A brief summary of a roundtable discussion about trademark protection, diverse industry interests, trade, and commercial law. The full text is available at www.interlaw.org, news & publications and features Interlawyers Lisa Landy of Akerman Senterfitt (Florida), José Orive, of F.A. Arias & Muñoz (Guatemala), and Emma Mejia Batlle and Larissa Diaz Brea of Pereyra & Asociados (The Dominican Republic).

The Dominican Republic-Central American Trade Agreement (CAFTA-DR) promulgates a seven-country economic partnership between Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, the Dominican Republic, and the United States. In addition to opening markets and streamlining trade regulations, CAFTA-DR promises to secure protections for trademark and intellectual property, attract new foreign investments, and encourages small and mid cap entrepreneurial companies to engage in greater profit margins without tariffs.

Critics count uneven labor standards, outsourced jobs, and uncertainty in the textile and sugar industries as a few reasons that CAFTA-DR should have been blocked. But pharmaceutical, technology, and agricultural companies as well as clothing manufacturers and food processors are celebrating its passage.

Trusted counsel is critical now more than ever—even with relaxed regulations, so Interlaw’s full service, multi-lingual commercial law firms are following CAFTA-DR closely. Official websites, consulate white papers and news releases from trade organizations urge clients to engage local commercial law attorneys as well as domestic counsel if they intend to partner with cross border companies, invest, or otherwise engage in new endeavors.

Interlaw, having member offices in each of the countries of CAFTA-DR, is particularly well suited to navigate small and mid cap companies to prosperity. Indeed, five hours after the U.S. inked its signature on the Agreement, the Interlaw Secretariat was tapped for a referral of a trusted Honduras Interlawyer to facilitate a U.S.-Honduras project.

The Interlawyer asked attorneys what CAFTA-DR means to their clients and to their practice throughout Central America, the Dominican Republic and the United States.

The Interlawyer: It is early yet of course, and not officially ratified by all countries, but have you noted any new client inquiries regarding CAFTA-DR?

Emma Mejia Batlle is a partner at Pereyra & Asociados (Dominican Republic) who practices in intellectual property; unfair competition; commercial law; civil law; corporate law; administrative law; aeronautical law; construction law; litigation; andarbitration.
Emma Mejia Batlle
Pereyra.law@codetel.net.do

 

Larissa Diaz Brea is a partner at Pereyra & Asociados (Dominican Republic). Her practice areas include civil law; commercial law; intellectual property law; patents; copyrights; free zone law; privatization; environmental law; telecommunications law; aeronautical law; employment immigration; and sanitary registration.
Larissa Diaz Brea
Pereyra.law@codetel.net.do

Pereyra & Asociados: Yes, we’ve had a substantial number of inquiries concerning CAFTA-DR, especially from local clients that are exploring the possibility of accessing the Central American markets. Also U.S. corporations with local operations that use the Dominican Republic as headquarters for the Caribbean Region and Central America are trying to ascertain the impact of the CAFTA-DR in such operations and explore all the other possibilities to structure similar operations here.

José Orive is a partner at F.A. Arias & Muñoz (Guatemala) with ample experience in international trade agreements, having previously served as Guatemalan Trade Representative and negotiated accords in various fields. Mr. Orive is actively involved in the CAFTA-DR process, mainly representing the interests of the Central American sugar and apparel industries.
José Orive
Jorive@ariaslaw.com.gt

A. Arias & Muñoz: We have received general & preliminary inquiries from some clients who mainly wish to ascertain the status of ratification in any given country and the changes in local legislation that implementation will bring about.

Lisa Landy is a partner at
Akerman Senterfitt (Florida),
co-chairs the Women Lawyers of
Interlaw Special Business Team and
works extensively in Latin America.
Lisa Landy
Lisa.landy@akerman.com

 

Akerman Senterfitt: Most Florida businesses were keenly watching the progress of CAFTA-DR in the U.S. House of Representatives and U.S. Senate and are very pleased that it passed and was signed into law by the president some days ago. Florida handles almost 50 percent of the trade in goods between the U.S. and CAFTA-DR nations and is the number one exporter to the CAFTA-DR region. To date, the inquiries we have received have been on the general parameters of the treaty and its ratification status. We expect, however, that Florida will be a big beneficiary of the lessening of trade barriers as the treaty is implemented.

The Interlawyer: Interlaw has been asked about conducting trade missions and CAFTA-DR Business Awareness Panels. What do business groups need to know about conducting business in your jurisdiction?

