APPENDIX 7

AMERICAN EXPRESS CO. MEMORANDUM ON THE TRADING WITH THE

ENEMY ACT

AMERICAN EXPRESS CO., Washington, D.C., March 9, 1977.

MEMORANDUM

Re: Trading With The Enemy Act-Experience of American Express Company

(1) American Express Company is a diversified financial services company operating in about 150 countries. Its policies and products are such that it prefers the minimum of trade restrictions and trade barriers of all types. It also realizes that some restrictions and trade barriers do exist.

(2) Its principal businesses outside the United States include the following: casualty and property liability insurance, travelers cheques, credit card, wholesale travel, retail travel, and commercial and merchant banking.

(3) Many trade barriers exist to these businesses which are in the "service sector" category. A recent Department of Commerce survey indicated that, among the international service sector, perhaps the business most severely affected by trade barriers was the international casualty and property liability insurance business.

(4) In the area of "trading with the enemy", the most current and exemplary problem of American Express lies in the 1975 “liberalization" of trade with Cuba. In 1975, the Administration purportedly liberalized trade with Cuba by allowing offshore subsidiaries of American companies to sell and ship goods of non-U.S. origin to Cuba. Unfortunately, and without intention, the regulations covered only "goods" and not "services". Within a few days when this was brought to the attention of the State, Treasury and Commerce Departments, Cubans troops were discovered in Angola and it became politically inconvenient to amend the regulation to allow "services" into Cuba from offshore subsidiaries of American companies. This has been at substantial cost to American Express' business, and other companies similarly situated.

A case in point would be the case of marine cargo insurance-a large portion of the international insurance industry in the U.S. Because of Cuba restrictions, a "Cuba clause" has been inserted making U.S. issued insurance inoperable in Cuba and difficult to market. Offshore subsidiaries should be able to offer such insurance, comparable to offshore subsidiaries selling goods to Cuba.

(5) Hence, the point is that when trade restrictions are imposed, the freezing of service transactions, particularly financial transactions, seems to be the first frozen; when thawed, the broad range of service industries seems to be left out by inadvertence.

(280)

HARRY L. FREEMAN.