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.

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.

The treaty is in [the Costa Rican] Congress, slowed down by a legal battle over whether President Oscar Arias can use a fast-track system to limit debate.

Smaller protests also took place across Costa Rica and several people were arrested when police broke through a protesters roadblock in the town of Siquirres.

Costa Rica is the only country among the DR-CAFTA parties not to have ratified the agreement. For the record, the others are:

• United States
• El Salvador
• Guatemala
• Honduras
• Nicaragua

Though there have been protests, the measure is expected to pass. This comment about the affects of the agreement caught my eye:

Some in Costa Rica worry the trade deal will lead to the privatisation of the state-run telephone company and hurt the social security system.

DR-CAFTA contains an entire chapter (13) that addresses telecoms regulation. Not only that, but there is a specific annex to chapter 13 that addresses Costa Rica. It contains section III 2. Gradual and Selective Opening of Certain Telecommunications Services which makes commitments to open up ‘private network services’, internet services, and mobile phone services on a certain schedule. This list specifically excludes public fixed line telephony, but issues concerning these areas are addressed further in the obligations for interconnection and use of physical infrastructure.

So while the state-run telephone company might not disappear, it will certainly have some competition. Will it, like BT here in the UK, lead to greater competition, and hopefully lower prices (and better quality) for consumers? This is what I see as the central issue, rather than simply wanting to preserve the state telephone system solely because they want a state telephone system.