But responding to one of the biggest objections Democrats raised to DR-CAFTA, U.S. Trade Representative Susan Schwab negotiated a deal with House Ways and Means Committee Chairman Charles Rangel, a New York Democrat, to strengthen labor and environmental provisions of the three Latin American free trade agreements and future bilateral trade pacts.

There was a pretty bitter fight over DR-CAFTA, especially among Dems, and it was passed with a narrow margin that included several Democrats. The IP and IT aspects of these agreements don’t seem to make the press as much as some of the other issues, but are definitely an important part to these agreements.

From the abstract:

E-commerce offers economy-wide benefits. World Trade Organization (WTO) members recognized the benefits e-commerce offers and have developed a work program to facilitate the development of e-commerce. However, WTO efforts to facilitate e-commerce have stalled, leading to a slower than anticipated progress. As fundamental differences continue to stall progress in the WTO’s program on e-commerce, the United States concluded a free trade agreement with Jordan. This agreement was the first ever to incorporate explicit provisions on e-commerce. This article analyzes how existing trade agreements have dealt with e-commerce. The article gives an overview of the situation in WTO. The article then examines the e-commerce provisions in the United States-Jordan Free Trade Agreement (US-JO FTA) and how the parties have tackled the obstacles that stalled the WTO work on e-commerce. It concludes that the US-JO FTA approach regarding e-commerce did not move beyond what the WTO has already done. It is argued that although there are specific provisions dealing with e-commerce in the FTA, the parties left many loopholes to be filled.

The abstract is available here.

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.

The President doesn’t have to present these deals under the TPA, but that authority does set a ‘fast track’ procedure which can be an advantage to getting them approved. As was noted in a recent AP piece by a leading Democract and a leading Republican on the Panama US FTA:

“We will continue to pursue agreement on these issues in the coming days because re-establishing a bipartisan foundation on trade policy is more critical than meeting a procedural deadline,” the two men said in their statement. [Link]

The USTR spent the time leading up to the April 2nd deadline completing negotiations with South Korea. Ben Muse has an excellent collection of resources that he is constantly updating on the KORUS FTA, which is located here.

In another statement, House Dems stated that they would use the 90 days prior to the TPA’s expiration to:

… use the 90-day notification period for discussions with the administration over “incorporating necessary changes on outstanding issues such as labor, environment and intellectual property that must be addressed before the bills will receive broad bipartisan support in Congress.”

So IP will be on the table when the Democrats try to work out an agreement for further extensions of the authority. While this wouldn’t effect the DR CAFTA agreement, the US is in negotiations with several other Central and South American countries and therefore we could see a different approach to IP in future agreements in the region. IP, as mentioned elsewhere on this blog, is an important component when looking at the impact of FTAs on IT based businesses. Areas include secondary liability for ISPs in the area of copyright infringement, ISP liability rules patterned on the DMCA,  and anti-circumvention provisions that software and hardware makers must comply with (these are also patterned on the DMCA).

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.

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!

Panama, along with Columbia and Peru, are seeking to preserve market access to the United States that had been given to them under the Andean Trade Promotion and Drug Eradication Act (ATPDEA) (Columbia and Peru) and the Caribbean Basin Initiative (Panama) — both of which are set to expire.

Colombian, Panamanian and Peruvian exporters therefore see the FTAs as helping to guarantee permanent access to the U.S. market. The FTAs also help Latin America diversify their export offerings and reduce their dependency on only one or a few commodity items that fluctuate in prices from year to year, Bastian says. Case in point: Venezuela, which has a booming trade with the United States, but no FTA nor plans to negotiate one. Only one product category – oil and gas – accounted for 77 percent of all Venezuelan exports to the United States and with oil prices falling, trade may decline this and next year.

The Panama-US FTA contains provisions for higher IP standards, similar to CAFTA. More details on the USTR site. The full story is available at the Latin Business Chronicle.

• Intellectual Property and its impact on the field, including domain name issues and peer-to-peer file sharing;
• Internet governance;
• Taxation and e-payments;
• Contracting electronically;
• Security and reliability issues, including spam and DDOS attacks;
• Authentication issues and digital signatures;
• Consumer protection issues;
• Content regulation issues, including defamation and pornography;
• Competition law aspects of e-commerce related businesses;
• Human rights issues, in particular privacy;
• Jurisdictional issues and the internet;
• Telecoms issues, such as net neutrality and the interplay between telecoms policy and the law.

However, from the trade lawyer perspective, e-commerce tends to be look at in terms of:

• Does e-commerce fit (if at all) within GATT, GATS, or both agreements?
• How do trade policies involving e-commerce fit within the policy of technology neutrality in the WTO?
• Is an internet transaction Mode 1 (travelling abroad) or Mode 2 (cross-border) within GATS?
• How does ‘likeness’ fit in with providing e-commerce services? Does this conflict with policy of technology neutrality?
• In particular with telecoms and ISP issues, what are the competition law aspects and how do they fit in with GATT and GATS?
• Are digitizable products goods or services?
• What is the relationship between e-commerce and MFN and national treatment obligations?

