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International trade and legal modernization: effects of Mexico’s membership in the North American Free… Beteta, Armando F. 1993

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INTERNATIONAL TRADE AND LEGAL MODERNIZATION:EFFECTS OF MEXICO'S MEMBERSHIP IN THENORTH AMERICAN FREE TRADE AGREEMENTbyARMANDO F. BETETALL.B., Escuela Libre de Derecho (Mexico),1991A THESIS SUBMITTED IN PARTIAL FULFILLMENT OFTHE REQUIREMENTS FOR THE DEGREE OFMASTER OF LAWSinTHE FACULTY OF GRADUATE STUDIES(Faculty of Law)We accept this thesis as conformingTHE UNIVERSITY OF BRITISH COLUMBIASeptember 1993©Armando F. Beteta, 1993In presenting this thesis in partial fulfilment of the requirements for an advanceddegree at the University of British Columbia, I agree that the Library shall make itfreely available for reference and study. I further agree that permission for extensivecopying of this thesis for scholarly purposes may be granted by the head of mydepartment or by his or her representatives. It is understood that copying orpublication of this thesis for financial gain shall not be allowed without my writtenpermission.(Signature) Department of 6 1-adtletie. Sil 1 dik_S (F .c ify 0( LAW)The University of British ColumbiaVancouver, CanadaDate  Ser10 triter Is, 1913. DE-6 (2/88)iiABSTRACTThe North American Free Trade Agreement, signed by theUnited States, Canada, and Mexico in December 17, 1992,establishes an important example of a Common Market whichincludes the participation of both developing and developednations. However, the fact that a less developed nation isincluded in this "first world" economic enterprise has createduncertainty regarding the Agreement's possibilities of success,since severe economic, political, and legal discrepanciesseparate the Parties.Legislation usually reflects a nation's economic, politicaland cultural, characteristics. Therefore, by comparing differentlegal systems, one is able to observe the discrepancies existingamong the economics, cultures and politics of nations. The mainpurpose of this thesis is to find out if NAFTA is a properinstrument for the elimination of differences between developedand developing countries and; if this is the case, examining themeans used to achieve such purpose.This thesis consists of four chapters. The theoreticalapproach of the thesis will be developed in the first two, wherean overview of the theories of free trade and dependency will bepresented. The problem of how to regulate divergent economiesunder an international agreement will be approached in the lasttwo chapters by making (in Chapter Three) a legal comparisonbetween NAFTA and the European Economic Community; and byaddressing (in Chapter Four) particular legal disparities amongiiiNorth American nations in the area of intellectual and industrialproperty, and their treatment under NAFTA.Benefits of free trade have encourage nations to forminginternational economic blocs, which will improve theircompetitiveness at both the domestic and international level.Less developed nations which are interested in participating inthis new economic trend, have engaged in legal reform and tradeliberalization, in order to satisfy the pressures and meet thestandards of industrialized nations.NAFTA has proven to be an efficient instrument for thehomogeneization of rules. Because, especially in the branch ofIntellectual Property, the Agreement helps eliminate mostdifferences between the Parties in establishing clear and unifiedprinciples and encouraging domestic legal reform in Mexico.TABLE OF CONTENTSABSTRACT ^  iiAKNOWLEDGEMENT ^  viINTRODUCTION  1I. Overview of Free Trade in the Late TwentiethCentury ^  7A) The 'New World Order' ^  7a) Political Change  9b) Ideological Change  11c) Economic Change  13B) Free Trade, A Theoretical Approach ^  17a) International Statutory Recognition ofFree Trade ^  20b) Main Arguments Against Free Trade  23c) Main Arguments Favoring Free Trade ^ 27d) Free Trade and Globalization in Today'sInternational Arena ^  30II. Dependency and NAFTA  35A) Dependency: A Definition ^  35B) Dependency in Mexico and the Rest ofLatin America ^  37a) Historical Background  37b) Today's Situation ^  43C) Dependency and Free Trade:Myths and Realities  45a) Domestic and InternationalDomination ^  45b) Unilateralism  48c) Nationalism  49d) Trade as Dependency's Instrument ^ 50e) Trade and Aid ^  51D) Conclusion ^  52III. The European Economic Community and NAFTA ^ 56A) Concept ^  57a) Definition ^  57b) Historical Background ^  58c) Main Objectives  60ivB) Less Developed Nations Situation in the EEC ^ 63a) Integration ^  63b) Participation and Benefits ^  65c) Conclusion  68C) Comparison Between the EEC and NAFTA ^ 69a) Incentives and Means ^  70b) Objectives ^  75c) Institutions  77D) Conclusion  81IV. NAFTA and Intellectual Property ^  84A) Intellectual Property in North America ^ 88a) Main Asymmetries ^  88b) Linkages ^  89B) Copyright  93a) Definition  93b) Asymmetries ^  94aa) Main Differences ^  95bb) Similarities  105c) Linkages  107aa) International Conventions ^  108bb) NAFTA ^  110d) Conclusion  118C) Trademark  119a) Definition ^  119b) Asymmetries  121c) Linkages  124aa) NAFTA  124bb) Mexico's New IndustrialProperty Legislation ^  129D) Patent ^  134a) Definition ^  134b) Statutory Asymmetries ^  135c) Linkages  141aa) NAFTA  141bb) Mexico's New IndustrialProperty Law ^  146E) Other ^  151a) Enforcement of IntellectualProperty Rights: General Provisions ^ 151b) Cooperation and Technical Assistance  155F) Conclusion ^  157CONCLUSION  161BIBLIOGRAPHY ^  168viARNOWLEDGEMENTI would like to thank my thesis supervisor, Professor RobertK. Paterson, for offering me his friendship and advice during theLL.M. Program. I especially appreciate the fact that he wasalways available to give me academic advice and helped improve myEnglish grammar.Special thanks to our Graduate's Dean, Professor Pitman B.Potter, for offering his friendship and guidance which helped meovercome the different hurdles a Master's Degree embraces. I alsoappreciate his valuable commentaries as my thesis' second reader.I really like to thank Professor Lincoln Quintana for hiscomments and advice in the area of Intellectual Property.Finally, I would like to thank my father and friend, ArmandoBeteta Monsalve, for his economic and moral support during mystay at Vancouver.1INTRODUCTIONThe end of the Cold War has shifted international attentioninto a new brand of global issues such as the environment, publichealth, human rights, and transnational trade. The ninetees, anera in which military 'protection' from the United States is nolonger required, is being characterised by a renewedinternational need for unifying interests and views in theeconomic sphere.One of the most tangible manifestations of this phenomena isthe intention among several nations on establishing regionaleconomic blocs which can face new challenges, such asinternational economic competitiveness. The formation of thesetransnational blocs relies on the assumption of an existingCommon Market which allows free trade among several participatingnations. At the same time, free trade is justified by thoseaiming at economic regionalization because it "promotes amutually profitable division of labor, greatly enhances thepotential real national product of all nations, and makespossible higher standards of living all over the globe.°Notwithstanding these positive effects, in practice, free tradefaces opposition as not all of the promised effects are alwaysproven.In June of 1990, both Presidents, Carlos Salinas fromMexico, and George Bush from the United States of America,decided to be part of this new world's regionalizing trend byissuing a declaration which stated their intention to negotiate a1 Jackson and Davey, Economic Theory and International Economic Policy (1986) at 11.2free trade pact, the North American Free Trade Agreement (NAFTA).A few months later, Prime Minister Brian Mulroney announcedCanada's intention to join such negotiations. On December 17,1992, six months after the deal had been originally announced,NAFTA was signed by the three North American nations: Canada, theUnited States and Mexico. NAFTA is expected to join the threecountries "in the largest and richest free trade market in theworld - over 360 million people and $7 trillion worth of annualoutput." 2 The Agreement will enter into force once it overcomesthe necessary legal procedures each country requires. Theexpected date for this event to happen is January 1, 1994.I must point out that even though Mexico represents theweakest economy in North America, it is welcoming this new era ofcloser trade and economic ties with its North American partners.In order to prepare itself for this and other new challenges, ithas been undergoing a rapid transformation of its internalmarkets and business culture, its economic and social structures.NAFTA's is setting an important example on the establishmentof a Common Market which includes the participation of bothdeveloped and developing nations. However, the fact that a lessdeveloped nation is included in this "first world" economicenterprise has created uncertainty regarding the Agreement'spossibilities of success, since severe economic, political, andlegal discrepancies separate the Parties.It is evident that under any international arrangementeconomic, social, political and legal asymmetries exist. The word"asymmetry" describes a situation where there is no regularity of2 SECOFI, Canada and Mexico: Forging a New Friendship  (Ottawa: Townsend Trade Strategies Inc., 1993) at 25.3accordance of form. In the present work, I decided to use thisword in order to describe particular disparities (primarilylegal) existing amongst North American countries embarking in aunitary project (free trade), and to explain how