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QUESTION
Acme Inc., a U.S. company, does not do any business in Cuba and does not purchase from any Cuban suppliers. Acme Canada, a Canadian company, found out several years ago that a supplier outsourced the manufacture of pajamas to Cuba and that these Cuban-made pajamas were being sold in Acme's Canadian stores. The U.S. parent company ordered the Canadian subsidiary to pull the product, but the Canadian subsidiary reported that doing so would violate Canadian law, which prohibits Canadian companies from complying with the U.S. boycott of Cuba. What should Acme U.S. do? What should Acme Canada do?
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Answer
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Doing Business with Cuba
I believe that Acme Inc should allow its subsidiary to continue doing business with Cuba since the products made I Cuba are not being sold in America, but are being sold in Canada. The US Company should be keen not to allow the products manufactured in Cuba to enter into America as this would go against the trade restrictions put on Cuba by the American government. The company should report the issue to the US Small Business Administration and report its inability to stop its subsidiary from buying products in Cuba. The SBA would advise on the best way forward given the precarious conditions facing the company (Fonda, 2015). However, it is expected that the SBA will allow Acme Inc, to permit its subsidiary to continue with its business relations with the Cuban manufacturers. This is because Acme Inc does not have full control over all the activities of its subsidiaries and ordering Acme Canada to terminate this relationship would result in a violation of Canadian rules.
Acme Canada should not terminate its business relationship with Cuban companies as this would go against Canadian trade rules and might get the company into trouble with Canadian authorities. The Canadian government is very clear on fact that Canadian companies should not emulate US companies in the boycott of trade with Cuba. The Canadian subsidiary should be careful to ensure that none of the products from Cuba is shipped to the US, as this would be against the use embargo on trade with Cuba (Spadoni & Sagebien, 2015). Another contributing factor for this situation is that Acme Canada is under a different jurisdiction and as such is not bound by the US trade restrictions on Cuba since it is not a US company. This is a crucial reason why the company should continue its trade relations with Cuba.
References
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Fonda, D. (2015). Profit From Cuba’s Coming Boom. Kiplinger's Personal Finance, 69(12), 53-54.
Spadoni, P., & Sagebien, J. (2015). Dealing With The New Cuba. Ivey Business Journal, 1-6.
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