On Cuba's Nickel

On Cuba's Nickel
Posted by Clif Burns at 6:01 pm on May 13, 2010
Category: Cuba Sanctions

Washington-based trade group Specialty Steel Industry of North America
("SSINA") marched up to Capitol Hill today to gripe to the House Ways
and Means Committee about Cuban nickel being surreptitiously imported
into the United States in violation of the U.S. embargo against Cuba
after a detour to China. Granted section 515.204 of the Cuban Assets
Control Regulations prohibits the importation into the United States of
any merchandise that "is made or derived in whole or in part of any
article which is the growth, produce or manufacture of Cuba." Cuba is
the ninth-largest producer of nickel in the world (not the largest, as
SSINA erroneously claimed in its presentation). Most of it goes to China
and some of it may well be coming back into the United States from China
as stainless steel products or NiMH batteries.

SSINA faulted the Office of Foreign Assets Control ("OFAC") for not
adequately enforcing the nickel embargo against Cuba, and it suggested
that OFAC should have China certify that stainless steel products
imported to the United States do not contain Cuban-origin nickel — as if
that were possible for Chinese manufacturers to certify and as if, even
if it were possible, the Chinese would tell the truth.

The SSINA presentation also made a big deal of previous certification
arrangements by the United States with some of our European allies, but
it failed to tell the whole story about those arrangements. Yes, the
U.S. did previously get France, Italy and others to agree to certify
that stainless steel products contained no nickel from Cuba. But that
was between 1981 and 1984. Since then, European Union Council Regulation
2271/96 would forbid E.U. exporters of stainless steel from making a
certification that their products did not contain any Cuban-origin parts
or materials.

SSINA accuses OFAC of neglecting its enforcement obligations without
mentioning that OFAC has indeed penalized U.S. subsidiaries of Chinese
companies investing in Cuban nickel production. In 2008, OFAC fined
Minxia Non-Ferrous Metals, Inc. for just that. This seems a more
sensible enforcement strategy than SSINA's proposed certification scheme.

But, as you might have already suspected, notwithstanding SSINA's
huffing and puffing about the moral imperative behind the Cuba embargo,
the trade group's real interest has little to do with U.S. foreign
policy and everything to do with Chinese competition. After all, the
alleged competitive disadvantage of U.S. producers who can't buy Cuban
nickel could be solved tomorrow by lifting the embargo, something SSINA
doesn't even whisper as a possible solution to its issues. Rather, it
seems the Cuba issue is a convenient excuse to look for ways to burden
or ban Chinese imports of stainless steel, and lifting the embargo
wouldn't accomplish that.

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