Peter Foster. National
Post. Canada, March 28, 2001.
Fidel Castro has a new revolutionary idol: Loblaw's former pitchman Dave
Nichol. Instead of knocking off political opponents, the Maximum Leader now is
threatening to knock off Western commercial brands. The big difference is that
El Presidente's choice is not going to be No Name. Coca-Cola and Palmolive have
been put on notice that Cuban versions may be in the offing. However, the brand
that Mr. Castro is really after, in every sense of the term, is Bacardi rum.
The Cuban rum/brand kerfuffle is important because it amounts to Mr.
Castro's assertion of what might be called "stolen property rights,"
and because it has embroiled both the European Union and the World Trade
Organization.
Desperate for hard currency after the collapse of the Soviet Union,
President Castro began, in the 1990s, to welcome foreign investors to the
island. The problem was that, in many cases, they were being invited to invest
in properties that had been expropriated, often from American companies, and
almost everywhere without compensation.
The U.S. legislative response was the Helms-Burton Act of 1996 (Canada's Ian
Delaney leaped into the forefront of the dispute when he and a group of
executives from Sherritt International were banned under Helms-Burton from
travelling to the United States because Sherritt had invested in an expropriated
nickel mine).
Opponents of Helms-Burton declared that it amounted to a power play on
behalf of the influential Miami-based Cuban exile community. Bacardi in
particular was fingered. Helms-Burton was dubbed "The Bacardi Rum
Protection Act." Cuban politburo member Carlos Lage declared that the act
would benefit: "those associated with the Batista regime, assassins,
torturers [and] all kinds of mafia members."
Señor Lage was playing to popular myth. One of the rationalizations
for the Castro regime's expropriations has always been that the Cuban business
community "had it coming to them." After all, hadn't they all
supported the dictator Fulgencio Batista, from whom Mr. Castro seized power?
In fact, if Bacardi has an embarrassing skeleton in its closet it is that --
like many Cuban-owned businesses -- it supported Mr. Castro before the
revolution. Founded in the 1860s in Santiago de Cuba, Bacardi had become Cuba's
first multinational. One of the reasons the company had diversified
geographically before the Castro revolution was the perennially uncertain state
of Cuban politics. Indeed, Bacardi's main concern in the late 1950s was
expropriation, not by crypto-Communists, but by President Batista.
Bacardi's reward for supporting Mr. Castro was having its business seized.
The family fled into exile. This hardly made them different. However, the Cuban
regime attempted to steal not merely Bacardi's facilities but also its
trademark, which embodied the goodwill accumulated during a hundred years of
operation. Without that trademark, the Cuban regime could not export under the
Bacardi name. Bacardi-in-exile fought, won and went on to become the most
successful liquor brand in the world, eventually absorbing Martini to become
Bacardi-Martini. Cuba, meanwhile, began a process of inevitable Communist
decline.
Until the 1990s, Bacardi -- which distills in Puerto Rico, the Bahamas,
Mexico City and Brazil -- played down its Cuban origins. That changed in 1993,
after French liquor giant Pernod Ricard took a stake in the Cuban Communists'
Havana Club brand, which had also been seized by the Castro regime in 1960.
Bacardi-Martini approached the family that had owned Havana Club, the
Arechabalas, and set about regaining the Havana Club trademark. It began
distributing its version of Havana Club in New York in 1995, whereupon Pernod
Ricard and the Castro government brought suit in the United States claiming that
Bacardi was infringing the trademark rights the Cuban regime had expropriated!
And anyway, claimed Fidel/Pernod, the Arechabalas had allowed the trademark to
lapse. The case was thrown out, and just to rub it in, Section 211 of the 1998
Omnibus Appropriations Act -- which was depicted as another Bacardi-inspired
exile plot -- asserted that those claiming trademark ownership should not be
recognized if the trademarks had been stolen. Pernod subsequently persuaded the
European Union to take up its case. The EU, in turn, took it to the WTO, where
it now sits.
The rum issue has inevitably become embroiled in broader policy towards
Cuba, especially whether the United States should maintain its forty-year-old
trade embargo. Perhaps surprisingly, the U.S. Chamber of Commerce has expressed
concerns about Bacardi-Martini's action because many of its members -- keen to
do business when Cuba eventually opens up -- have recently been re-registering
their trademarks on the island. It's hard to imagine, however, that Mr. Castro
-- whose regime has traditionally not been able to organize a fiesta in a
distilería -- is likely to cause any damage to the world's great brands.
Meanwhile the Cubans may well slap the name Bacardi on a bottle of rum, but it
will be harder to market internationally than the slogan "Socialism or
Death."
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