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