TIn the all-important negotiating group on market access, there has 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 remain on textiles, agriculture, and the timetable for tariff elimination, as reported on in last week's column.

Services and investment will be a major part of the CAFTA arrangement. The two sides have 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 favoured 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 are 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 are 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 is 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 here 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.

Next week we will examine the issues in dispute resolution and institutional matters, labour, the environment and cooperation.

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