such differencesmight jeopardize this project's sense of proportion. In otherwords, these existing disparities or asymmetries constitutehurdles which may endanger the succesful achievement of suchAgreement's goals, as international cooperation amongst theParties becomes more complicated because of existingdiscrepancies.Therefore, an international agreement may also need toconsider as one of its primary goals, the reduction of suchdifferences and establish linkages which could erase or, atleast, compensate any negative effect which these differences maycause. In the case of NAFTA, for example, Canada and the UnitedStates may have to give economic related assistance to Mexicosuch as debt considerations, investment promotion and/or directeconomic support for development programs. In exchange, Mexicomay need to reciprocate with strong state reform which includeseconomic, legal and political reform; all of these issues embracea high content of historical, cultural and sovereignty concerns.Legislation usually reflects a nation's economic, politicaland cultural characteristics. Therefore, by comparing differentlegal systems, one is able to observe the discrepancies existingamong the economics, cultures and politics of nations. There isa possibility of abolishing or correcting such asymmetries bymeans of such international agreements and encouraging domesticreforms. Thus, the main purpose of this thesis is to find out ifNAFTA is a proper instrument for the elimination of differences4between developed and 'developing countries and; if this is thecase, examining the means used to achieve such purpose. In thefollowing paragraphs, I will explain the methodology which I willuse in order to prove my point.First of all, I would like to point out that the particulartopic I am approaching, asymmetries in international trade, notonly has to do with legal matters but economic and politicalissues are involved as well. Therefore, in order to obtain awell-founded and objective conclusion, economic and politicaltopics will be addressed, mainly in the theoretical part of thisthesis; while the practical part or the main problem will beapproached by legal means, basically analyzing NAFTA and somedomestic laws in North American countries.This thesis consists of four chapters. The theoreticalapproach of the thesis will be developed in the first two, wherean overview of the theories of free trade and dependency will bepresented. The problem of how to regulate divergent economiesunder an international agreement will be approached in the lasttwo chapters by making (in Chapter Three) a legal comparisonbetween NAFTA and the European Economic Community; and byaddressing (in Chapter Four) particular legal disparities amongNorth American nations in the area of intellectual and industrialproperty, and their treatment under NAFTA.Chapter One is entitled "Overview of Free Trade in the LateTwentieth Century". Its main objective is to give a generaloverview on the international economic situation in the latetwentieth century and establish the theoretical grounds5(basically David Ricardo's 'Law of Comparative Advantage') whichhave encouraged many nations for embarking into free trade.Additionaly, this Chapter will also talk about the main benefitsfree trade can bring to the community, as well as discussarguments opposing free trade.Chapter Two, entitled "Dependency and NAFTA", will bededicated to the study of the Dependency Theory and its influenceon Latin America's (particularly Mexico's) underdevelopment.Dependency focuses on the coexistence of developing and developedcountries within the world economy. Under these circumstances,its advocates sustain that "those with an autonomous capacity forchange and growth became the developed sector and those wholacked this capacity were dependent upon that sector."3Therefore, less developed nations occupy a subordinate positionwithin an international system of production and distribution.This idea has been used by those opposing free trade amongasymmetrical economies, as it is sustained that the recent shiftin Latin America's economic policies from regulated markets andimport-substitution ideologies into completely different policieswhich embrace extensive deregulation, foreign investmentpromotion and free trade, only help to maintain a dependentrelationship of the developing countries with the developedworld. Therefore, in this Chapter, I will try to find out iffree trade equals dependency.3 R.J. Radway, "The next decade in Latin America: anticipating the future from the past" (1991) 13 CaseWestern Res.J.Int.L. 1 at 17.6Chapter Three, entitled "The European Economic Community andNAFTA", aims at making a comparative study of internationaltrade, by examining another trading bloc formation in Europe.The main purpose of this Chapter is to find out if such blocformation (EEC) is comparable with NAFTA, and discuss the lessdeveloped nations' situation