Europe Plans to Retaliate for U.S. Law on Cuba Trade

Reacting to a new U.S. law that penalizes foreign companies trading with Cuba, foreign ministers from the 15-nation European Union agreed on retaliatory measures Monday that could hamper American businesses operating in Europe.

The set of four moves, which include the possibility of imposing visa requirements on U.S. business travelers to Europe, were viewed by observers as low-key but a potential irritant in America’s biggest international trade relationship.

The ministers, however, stopped short of implementing any part of the package immediately, and EU officials said it will most likely be Wednesday before any decision is made to bring the measures into force.

“The mood was to wait for President Clinton to make his choice before anything is done here,” said an official familiar with the debate who declined to be identified. Under terms of the Helms-Burton act, Clinton must decide whether to waive the punitive foreign-trade aspects of the law for a period of six months.

Congress passed the Helms-Burton act in March after Cuban MIGs shot down in the Florida Straits two planes piloted by exiles, killing four people. Under the law, the U.S. can impose sanctions on foreign companies whose business ties to Cuba involve property confiscated from Americans after Fidel Castro took power in 1959.

The European Union views the law as illegal and has opposed it from its inception. According to EU statistics, member countries conducted about $1.1 billion in trade with Cuba in 1994, the last year for which statistics are available. Spain, France and Italy accounted for about half that total.

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In addition to the possible visa requirement for Americans, the European foreign ministers proposed to:

* Take the dispute to the recently created World Trade Organization, which has a special panel to rule on such differences.

* Establish a watch list of U.S. companies whose Cuban-based assets and property were confiscated when Castro came to power and who file suit to recover damages against European companies now trading with those entities.

* Introduce legislation that would permit European companies to counter-sue for any damages incurred under the Helms-Burton provisions.

The EU action in some respects parallels steps taken by Canada and Mexico, which also vigorously oppose the legislation.

The Canadian government has promised to enact legislation that would permit companies sued by Americans under the Helms-Burton act to counter-sue in Canadian courts to recover damages awarded in the United States. Canada and Mexico also have filed a complaint under the North American Free Trade Agreement alleging that the law violates the pact.

Additionally, Oxfam Canada, an international aid organization, has started a movement urging Canadians to boycott Florida and other U.S. vacation destinations this year.

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In Washington, as Clinton deliberated whether to waive the tough rules, his spokesman exhorted U.S. allies to help the United States with collective economic measures aimed at bringing Castro’s Communist government to its knees.

“We would say to our allies: Join us in the effort to confine . . . Cuban communism to the trash bin of history, where it belongs,” White House Press Secretary Mike McCurry said. “Join us in bringing the kind of pressure to bear on Fidel Castro, and on that system, that will bring about market economics and democracy in Cuba.”

Clinton studied a memo from his foreign policy advisors during a weekend retreat in Camp David, Md., and was to talk to them before announcing a decision. The choice pits the administration’s interest in wooing Cuban American voters in the swing states of Florida and New Jersey against its interest in maintaining good trade relationships.

A large majority of Clinton’s foreign policy advisors want him to suspend the rules, fearing that a harsh reaction to the punitive measure could harm a wide range of U.S. efforts with its allies, such as collecting money to reconstruct Bosnia-Herzegovina and soliciting help in weaning North Korea from undesirable nuclear energy policies.

“There are all sorts of ways this could come back to hurt us,” one U.S. official said.

Times staff writers Craig Turner of The Times’ Toronto Bureau and Paul Richter in Washington contributed to this report.