The EU and Canada issued a joint warning against the United States on Wednesday after Washington said it would allow US lawsuits against foreign investments in Cuba.

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"The EU and Canada consider the extraterritorial application of unilateral Cuba-related measures contrary to international law," the EU's foreign affairs supremo Federica Mogherini and Trade Commissioner Cecilia Malmstrom said in a statement that was also signed by Canadian Foreign Minister Chrystia Freeland.

The statement came as US President Donald Trump on Wednesday forged ahead with a long-delayed law that allows lawsuits in US courts over property seized by Cuba, defying warnings from the European Union and vowing to issue no exemptions.

Fueling fears on the island over its economic future, US Secretary of State Mike Pompeo announced that the measure -- passed by the US Congress in 1996 but until now delayed systematically by each president every six months -- will go into effect on May 2.

EU to fight measures

"Any person or company doing business in Cuba should heed this announcement," Pompeo told reporters.

Under the provision of the Helms-Burton Act, any companies that operate in property seized by Cuba during Fidel Castro's 1959 communist revolution could face lawsuits in US courts from the vast and politically powerful Cuban American diaspora.

Pompeo called on all businesses that own buildings in Cuba to "fully investigate whether they are stolen in service of a failed communist experiment."

"I encourage our friends and allies alike to follow our lead and stand with the Cuban people," he said.

But the European Union and Canada, which have long warned against the Helms-Burton Act, swiftly condemned the move.

In a letter ahead of the announcement, Mogherini and Malmstrom warned Pompeo that enforcement of the law would lead to reprisals in Europe.

The European Union "will be obliged to use all means at its disposal, including in cooperation with other international partners, to protect its interests," said the official letter seen by AFP by EU foreign policy chief Mogherini and trade commissioner Malmstrom.

'Illegal and violates international law'

The 1996 act gave Americans the right to sue the mostly European companies that operate out of hotels, tobacco factories, distilleries and other properties that Cuba nationalized after Fidel Castro took power. The act even allows lawsuits by Cubans who became US citizens years after their properties were taken.

Countries with large investments in Cuba have ferociously protested the law and threatened to sue in the WTO if Washington tries to interfere with the business ties between Cuba and another sovereign nation.

"The extraterritorial application of the US embargo is illegal and violates international law," said Alberto Navarro, EU ambassador to Cuba. "I personally consider it immoral. For 60 years the only thing that's resulted from the embargo is the suffering of the Cuban people."

US airlines and cruise lines that bring hundreds of thousands of travellers to Cuba each year appear to be exempt from the key provision of the Helms-Burton Act.

Every US president since Bill Clinton has suspended the key clause to avoid those trade clashes and a potential mass of lawsuits that would prevent any future settlement with Cuba over nationalised properties. Cuba has said it is willing to reimburse the owners of confiscated properties, but only if the communist government is also reimbursed for billions of dollars in damages generated by the six-decade US trade embargo.

Cuba's struggling economy

The announcement comes at a moment of severe economic weakness for Cuba, which is struggling to find enough cash to import basic food and other supplies following a drop in aid from Venezuela, and a string of bad years in other key economic sectors.

Foreign investment in Cuba increased slightly in recent years, but it remains far below the levels needed to recapitalize the island's dilapidated, often collapsing infrastructure. The Trump administration's decision is not expected to drive out major foreign players like Pernod-Ricard of France, which makes Havana Club rum, or Spanish hotel chains Melia or Iberostar, but it could prove a major obstacle to new investment from foreign companies.

"It will harm prospective investment in Cuba. It will not cause people who are invested in Cuba already to pull out now," said Phil Peters, director of the Arlington, Virginia-based Cuba Research Center, who advocated for closer relations with Cuba and has consulted for US companies looking to invest.

Peters said he also believed the new measure could hurt the Trump administration's effort to force Maduro from power with help from allies like Spain.

"There are plenty of countries that are interested in helping Venezuela find a soft landing after Maduro, but they are not interested in waging an economic war on Cuba," Peters said.

(FRANCE 24 with AFP, AP and REUTERS)

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