F.A. Arias & Muñoz: The key areas for business would be investment and the opportunities that arise due to CAFTA-DR, intellectual property rights (IPR) protection and the new levels of commitments assumed by the countries party to the accord, and also, dispute settlement where private parties can now activate the process directly on their behalf.

Pereyra & Asociados: The U.S. has been the main trading partner for the Dominican Republic for quite a while, so the DR markets for U.S.-based companies and products have been open and accessible prior CAFTA-DR. Provisions include new recourse against the Dominican State in the event of a dispute (latter waiving rights to apply its domestic laws in order to participate in an international arbitration); and the transparency regulations requiring all government business dealings shall be made through bidding process. It is expected that the DR and CA countries would gain permanent tariff-free access to the $10.9 trillion U.S. economy, representing more than 145 times the size of their combined economies. Tariffs on about 80% of U.S. imports to the participating countries, including DR will be eliminated immediately and the rest will be phased out over the subsequent decade.

The Interlawyer: How will the trademark protection provisions affect your clients?

Akerman Senterfitt: The treaty strengthens protection for US patents, trademarks and trade secrets. It also includes specific protection for digital products. These important measures will provide more comfort for software, music, text and video suppliers that might have shied away from doing business in the region before.

F.A. Arias & Muñoz: The increased levels of protection will enable our clients to obtain the certainty and assurance about their rights, and also have the clarity that the Central American countries have agreed to the highest standards worldwide.

Pereyra & Asociados: As a member of the WTO (World Trade Organization), the Dominican Republic is also part of the TRIPS and consequently, as of the year 2000, modernized its internal regulatory framework with respect to Intellectual Property and Copyrights. As a result, the provisions contained in CAFTA-DR with respect to this subject, will not be much different to what is already established in local regulations, although the enforce¬ment of such regulations will be more closely monitored.

The Interlawyer: What about food processing and agriculture?

F.A. Arias & Muñoz: CAFTA-DR will have an impact on agriculture and food products as the Central American market opens up to U.S. goods that, in many cases, will potentially displace local production. From the regional perspective, CAFTA-DR provides unimpeded market access to Central American exports of fruits, vegetables, spices, ornamental plants and cut flowers, and probably a phytosanitary protocol will need to be addressed. Another interesting opportunity is the additional sugar access obtained by Central America which after generating considerable political controversy in the U.S. Congress, now will become a reality and Central American countries will seek the most value-added, potentially shipping specialized sugars and or confectionary products.

Akerman Senterfitt: Agricultural exports represent about 20% of Florida’s total exports and were estimated at $1.5 billion in 2004 so obviously agriculture is an important sector of Florida’s economy. The U.S. market has already been open to agricultural imports from CAFTA-DR countries so the reciprocal lowering of tariffs should “level the playing field.” Nearly every agricultural sector should benefit from greater market access such as fruits and vegetables and related products, beef, dairy and poultry. Sugar is a sensitive issue in Florida and was handled with care in CAFTA-DR. There will be some increased access to the U.S. market for CAFTA-DR country sugar producers; however, there is an importation quota after which very high tariffs will apply. This tariff ceiling grows each year, but by only 2%. Also only net surplus exporting countries will qualify for non-tariff importation.

Pereyra & Asociados: For DR as well as other Central American countries, agriculture is an important economic source for its citizens, as some 35% of the total population depends on it. Removal of agricultural tariffs is a hot topic here, as some economic sectors believe that the list of excluded products (40 products included in the DR list) should have been broader and that the DR should be able to continue to protect the agricultural sector as a whole (subsidies, no import duties on machinery).

The Interlawyer: What labor issues will you advise your clients to consider?

F.A. Arias & Muñoz: Firm adherence to local labor standards is of paramount importance as businesses will want to avoid being subject to any sanctions or penalties as contemplated by the labor chapters of CAFTA-DR. Attention should be given to compliance with the working benefits, child labor, and work by women.

The Interlawyer: Any last thoughts about CAFTA?

Pereyra & Asociados: CAFTA-DR is in the process of being approved by the DR Congress. Such approval process should come hand in hand with tax reforms that will allow for the state to compensate the loss of revenue from customs tariffs, which is one of the main issues being discussed among the Congress, the Executive Power and local economic groups. Although as of yet we may not ascertain an approximate date in which DR-CAFTA will be approved, the agreement itself has deadlines that will have to be abide by, hence such approval should come before or on January 2006.

 

By Regina A. McConahay