under the EEC to foresee if theirasymmetrical experiences might be taken into consideration byMexico under NAFTA.Finally, Chapter Four, entitled "NAFTA and IntellectualProperty", will explore the existing legal asymmetries in thearea of intellectual and industrial property law, amongst Canada,the United States and Mexico. I chose to focus specifically onthis branch of law because it contains tangible examples of legaldifferences amongst the North American Parties. Additionaly,industrial and intellectual property are already regulated byseveral international agreements; therefore, the existence ofuniversally accepted rules and principles in this area maysimplify the homogeneization of laws affecting this type ofproperty in North America.The object of this Chapter is to point out the nationallegal differences and find out if they have been ovecome and,assuming they were, search for the means which were used to reachsuch accomplishment.7CHAPTER I. OVERVIEW OF FREE TRADE IN THE LATE TWENTIETH CENTURYA. The New World OrderOn September 11, 1990, the President of the United States ofAmerica, George Bush, used, for the first time in the last fortyyears, the phrase "New World Order".1 Since that date, thesethree words have been used by many when referring to the post-Cold War era, probably marked in time by the Helsinki Summit.However, a specific meaning of this phrase has not yet beendetermined. In other words, the indiscriminate use bypoliticians of this concept for justifying completely opposingpurposes such as halting an aggressor who has broken the lawwhile, at the same time, referring to the creation ofinternational human rights laws, create confusion in relation toits meaning.Although this concept may be characterised for itsvagueness, the majority of the world's population relate thisterm to a new era full of hope and change. In relation to thistopic, the Director of the Center for International Studies atNew York University School of Law, stated the following:The world will certainly miss the boat if it does not usethe end of the cold war to create a global system for thenew millenium, one which preserves peace, fosters economicgrowth, and prevents the deterioration of the human physicaland environmental condition.2As we can see, this proponent of a New World Order, has a ratherbroad view of what this term embraces. On the other hand, several1 R. Barnet, I. Buruma & O. Harris, "Defining the New World Order" (1991) Harper's Magazine. at 59.2 T.M. Franck, "United Nations Based Prospects for a New World Order" (1990) 22 NYU J.Int.L. & Poll. at 601.8scholars aim at a less ambitious description of the world'spresent and near future. In other words, they "associate theconcept with the ultimate goal of abolishing war, but onlythrough a deterrence model firmly cemented upon the Rule ofLaw". 3 It is obvious, that this is mainly a political ambitionwhich does not contemplate all the changes the world isexperiencing today; for that reason, we coincide with the formerdefinition which is broader.What seems to be evident is that the desintegration of the"Second World" or communist bloc, translates into a substitutionof armed confrontation for economic, societal and environmentalissues. This means that a post-Cold War world may becharacterized by a different distribution of power with lessideological rivalry among nations. Barry Buzan, refers to thisissue by saying that:Because the great powers are spread across several regionsand do not include a dominating ideological or power rivalrywithin their ranks, they will project their own conflictsinto the periphery much less forcefully and systematicallythan under the zero sum regime of the "Cold War". 4By stating the above, Buzan is considering the creation of amultipolar world with several 'new powers' which will bespreading their influences in specific zones around the globe.This emergent world with different poles of power could becharacterized by an increasing global interdependence amongcountries, combined with a regional integration of nationsattracted to a particular pole. In other words, what we haveknown as the Nation-state has lost its capacity to control events3 J.F Addicott, "The United States of America, Champion of the Rule of Law or the New World Order?" (1990)6 Fla.J.Int.L. at 90.4 B. Buzan, "New Patterns of Global Security in the Twenty-First Century" (1991) 67 Int. Aff. at 435.9and phenomena which transcend frontiers such as financial,commercial, environmental, and technological issues, amongothers.5^A successful coexistence between the world's nationsmay depend on the following:The fate of this new world would depend on the ability ofthe "poles" to cooperate enough in order to prevent ormoderate conflicts, including regional ones, and to correctthose imbalances likely to develop in the world economy.6This phenomena creates a necessity for the 'new powers' todevelop their own areas of influence