It is important to point out that the US has already signed on to DR-CAFTA, as well as other Latin American FTAs (and in other regions). A Democrat in the White House in 2008 wouldn’t undo DR-CAFTA, but could put a halt on other, future, agreements.

Sokol on Non-Enforceable Competition Chapters in Free Trade Agreements

D. Daniel Sokol (University of Missouri-Columbia School of Law; University of Wisconsin Law School) has posted Why is this Chapter Different from All the Others? An Examination of Why Countries Enter into Non-Enforceable Competition Policy Chapters in Free Trade Agreements on SSRN. Here is the abstract:

There has been an explosion in the past 10-15 years of bilateral and regional free trade agreements in Latin America (together preferential free trade agreements or ‘PTAs’). The purpose of PTAs is to increase trade, regulatory and investment liberalization. As trade liberalization requires more than just a reduction of tariffs, PTAs include ‘chapters’ in a number of areas of domestic regulation. These chapters that address domestic regulation, create binding commitments to liberalize domestic regulation that may impact foreign trade. Among chapters that address domestic regulation, many of the Latin American PTAs include a chapter on antitrust/competition policy. Until now, the effectiveness of such chapters has remained unanswered. This article undertakes the first empirical analysis of Latin American antitrust/competition policy chapters in PTAs.

To understand the dynamics of PTAs, this article begins with some context of Latin American development. First, the article provides an overview of the process of liberalization in Latin America. It then describes how domestic antitrust fits within Latin American liberalization. Thereafter, it describes the limits of domestic antitrust in Latin America. The article then describes competition policy chapters within Latin American PTAs. The standard practice in PTAs is to create binding commitments that have third party adjudication for potential disputes. The choice of international institutions, such as PTAs, is based on the perception of the relative strength of PTAs over purely domestic approaches. A comparison of the institutional alternatives to PTAs illustrates that this perception is not born out by the facts. This article finds that antitrust chapters within PTAs go against the standard practice of binding commitments. Competition policy chapters, unlike other chapters of the same trade agreement, lack binding dispute settlement. All Latin American PTAs lack dispute settlement for core antitrust issues of mergers, collusive agreements and monopolization within the competition policy chapters. This departure from the standard PTA practice is more striking given that other chapters in the same trade agreement have binding dispute resolution. These other chapters include some competition element to them, such as services and intellectual property. The remainder of the paper explores the dynamics of these chapters, including why PTAs treat antitrust differently from other areas of domestic regulation.

Competition, as well as IPRs, are two areas that we covered in the project. I look forward to reading this one (when I find the time…). Fellow team member Abbe Brown has considerable experience in the competition field, and I’ll be anxious to hear what she thinks about this paper.

Many Costa Ricans Still Favour CAFTA – Poll data saying that most Costa Rican would vote in favour of DR-CAFTA, though the number is still 45 percent with 23 percent undecided (which is up from 18 percent).

Catholic church worried DR-CAFTA will split the country – church leaders are calling for tolerance for those on both sides of what is a divisive issue for the country.

Costa Ricans worried about water privatisation – Via Prensa Latina, Costa Rican are worried about water becoming more of a commodity.

Costa Rica’s opposition leader wants renegotiation – Opposition leader Solis wants to renegotiate DR-CAFTA (at least Costa Rica’s part) in order to add Labour and Environmental standards.

Telecommunications, as noted in our report, is one of the central issues of DR-CAFTA. Costa Rica’s telecoms infrastructure is one of great pride for Costa Rica, and the idea of having it privatised brings up strong feelings.

Costa Rica’s citizens will be voting directly on whether or not to approve DR-CAFTA.

Both the Appendix and the updated report are available as part of the working paper series at the AHRC Research Centre for Studies in Intellectual Property and Technology law at the University of Edinburgh.

Working papers at the Centre.

The Costa Rican press has been reporting on the unconstitutionality action brought by the Defensoría de los Habitantes (a citizen ombudsman), and 17 legislators from several opposition parties. The argument is that the existing text in CAFTA violates several constitutional norms, particularly with regards to the opening of the telecommunications market. The Costa Rican Constitutional Court (Sala IV) has voted to uphold the constitutionality of the agreement 5 votes in favour and 2 against (2007-09469). The Court’s full opinion has not been published yet, but the vote has been made available by the press. I will write a brief outline of the analysis as soon as it is published, as this may prove to be an extremely important and historic decision.