The first set, the IT lawyer perspective, doesn’t really make it the sections on ‘e-commerce’ in these agreements. It is true, however, that issues such as telecoms policy and IP do get addressed in FTAs. Taxation issues tend to be addressed in tax treaties and not in trade agreements. As to human rights issues, whether or not these can (or should) be addressed in the trade context is an area of some research.

This leaves issues such as:

• Internet governance;
• Contracting electronically;
• Security and reliability issues, including spam and DDOS attacks;
• Authentication issues and digital signatures;
• Consumer protection issues;
• Content regulation issues, including defamation and pornography;
• Jurisdictional issues and the internet.

The above ‘e-commerce’ issues are generally not addressed (at least not directly) in these agreements. Though it falls outside of the scope of the core goal of this project, looking at the possibility of addressing these issues in FTAs is interesting. This kind of study would by necessity have to look at the institutional aspects of regulating in these areas — I’m thinking of the forum shift from WIPO to the WTO that happened in relation to IP.

Could we see issues such as the Proposed Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters be brought up within the trade context?

L E Nagle, E-Commerce in Latin America: Legal and Business Challenges for Developing Enterprise (2001) 50 Am. U. L. Rev. 859.

I fear, however, that since it was published in 2001 that most of the facts and figures about the layout of e-commerce in Latin America are a bit dated. However the ideas about the challenges to e-commerce in the region generally, and DR-CAFTA members specifically, should still apply.

This section caught my eye in particular:

Generally, Latin Americans prefer to buy products at the store, where they can personally inspect them. A JP Morgan report notes that, “many upper-class shoppers (who would have access to the Internet) prefer the service and attention that a personal visit affords.” Chileans, like many Latin Americans, “prefer to go to the malls where they can meet with friends, enjoy their families, eat, and window shop.” Latin America never has had a “catalog culture” as exists in the United States. Indeed, the tactile pleasure of sampling merchandise and negotiating a price is an important component of the socio-economic fabric. “For the most part, Latinos like the idea of personal relationships and buying goods from people they know.” Moreover, the loyalty of sophisticated Latin Americans to brand names, and a preference for buying brand names, presents a significant obstacle to companies that will rely only on the Internet to sell goods and otherwise have no traditional “brick and mortar” market identity.

The social-cultural differences that create obstacles to e-commerce are another important aspect of encouraging development in this sector. These barriers are much less ‘trade related’ however, and I think that it would be too far a stretch to see these addressed directly in trade agreements.

But what about my earlier post on FTAs as exporting a certain culture? Could broader FTAs (or treaties) encourage the development of e-commerce while tackling problems like these?

On this last point, I am reminded of the European Union, and its principle of the ‘free movement of goods and services’ which has led to any citizen of a European country being able to relocate and live and work in any other EU country. This principle has led to many things, but mainly it has led, in my opinion, to greater cultural understanding and exchange between EU nations.

Perhaps programmes and treaties that concentrate on the free movement of people between Latin American states and the United States could encourage changes on both ends and foster greater commerce and development in the region. I’d be interested to see any economic studies done on the impact of lowering immigration and travel controls between nations.

I’m also interested if you can recommend any newer legal studies in the area of e-commerce in Latin America. I fear, however, that at least in the legal journal article area that this field became somewhat unfashionable post dotcom crash in 2001.
Other articles that I’ve been reading:

J B Willingham, Electronic Commerce and the Free Trade Area of the Americas (2000) 6 NAFTA: L. & Bus. Rev. Am. 483.

R M Kossick, “The Emerging Disharmony of Electronic Commerce Legislation in Latin America” (2001) 9 Tul. J. Int’l & Comp. L. 387.

A D Mitchell, “Towards Compatibility: The Future of Electronic Commerce Within the Global Trading System” Journal of International Economic Law (2001) 683-723.

The International Economic Law and Policy Blog notes that more than just the threat of a WTO dispute can affect domestic farm subsidies — the cost of the Iraq war will hurt the budget for US agriculture spending.

Speaking of domestic farm subsidies, Ben Muse has a post on the EU / US trade deal involving capping these subsidies. It looks like this deal could revive the Doha Round.

Both of these posts, for me, reinforce the need to look at the circumstances of these agreements holistically, as many forces come into play when negotiating these agreements.

And in regional political news, bilaterals.org has a copy of an AP story ‘Unification remains elusive at Mercosur‘ discussing last week’s two-day Mercosur summit. Venezuelan President Hugo Chavez and Bolivian President Evo Morales were both there advocating a reformation of Mercosur to focus in on areas other than free trade.

The Chavez / Morales agenda is the Bolivarian Alternative for the Americas (ALBA in Spanish). This is an agreement put forth as an alternative to FTAs, and emphasizes social policy rather than ‘free trade’.

For more links, you might want to see this ZNet story, the ALBA wikipedia entry, and this piece from venezuelanalysis.com.