and maintain, at the sametime, a harmonious relationship with the rest of the world.The first tangible examples are beginning to rise with thecreation of multinational economic blocs. However, beforegetting into these new world's economic changes, we would like tobriefly address the political and ideological changes the worldis suffering today.a) Political ChangePerhaps the most evident change in the international scenehas occured within the political arena. The vanishing of theSoviet Union has transformed a bipolar into a multipolar world.Nevertheless, some authors do not seem to recognize thismultipolarity but emphasize on the existence of a unipolar worldleaded by the United States. An example, of the above is given inthe following paragraph, written by Jeffrey F. Addicott:5 G. Arevalo & F.R. Sagasti, "America Latina en et nuevo orden mundial fracturado: perspectives yestrategias" (1992) vol.42, 12 Comercio Exterior. at 1102.6 R. Otunbayeva, "On the Threshold of a New World Order" (1991) 4 Int. Aff. (Moscow). at 143.10For the next several years, one characteristic of the post-Cold War era is undeniable; the United States stands aloneas the world's bastion of stability and as the foremostsphere of power and influence. 7This comment may be relying in the assumption that the UnitedNations does not have the capacity to guarantee the security ofits members without the help of the United States. AlthoughAddicott may not be completely wrong, the world could face a riskby believing that a new world is being born in "direct emulationof America". 8^This could translate in delegating in the UnitedStates a world's 'justice' enforcer role. 9^Richard Ullman,contemplates this hypothesis by analyzing the recent happeningsin the Gulf War; he states that:The imbalance between the U.S. contribution to the anti-Saddam coalition and what other governments were willing orable to send even prompted the suggestion that America'srole in the post-Cold War world order should be the'explicitly mercenary' one of global policeman, to besubsidized by states like Saudi Arabia, Japan, and Germany,whose stake in international stability is large but whosepast history or current circumstances lead them not toacquire strong or interventionary forces of their own."This malinterpretation would lead to a regression of theinternational community into the United States military powerdependence.However, from my particular point of view, this is not thecase. Although it seems that with the military, economic andideoligical decline of the former Soviet Union, the United Statesstands alone as a 'superpower', ironically, its leading role in7 Addicott, supra note 3 at 64-65.8 K. Elliot, "The Nineties and Beyond: For all its difficulties, U.S. stands to retain its globalleadership" (1990) On the Agenda. at 446.9 An example of the above is what is happening today at the former Yugoslavia, where there is a worldwideexpectation on whether the U.S. is going to militarily intervene in order to stop the fighting.10 R. Ullman, Securing Europe (Princeton: Princeton University Press, 1991). at 149.11today's world is diminishing. With the absence of a 'Cold War',the world's needs for security and protection supplied by theUnited States have decreased. It is evident that security issuesare being relegated by global economic interests. Ted Hopf,gives an example of the above, by stating:The international political economic system in general isstructured in such a way that it is virtually always cheaperto gain access to necessary raw materials and goods throughinternational trade than through direct militaryintervention and occupation."This example shows that, in order to obtain power in today'sworld, economic measures might be more appropriate as they arecheaper than military means. As a result, countries may have toreplace conflict for interdependence in order to gain a globaleconomic position.As a matter of conclusion in the political arena, andbasically in relation to military needs, it could be said that aunipolar world prevails. However, political issues have lostsignificance against the economic realm. In relation to thelatter, a multipolar world rises and turns the late twentiethcentury into an era of uncertainty and expectation regarding thisNew World's organization and distribution of powers.b) Ideological ChangeUnder the ideological arena, some critics seem to beassuming an unrealistic situation. With the vanishing ofcommunism as the primary rival of the capitalist ideology,11 T. Hopf, "Polarity, the Offense-Defense Balance, and War" (1991) 85 Am.Poli.Sci.Rev. at 490.12authors as Francis Fukuyama are beginning to assert that a lackof clashing ideologies prevail in today's world. 