Guatemala could be the subject of the first arbitration claim under the dispute settlement provisions in Chapter 10 of DR-CAFTA. This section provides for an ‘Investor-State Dispute Settlement’, which requires that claimants must give a 90 day notice before submitting a claim in Article 10.16.2. Railroad Development Corporation is believed to be the first company to send one of these notices.

The claim concerns RDC’s ownership of a 50 year lease on aspects of Guatemala’s railway infrastructure that they won by bid in 1997. The lease is over Ferrovias Guatemala (RDC’s now subsidiary), which includes nearly 500 miles of track, port facilities and rights of way (which can be exploited for other infrastructure). This must encompass nearly all of the rail in the country, because the CIA World Factbook lists 886kms, with the RDC site reporting the lease at 800 kms. Last August, the Guatemalan government issued a Presidential Decree declaring that the privitsation of ‘rolling stock’ (non-locomotive railcars) was against government interests.

RDC alleges that the decree has indicated to banks, customers and others that there is a general hostility to Ferrovias and so they have been reluctant to use its services — thus meaning less credit and less business. From RDC’s perspective, the acts of the Guatemalan government indicate an attempt to take back over the national rail infrastructure after having abandoned it in the 1990’s (and being rescued by RDC’s efforts under the lease over the past 10 years). A ‘case study’ of the restoration is available on the RDC site.

With the privitisation of the telecoms industry being so central to the agreement and our focus for this project, this will definitely be a case to watch. The deregulation of the telecoms market, especially in states such as Costa Rica, will mean greater investment by foreign corporations. Provisions such as this one, providing for arbitration of disputes, are a kind of double-edged sword — they aim at encouraging foreign direct investment by giving assurances of fairness, but can also be seen as giving foreign corporations too much power.  This sort of Jeckll and Hyde view of FTAs of course generally underlies most discussions of free trade and neo-liberal economics. The goal is to see past these broader depictions to the actual affects of the policies.

In light of the moves towards nationalization taken by Chavez in Venezuela, and his continual promotion of ALBA, this suit might provide a powerful signal to other Central American countries when tackling the deregulation issue.

IP laws can have quite a large impact on IT-based businesses, especially in relation to liability for acts in the online environment. The DR-CAFTA agreement covers many areas of intellectual property, including areas that might not strictly be ‘IP’ but are highly related.

This includes:

• Patents
• Copyright
• Trade marks
• Geographical indications of origin
• Domestic content restrictions
• Satellite signals, and
• Patents and public health issues.

The agreement covers many of these areas directly, but also sets standards by including requirements to accede or make efforts to accede to external treaties related to intellectual property. The following IPR treaties are required by DR-CAFTA:

• WIPO Copyright Treaty (1996);
• WIPO Performances and Phonograms Treaty (1996);
• Patent Cooperation Treaty as revised and amended (1970);
• Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure (1980);
• Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite (1974); and
• Trademark Law Treaty (1994).

The International Convention for the Protection of New Varieties of Plants (UPOV 1991) is required unless the party offers ‘effective patent protection for plants’, in which case they are required to make ‘all reasonable efforts to ratify or accede to the UPOV Convention’.

The following treaties are not mandatory, but parties ‘shall make all reasonable efforts to ratify or accede to’ the:

• Patent Law Treaty (2000);
• Hague Agreement Concerning the International Registration of Industrial Designs (1999); and
• Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (1989).

It should also be noted that TRIPs, of which all parties are a member, includes obligations under other treaties as well, such as the Berne and Paris Conventions.

As discussed in an earlier post, DR-CAFTA also contains rules regarding anti-circumvention, which are based on the DMCA in the US. This is a rule on how to implement the two WIPO Internet Treaties (the WCT and WPPT), and is generally regarded as the maximalist approach.

In the report / study, we will be focussing in on IP rules in relation to:

• UDRP for ccTLDs
• Anti-circumvention law
• Pre-established damages and copyright
• Intermediary liability and copyright

These areas, together with telecoms regulation, and e-commerce, will make up the bulk of the report.

Telecoms deregulation is a complicated area of the law, to say the least. Since at least the 1940’s, the overall approach by governments has been that in the case of telephony, monopolies were a good thing. This mainly stems from the inefficiencies involved in having more than one company building up the physical infrastructure (telephone lines, etc) to connect people to the system. This approach led to state-owned companies (British Telecom here in the UK) or de-facto government sponsored monopolies (AT&T in the US).

