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.

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.

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.

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.

¹ “Brazil-Dominican pact would bank on US-Central America Free Trade” (June 20, 2007), Dominican Today: http://www.dominicantoday.com/app/article.aspx?id=24367 

² “Official visit seeks Dominican-Brazilian trade, aviation and fuel pacts” (June 15, 2007), Dominican Today: http://www.dominicantoday.com/app/article.aspx?id=24317 

³ “President back from a successful Brazil trip” (June 24, 2007), Dominican Today: http://www.dominicantoday.com/app/article.aspx?id=24412

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.