As the May 12-16
Fourth Round of Negotiations between Central America the United
States for a Free Trade Area (CAFTA) approached, clear points of
convergence and divergence in the negotiating positions had been
established.
In the all-
important negotiating group on market access, there had been a
meeting of the minds on national treatment, treatment of free
zone goods, elimination of non-tariff measures and of taxes on
imports, rules of origin (except for textiles), customs
procedures and trade facilitation, technical obstacles to trade
and sanitary and phytosanitary measures.
Differences
remained on textiles, agriculture, and the timetable for tariff
elimination.
Services and
investment will be a major part of the CAFTA arrangement. The
two sides reached agreement on the definitions and the scope of
application of this chapter, on the administration of domestic
regulations, and on transparency, national treatment and most
favored nation treatment (MFN). These will become basis points
of reference for the Free Trade Area of the Americas (FTAA)
negotiations.
Still
outstanding in this area were the issues of the focus of non-
discriminatory quantitative restrictions on the trans-border
services trade and the transfer of funds for the payment of
service transactions.
In financial
services, the remaining outstanding issues relate to the
specific dispositions for the resolution of disputes over the
involvement of national supervisory authorities, and the list of
measures that would be disallowed under the agreement.
E-commerce will
be included within CAFTA. The existing tariff moratorium on
transactions will consolidate, national treatment and MFN
treatment will be guaranteed, and transparent regulations will
be developed. The issues to be resolved relate to the scope of
the definition of digital products, and the method of
determining their origin.
Telecommunications were another bone of contention. The
United States wants to include this within the scope of CAFTA:
private firms would be given connection access to the public
telecom networks of Central American countries; a provision that
presupposes the existence of open competition in the sector
nationally. This poses a big problem for Costa Rica, where the
state monopoly in telecommunications is embedded in the national
Constitution. Costa Rica has not agreed to the inclusion of this
sector within CAFTA.
On investment,
there was already substantial agreement, including issues of
payment transfers, movement of senior management personnel and
dispute resolution between investor and host country government.
Some details still to be worked out relate to definition, cases
of expropriation, and prohibited measures.
One of the most
complicated areas for negotiation is intellectual property.
Central America's interest in accessing the benefits of new
information technologies is colliding with the US interest in
preserving the proprietary technology of IT and communication
firms. The issues to be resolved include rights to temporary e-
copies, parallel imports, periods of protection, illustrations
of infringements, exceptions to the protection of evasion of
technology measures, legitimate government software, and
protection of coded satellite broadcasting.
Government
procurement is another major area within CAFTA that is being
negotiated within the FTAA and is proposed for inclusion in the
new round of WTO negotiations.
Central America
and the US have reached a wide measure of agreement in this
area, with outstanding issues remaining in the application of
rules of origin, minimum time-tables for application, and the
requirements for integrity in government contracts.
The US-Central
America free trade agreement (CAFTA) will seek to resolve
disputes in two categories: those between states and those
between natural or juridical persons.
In state-state
disputes, both sides agree on the procedural stages for the
setting up of dispute resolution panels, the lists of panels and
on the initial and final findings of panels. Issues remain on
the terms of participation of interested Parties in the
resolution process (for example the claiming party, the
consultative party, the third party), on model rules of
procedure and most importantly, on the suspension of benefits
and compensation for damages suffered as a result of breaches of
the agreement.
In person-person
disputes the areas of agreement include the interpretation of
the treaty before internal judicial and administrative entities
and the rights of persons vis-a-vis measures imposed by another
Party in the area. But Central America also wants the
consultative committee for private commercial disputes to play a
more active role in promoting and disseminating alternative
means of conflict resolution.
Free trade
agreements can involve onerous and costly institutional
obligations. CAFTA will create a Free Trade Commission and
several subsidiary committees to service the agreement. But much
remains to be worked out on how to give effect to the
requirements of transparency, especially with regards to Central
America's obligations for notification and for the exchange of
information on the internal procedures of publication of laws,
regulations, procedures, and administrative provisions of
general application. Details of a proposed Subcommission on Free
Trade to facilitate the work of the Commission also remain
outstanding.
Central America
is proposing to include cooperation on environmental matters
within the CAFTA. It wishes to have guarantees on the sovereign
right of each country to establish its own levels of
environmental protection and respect for internal procedural
norms relating to the environment. A possible source of
disagreement is the issue of sanctions against countries that
fail to carry out their obligations in environmental matters,
where it is believed that the US may present a proposal.
Labor is another
subject that will be brought within the ambit of CAFTA. The US
has proposed a mechanism of cooperation that Central America has
accepted as a basis of discussion. But Central America is
insisting that the mechanisms should respond to the priorities
established by each Party, and should not be one-sided.
Accordingly Central America undertook to provide by the end of
April proposals to access funds from the US Department of Labor.
The US for its part has indicated its intention to include
elements similar to the bilateral agreement with Chile and
Singapore.
One interesting
feature of the CAFTA is the inclusion of cooperation programs
within the terms of the proposed Treaty. The US has already
committed several million dollars for capacity building aimed at
helping the Central Americans prepare for negotiations.
Cooperation is to extend to the private sector, and the US Trade
Department is to visit each Central American country to identify
cooperation projects for information technology applications.
Other proposed projects include the application of science and
technology in the rural areas of Costa Rica and the support for
the production and commercialization of organic agriculture in
that country.
Professor
Norman Girvan is Secretary General of the Association of
Caribbean States. The views expressed are not necessarily the
official views of the ACS. Feedback can be sent to mail@acs-
aec.org.
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