12However, this situation should not be seen as an ideologicalvacuum in our society but as a shift in the type of ideologicalclash. In other words, the contemporary ideological battle is nolonger viewed as capitalism against socialism but as liberalismagainst democracy within a capitalist society. Jonathan R. Maceyand Geoffrey P. Miller clarify this point by stating that:A basic tension exists between liberalism and democracybecause the liberal conception of the primacy of rightsinevitably comes into conflict with the democraticconception that majorities be able to control policy. 13I agree with this point of view and consider it a majorcontroversy which has an immediate effect on free trade, as oneof the defining characteristics of the 'New World Order' is,apparently, a new tendency of most countries to favor marketcapitalism, rather than accepting a non-liberal capitalistregime; as the latter, is committed to the interests of thetotality rather than to the satisfaction of individual rights.By pursuing a free trade policy, a country may 'sacrifice'populist issues, which often include sovereignty concerns, inorder to focus on supporting the individual's search for self-improvement in a free market economy. Free trade relies onliberal principles and can easily clash with democratic orpopulist values. This point is mentioned by Macey and Millerwhen referring to a new beginning of history after the Cold War;they assert that this new era:12 J.R. Macey & G.P. Miller, "The end of history and the new world order: the triumph of capitalism and thecompetition between liberalism and democracy" (1992) 25 Cornell Int.L.J. at 279.13 Ibid. at 281.13Focuses on how to preserve markets, rather than on howcharismatic national leaders can impose their wills on lessforceful or assertive rivals and instill in the nation'scitizens a sense of pride and purpose.14In other words, what these authors mean to say is thatnationalistic tendencies might be outweighed by free marketprinciples. The post-Cold War era aims at a new way of thinkingthat goes beyond national boundaries.c) Economic ChangeThe international economic arena is suffering a radicalchange. It is evident that in the last fifty years, developingcountries have become increasingly dissatisfied with aninternational system, established by Western Europe and theUnited States after the Second World War, in which, three basicinstitutions (the International Monetary Fund, the InternationalBank of Reconstruction and Development, and the General Agreementon Tariffs and Trade) "shaped their economies but excluded themfrom management."15 In other words, Third World countries werenot allowed to take part in the distribution of resources.Several measures were taken. These, basically involved unilateralaid from developed to developing nations; however, this type ofhelp turned out to be ineffective as it is evident that there isnot much encouragement for developed countries to embark in aproject when there is nothing to receive in return.14 Ibid. at 283.15 A. Akinsanya & A. Davis, "Third world quest for a new international economic order: an overview" (1984)33 Int. & Comp. L.O. at 208.14The fact is that in the nineties, Latin America, forexample, is facing a new world order where comercial, political,financial, environmental, technological, and culturalglobalizations are taking place and, in which, these lessdeveloped nations will have to overcome the double task ofrecuperating economic growth and improving its nationals' livingconditions.As stated above, the end of the Cold War has brought intothe international arena a new brand of global issues such as theenvironment, public health, human rights, and trade. In relationto international trade, it is important to say that this areahas suffered important changes. Among other issues, the NorthAtlantic region has been replaced by the North Pacific region asthe most important comercial area of the world; there has been anincrease in the trade flow of services; the participation of rawmaterials in international trade has decreased and; recentindustrialized countries have emerged as export manufacturingnations.16It is obvious that as most nations are achieving militaryindependence from the United States, economic patterns continueto emerge, permitting other developed as well as underdevelopedcountries to gain significance. The first manifestations of thisphenomena are beginning to rise with the intention of severalnations in finding new alternative institutions, which includethe constitution of multinational economic blocs.The most recent example on economic bloc formation is the^North American Free Trade Agreement (NAFTA).