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.

As reported in the Scotsman:

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.

DR-CAFTA is of course not NAFTA, but this NY Times article has an interesting critique on the immigration and development angle often brought up in relation to Free Trade Agreements. This is a look back at NAFTA and Mexico. Them immigration/development argument generally runs like this: an FTA will encourage investment, which in turn leads to higher wages and better physical infrastructure, and this results in less people seeking to immigrate (illegally). Oftentimes the end product (less illlegal immigration) is also tied to arguing that the result is stronger national security.

The article points out, in short, that the reality of NAFTA did not lead to greatly decreased illegal immigration. The key factor is that the projections on government spending to increase infrastructe did not turn out to be true. Dani Rodrik, an economist and trade specialist at Harvard’s John F. Kennedy School of Government explained:

“We have indeed had one disappointment after another on this score,” Mr. Rodrik said, noting that the same assumption about government spending is part and parcel of the agreements, now before Congress, with Columbia, Peru and Panama.

Rodrik also compared the NAFTA (and DR-CAFTA) approach to the EU:

The European Union, in contrast, assumes little about government spending on the part of economically weaker nations joining it. The union itself has hugely subsidized the improved services needed by entering countries like Portugal, Spain, Greece and Poland, rather than leave financing to the relatively meager resources of entering countries.

Though this goes into the bigger picture questions of FTAs, I note that several legal scholars who have looked at e-commerce in Latin America have noted that a solid infrastructure is required in order to expand e-commerce as well. Roads and other transportation networks are key to deliver products ordered over the internet, as well as increasing telecom infrastructure to get people on the internet in the first place.

DR-CAFTA will become a fertile ground for more comparative study in this area. As this is just the beginning of the agreement, only time will tell.

Panamanian president Martin Torrijos was in Washington DC last week. His meetings included President George W. Bush, but also included key Congressional Democrat Charles Rangel and AFL-CIO representatives to gather support for the US-Panama FTA before the expiration of the President’s Trade Promotion Authority this summer.

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.

The US business community is gearing up for a fight on passing free trade agreements.

‘We have to make sure that we as a business community win the debate,’ Christman [of the US Chamber of Commerce] said, adding, ‘It is by no means clear that we will win.’

From the Miami Herald [via bilaterals.org]

A Dominican Republic news site is blaming Texaco-Chevron for the US dragging its heels on bringing the country into the DR-CAFTA fold. [Link]

At least one site is mentioning that a Mercosur-US FTA is more likely than moves towards the Free Trade Area of the Americas. [Link].

The Hill.com has some thoughts on the Sugar lobby and their future in the US Congress.

American Crystal is one of several groups representing the U.S. sugar industry that stepped up their political activity in the wake of the fight over CAFTA. The cooperative spent a record sum — more than $1 million — on political contributions to House and Senate campaigns in the 2005-2006 election cycle, according to the PoliticalMoneyLine website. This is almost twice what the company spent during the 2002 cycle and $250,000 more than the total for 2004.

DR-CAFTA was seen as a defeat by the sugar lobby because it allowed for an increase (though small) of sugar imports. [Link].

Investment ratings firm Fitch Ratings has given El Salvador a ‘BB+’ Rating in part because of its participation in DR-CAFTA. [Link]. Wikipedia for Fitch Ratings here.

US Vice-President Dick Cheney predicts a tough fight for an extension of the Trade Promotion Authority, a law that allows for the fast tracking of free trade agreements by the President. House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) predicts that the fight will involve labour and environmental standards.[Link].

Development bank the Central American Bank for Economic Integration has predicted GDP growth in Central America up by over 5% for 2007 in part because of DR-CAFTA related projects. [Link].

The DR-CAFTA agreement, in Article 15.4 Domain Names on the Internet requires that the parties provide, for their respective ccTLDs:

an appropriate procedure for the settlement of disputes based on the principles established in the Uniform Domain-Name Dispute Resolution Policy.

For those of you who don’t know, a ‘ccTLD’ is the Top Level Domain name (TLD) based on the individual nation’s country code (cc). A TLD is the last part of any domain name, i.e. the ‘.com’, ‘.uk’ or ‘.eu’. Individual countries have control over how their own ccTLD is administered, and this Article requires parties to use a specific method of resolving domain name disputes — the UDRP developed by ICANN.
The ‘UDRP-like’ requirement is in other FTAs involving the United States:

• Chile-US in Article 17.3
• Singapore-US in Article 16.3
• Australia-US in Article 17.3

In addition, a UDRP requirement can be found in the drafts of the Free Trade Area of the Americas agreement.

In the course of conducting my research, I haven’t run across much in the way of legal academic work examing the proliferation of the UDRP in the FTA context. Searches in the UK and US Westlaw databases (UK-JLR & TP-ALL), and on the general web, have turned up few mentions of the subject. This looks like at least one area that will come out of this project as being identified for further research.

Follow up posts on this issue to come.

There are really two perspectives on just what is ‘e-commerce’ within the international legal community. For those of us that focus in on teaching and researching in the field of IT law, we tend to think about the following in terms of e-commerce:

• 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?

Apparently, there is an ad war going on in Korea over an FTA with United States. [bilaterals.org].

It appears that the US is not convinced that the Dominican Republic has fully complied with DR-CAFTA requirements. [bilaterals.org].

New book out by several contributors to the International Economic Law and Policy Blog — Research Handbook in International Economic Law. If anyone gets a chance to review it, please post in the comments. I would very much like to give it a look-through in relation to the project. [Edgar Elgar].

More blogosphere news

From Global Voices comes a discussion on DR-CAFTA events in Costa Rica. Of particular relevance to this project is the part discussing moves by companies to provide broadband services once the markets are fully open. One private company is rolling out WiMax to meet the need. [Global Voices].

Daniel Ikenson over at Cato comments on imports and free trade in relation to the US President’s Trade Promotion Authority, which is due to expire this summer. [Cato].

The Trade Diversion blog doesn’t think much of the import arguments used by Ikenson in relation to DR-CAFTA. [Trade Diversion].

Via Opinio Juris, the Gapminder tool allows users to graphically track indicators of development on a world map.  It’s pretty neat, and in relation to our project, has tracking available for phone use (fixed line and mobile phone subscribers per 1,000 people) and Internet use (per 1,000 people).  By running the tool, you can see how much these two statistics have increased in the past 10 years in Latin America — looks like quite a bit. This is good news in the e-commerce world, which naturally enough depends on consumers being on the internet and being connected.

Tool link.

As I mentioned in my last post, I am currently focusing on e-commerce in Latin America and the e-commerce section of DR-CAFTA in my research. Today I finished the excellent:

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.