Wednesday, June 21, 2017

What Does Trump’s Cuba Policy Mean for Baseball?

On Friday, Donald Trump issued a presidential memorandum announcing tighter controls on U.S. economic relations with Cuba. What does this mean for Major League Baseball and the recruiting of Cuban ballplayers, a dicey subject I’ve written about previously on this blog?

Before seeing the regulations that will be forthcoming from Commerce and Treasury, it’s too soon to say. But a couple of aspects of the Trump memorandum suggest that MLB is unlikely to find Treasury a willing partner in its proposal to ease restrictions on doing business with Cuban ballplayers and their teams or agents. Most likely, if MLB wants to reduce the human rights abuses against its star Cuban prospects, it will need to amend its own rules.

GAESA and the “Russian Doll” Problem

One of the primary changes signaled by the presidential memorandum is its prohibition on any transactions with the Grupo de Administración Empresarial SA, or GAESA. Through this company, the military regime under Castro built an investment network that controls major aspects of the Cuban tourism industry, particularly hotels.

This clearly restricts Cuba tourism and may also complicate the proposal made by MLB to the Office of Foreign Assets Control in the spring of 2016. MLB proposed lifting the ban on signing of Cuban players and paying compensation to a newly-created organization devoted to Cuban youth baseball development instead of to the government-owned Cuban teams themselves.

The trouble is that GAESA has been described as “una especie de muñeca rusa” – a sort of Russian doll, each thing hiding something else inside that no one knows about. According to the Miami Herald, GAESA controls about 60 percent of the Cuban economy. With such an extended web of ownership involving GAESA in Cuba, it may be difficult to verify that GAESA holds no ownership interest in whatever entity MLB proposes to pay in exchange for Cuban ballplayers. Without such assurances, OFAC is highly unlikely to entertain MLB’s proposal.

MLB Doesn’t Have to Wait for Trump

The new policy means Trump is not letting MLB off the hook. But MLB can still protect young Cuban baseball players from the greatest dangers of human trafficking and extortion by changing their own regulations.

MLB should change its draft and international free agent rules to allow Cuban ballplayers to sign as international free agents even after defecting directly to the United States.

Under current rules, Cuban players who defect to Mexico or Haiti or the Dominican Republic can sign as international free agents, but if they enter the United States they are subject to the Rule 4 draft. The testimony in the recent federal conviction of a baseball agent and trainer in U.S. v. Hernandez shed light on the coercive and extortionate conditions to which Cuban ballplayers are subject in these third-country defections.

MLB should not wait for Trump. It should make this issue a point of central importance in bargaining its new rules with the MLB Players’ Association next winter.

You can read the earlier post on MLB’s policy toward Cuban players here.

http://lawprofessors.typepad.com/inttradelaw/2017/06/what-does-trumps-cuba-policy-mean-for-baseball.html

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