^In relation to16 G. Arevalo & F.R. Sagasti, supra note 5 at 1103.15NAFTA, the former President of the United States, George Bush,pronounced on July 15, 1992, the following statement:By building together the largest free trading region in theworld, Mexico, the United States and Canada are working toensure that the future will bring increased prosperity,trade, and new jobs for the citizens of each of ourcountries."This statement reflects the fact that countries may need to relyon their interdependence in order to gain an importantinternational economic position.The 'New World Order' includes different types of problemswithout a unique or common solution. However, a viablepossibility is that the end of the Cold War may cause thereplacement of some of today's international agreements with thecreation of newer mechanisms that will be able to confront,efficiently, the world's economic necessities. The GeneralAgreement on Tariffs and Trade (GATT), is a good example of theabove. With the integration of the European Community on 1992and the signing of NAFTA on the same year, some suggest thatGATT could become an obsolete system to manage world trade.Lester C. Thurow, states that:While common markets are permitted under GATT rules, theyfundamentally violate the spirit of the agreement. The EC istalking about offering associate memberships to neutralWestern European countries such as Switzerland and to thecountries of Eastern Europe that are now emerging fromcommunism. There is no provision for such arrangements inGATT. 18In other words, the formation of a European economic bloc or theNorth American economic bloc could marginalize old international17 Office of the U.S. Trade Representative, The North American Free Trade Agreement: Overview (Washington,D.C.: US Trade Representative, 1992) at 4.18 L. Thurow, GATT Is Dead (US: 1991) at 29.16agreements which excluded certain countries from participatingunder their particular rules. However, at the same time, it mustbe considered that economic blocs can also be more restrictive tooutsiders. Restrictiveness is not the only risk we could face inthis regionalization process. Francisco R. Sagasti and GregorioArevalo talk about the negative consequences a "fractured newglobal order" can bring. In this regard, they assert thefollowing:We are witnessing the emergence of a fractured global order:one which is global but not integrated; one which keeps usin contact with each other but, at the same time, maintainsa deep abyss between individuals and groups; one whichgenerates enormous progress opportunities while, at the sametime, segregates a considerable bulk of humanity by notallowing any access to the benefits:9Thus, regionalization has necessarily its advantages as well asits risks.As we said before, economic international change has beenone of the main issues characterizing the last decade. In LatinAmerica's case, new theoretical currents have replaced oldideologies. New perspectives about economic policies havearised; today, the main goal is to achieve a more reasonableequilibrium between market forces and state intervention.20 Atthe same time, the rising growth of the population in the pastdecades is demanding a high level of employment which forces anexpansion of the modern sector of these countries' economies.Thus, Latin America is finding out today that some form ofregional organization is necessary for technological advances and19 G. Arevalo & F.R. Sagasti, supra note 5 at 1103.20 Ibid. at 1105.17industrial growth to proceed. There is an international need forunifying interests and views in the economic sphere. In relationto this point, we would like to reproduce Mario Ojeda's point ofview on today's international panorama:In a near future, countries which choose not to adjust tothe economic liberalism's orthodoxy and free trade, can besure not to receive the world powers' and internationalorganizations' support. Thus, in the case of developingnations, its isolationism or lack of liberal orthodoxy ineconomic matters will accelerate their collapse intobackwardness and poverty. 21This means that the new international political, ideological, andeconomic orders will have a great influence over developingcountries' destinies. There is a need for a new concept ofdevelopment for Latin America which could integrate economicissues with societal, political, environmental, and technologicalaspects. In other words, many of these countries will have toengage in a strong and consistent state reform which will includea shift in their current economic ideologies in order to achievetheir new objectives.B. Free Trade, A Theoretical ApproachIt was generally understood by classical economists that,within an specific region or country, the value of a commoditywas determined by the amount of labor assigned to produce acertain good. 22 Regional trade in such cases, was explained by21 M. Ojeda, "El cambiante contexto internacional a finales del segundo milenio" Hacia un tratado de librecomercio en America del Norte (Mexico: Porrua,1991) at 18.22 This idea is commonly known as the "Labor Theory of Value".18using the theory of absolute advantage, which states thefollowing:After labor has spread itself among several regions toequalize wages, these regions will produce and sell to eachother what each region can make the cheapest. Its advantagein such commodities over other regions will be