This ruling will green-light the referendum. The YES camp is consistently ahead in the polls, with roughly 50% of the voting population in favour of its approval.

KORUS has more in-depth treatment on e-commerce than was in the DR-CAFTA agrement, including specific sections on Electronic Signatures, Online Consumer Protection, a set of principles on internet use and access, and cross border information flows. A few key points are interesting:

Electronic Signatures

KORUS Article 15.4 specifically addresses Electronic Authentication and Electronic Signatures. It contains an outright prohibition from adopting or keeping legislation that:

15.4.1(a) prohibit parties to an electronic transaction from mutually determining the appropriate authentication methods for that transaction;

15.4.1(b) prevent parties from having the opportunity to establish before judicial or administrative authorities that their electronic transaction complies with any legal requirements with respect to authentication; or

15.4.1(c) deny a signature legal validity solely on the basis that the signature is in electronic form.

My first impression is that this may be related to problems, often found in civil law societies, with requirements for certain formalities in contracts and the conflict with performing these acts electronically.

Online Consumer Protection KORUS 15.5

This is a very general statement about the importance of consumer protection in the online environment, and states that their respective consumer protection agencies ” shall endeavor to cooperate with each other” on enforcement issues. My guess is that phishing and spam are the key drivers for the inclusion of this language.

DR-CAFTA 14.5 also has a cooperation section, though it is broader, and includes cooperation on IP and electronic government (14.5(b).

Principles on access to and use of the internet for Electronic Commerce KORUS 15.7

This is pretty interesting, so I include it in full:

To support the development and growth of electronic commerce to facilitate trade, each Party recognizes that consumers in its territory should be able to:

(a) access and use services and digital products of their choice, unless prohibited by the Party’s domestic law;

(b) run applications and services of their choice, subject to the needs
of law enforcement;

(c) connect their choice of devices to the Internet, provided such devices do not harm the network and are not prohibited by domestic law; and

(d) have the benefit of competition among network providers, application and service providers, and content providers

All of this is with the soft and probably non-binding “should be able to” standard.

Cross border information flows

15.8 of KORUS includes this language:

In recognition of the importance of the free flow of information to facilitating trade and acknowledging the importance of protecting personal information, the Parties shall endeavor to refrain from imposing or maintaining unnecessary barriers to information flows across borders.

DR-CAFTA has a similar provision in 14.5(c):

(c) working to maintain cross-border flows of information as an essential element in fostering a vibrant environment for electronic commerce;

My first impression is that the KORUS language seems to address more closely cross border privacy issues, much like the EU-US sharing of data situation. It also contains a stronger (though not that strong) standard – “shall endeavor to refrain from imposing”.

I wonder if e-commerce will play a greater role in future agreements by the US — more to follow on this analysis. Comments are warmly welcomed.

• Sonia Picado, former Costa Rican Ambassador and President of the Inter-American Institute of Human Rights
• Todd Tucker, Research Director of Public Citizen’s Global Trade Watch
• Jose Carlos Quirce, Costa Rica’s Special Envoy for CAFTA in Washington
• Otton Solis, who ran against Oscar Arias in last year’s presidential election
• Alan Thompson, Partner at Bufete Thompson & Asociados in Costa Rica

Costa Rica: Yes to CAFTA?

The legislative and executive branches of Costa Rican government have been unable to reach a decision on ratification, and as a result, it has been decided that the people of Costa Rica will directly vote on the issue in a nationwide referendum to be held in September 2007.  Costa Rican president Oscar Arias Sánchez has been trying to gain approval of DR-CAFTA, which was a part of his presidential platform in the sharply contested 2006 elections.

It also has been reported that Costa Rica’s Constitutional Court has also announced that it will review the constitutionality of the agreement. Their findings are expected in June.

Costa Rica is the only country in the DR-CAFTA agreement which has signed but not ratified the agreement.  The other countries are Guatemala, El Salvador, Honduras, Nicaragua, the Dominican Republic, and the United States.  The agreement was originally negotiated without the Dominican Republic, who was added after the text was finalized and the agreement was renamed DR-CAFTA (or CAFTA-DR).  It has been ratified and has entered into force with all parties save Costa Rica.

Postscript: After a hiatus, this blog will return to regular updates (marking and other projects have taken their toll).

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.

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.