From about the late 1970’s, and really gaining traction in the 1980’s, the telecoms market has been facing increased deregulation. As mentioned in an earlier post, DR-CAFTA contains provisions requiring the deregulation of the telecoms markets of member states. These measures are largely tied to how the physical structure, the architecture, is used — generally rules on access to equipment and transparency of agreements. Others include consumer protection measures in order to prevent anti-competitive practices. They include provisions on:

• Number poratability - 13.3
• Dialing parity - 13.3
• Unbundling of services - 13.4.4
• Leased circuits - 13.4.6
• Colocation - 13.4.7
• Rights of way - 13.4.8
• Submarine cable systems - 13.5
• Independence of the regulatory body - 13.7
• Universal service obligations - 13.8
• Licence transparency - 13.9
• Frequency allocation - 13.10
• Enforcement arm of the regulatory body - 13.12

How these translate into practice into the individual jurisdictions is obviously a question highly related to the relevant legal system and governance structure. But if the end result is to decrease the ‘digital divide’ by providing better quality and lower cost services, this will have an exponential effect on IT-based businesses in the region. Not to mention the development of ‘m-commerce’.

As a final parting point, I’d also like to add that alternative physical infrastructures will also come into play, and that these have competition law and telecoms aspects. For example, wireless mesh networking could offer alternatives for high-quality broadband access using a low cost infrastructure that is generally not subject to the same level of regulation as the standard telecoms industry. VoIP, personal satellite services, other wireless technologies all feed into the decreasing dominance of the traditional telecom industry - and thus the regulatory structures used to control it.

While researching for the project, I reviewed the following 4 articles in regards to the incorporation of anti-circumvention rules into Free Trade Agreements. The US has been exporting into free trade agreements the model on anti-circumvention law that they used in the much-maligned Digital Millenium Copyright Act (DMCA). The DMCA provides for (among other things) legal liability for circumventing a technical protection measure or altering or removing rights management information. Nominally, this provision was enacted in order to bring the United States into compliance with requirements in the WIPO Internet Treaties — whether this was necessary or not is discussed in the literature.

They are all particularly good and concentrate on the problems with the original DMCA model and then the problems that arise when this model is applied in foreign legal systems. There is also quite a bit of comparative work in there as well, as the DMCA model has been applied in multiple treaties.

The articles are:

•  54 Clev. St. L. Rev. 205
  Cleveland State Law Review 2006 Symposium EXPORTING DMCA LOCKOUTS Anupam Chander.
• 84 Denv. U. L. Rev. 13
  Denver University Law Review 2006 Articles ANTICIRCUMVENTION AND ANTI-ANTICIRCUMVENTION Peter K. Yu.
• 20 Santa Clara Computer & High Tech. L.J. 941
  Santa Clara Computer and High Technology Law Journal May, 2004 Symposium Review LOCKING UP THE BRIDGE ON THE DIGITAL DIVIDE–A CONSIDERATION OF THE GLOBAL IMPACT OF THE U.S. ANTI-CIRCUMVENTION MEASURES FOR THE PARTICIPATION OF DEVELOPING COUNTRIES IN THE DIGITAL ECONOMY Mia K. Garlick.
• 34 AIPLA Q.J. 217
  AIPLA Quarterly Journal Spring, 2006 Article DMCA ANTI-CIRCUMVENTION PROVISIONS IN A DIFFERENT LIGHT: PERSPECTIVES FROM TRANSNATIONAL OBSERVATION OF FIVE JURISDICTIONS Richard Li-Dar Wang.

Enjoy!

From the AP, story available on bilaterals.org, DR-CAFTA member Nicaragua asks for money to compensate for damage by free trade agreements:

MANAGUA, Nicaragua: President Daniel Ortega has asked the United States and the European Union to set up “compensation funds” to offset the effects of free trade and globalization on poorer nations like Nicaragua.

Ortega said Wednesday that he had broached the idea with representatives of the EU - with which Nicaraguan is discussing a possible trade deal - and the United States, which along with Nicaragua is part of the Central American Free Trade Agreement.

“We have explained to the Europeans that if there is no compensation fund, the association (agreement) would have no future,” Ortega told a meeting of businesspeople.

Could this be an influence of Nicaragua’s recent accession into ALBA - the Bolivarian Alternative for the Americas - that Chavez and Morales started?

In the rest of the article, Ortega argues for a development plan similar to that used by the EU for new member states in order to get their infrastructure up to par with the rest of the Union.