absolute.23Although valid at a domestic level, the 'Absolute AdvantageTheory', together with the 'Labor Theory of Value'24, are notable to justify international trade.In relation to the 'Labor Theory of Value', the fact thatgoods are produced by variable proportions of two other factorsof production (land and capital), besides labor, make thistheory's principles obsolete, as labor cannot be a singlestanding point for considering the value of a certain commodity.Besides, it is well known that at an international level,"different goods... require different factor inputs; anddifferent countries have different factor endowments."25 Acountry's productivity, for example, may be more dependant on itsland's quality rather than on its labor strength.In the case of the 'Absolute Advantage Theory', twocircumstances obstruct this theory's application at aninternational level. In first place, it is evident that, inrelation to productivity, some countries have an absolutesuperiority over others; this situation would make this theory'sapplication impossible, as not every country in a trading dealwould be able to obtain an absolute advantage over the other23 C.P. Kindleberger, International Economics, Fifth Edition (Homewood, IL: Richard D. Irwin, Inc., 1976)at 17.24 Ibid.25 Ibid. at 20.19party.^Secondly, this theory lacks validity at a global levelbecause of the fact that^migration cannot take placeinternationally as easy as it does domestically, in order toequalize wages.^-As a response to these problems, David Ricardo developed the'Law of Comparative Advantages' 26, which justifies thepossibility of trade among different nations. Such theory issummarized as follows:A country would export the product in which it had thegreater advantage, or a comparative advantage, and importthe commodity in which its advantage was less, or in whichit had a comparative disadvantage. vThis theory suggests that trade among nations can happen,even if a country has an absolute economic advantage or superiorproductivity over another nation. The fact that a country canobtain a higher quantity of goods by international trade, insteadof receiving a smaller amount of the same goods, even if suchcommodities are produced more efficiently at a domestic level,makes of this comparative advantage, at an international level, achoice worth of consideration. Besides, the fact that eachnation could specialize in producing commodities which wouldcoincide with their strongest factors of production, allows thepossibility of trade, as each nation can produce one good cheaperthan the other. In other words, "free international trade isbeneficial to a nation because when each nation specializes inmaking the products that it can make most efficiently and trades26 See D. Ricardo, The Principles of Political Economy and Taxation, Int. by Donald Winch (London: Dent,1973) at 77-93.27 Kindleberger, supra note 23 at 18.20for the other products it needs, overall welfare is increased ineach nation."mAnother positive view on international trade, whichgenerally describes free trade's main characteristics andadvantages, is summarily given by Paul Samuelson in the followingterms:Free trade promotes a mutually profitable division of labor,greatly enhances the potential real national product of allnations, and makes possible higher standards of living allover the globe.29Even though, the validity of these characteristics may becontroversial, as it is clear that it limits a theory which isnot evident; before addressing them, we would like to brieflytalk about the statutory recognition free trade has among theinternational community.a) International Statutory Recognition of Free TradeAlthough the concept of free trade is not new, before thecreation of GATT, it was difficult to find any internationalstatute which explicitely alluded such issue.GATT's Article XXIV (8)(b), defines a free trade area in thefollowing terms:A free-trade area shall be understood to mean a group of twoor more customs territories313 in which the duties and otherrestrictive regulations of commerce (except, wherenecessary, those permitted under Articles XI, XII, XIII,28 Jackson & Davey, Economic Theory and International Economic Policy, (1986) at 15.29 Ibid. at 15.30 GATT's Article XXIV (2), defines customs territory as "any territory with respect to which separatetariffs or other regulations of commerce are maintained for a substantial part of the trade of suchterritory with other territories."21XIV, XV and XX) are eliminated on substantially all thetrade between the constituent territories in productsoriginating in such territories. 31This definition gives a short and clear description of whatshould be understood as a free trade area. However, we wouldlike to point out that a main controversy has been brought up bysome scholars, regarding the fact that GATT only contemplates 100percent preferences within a free trade area and does not allowpreferential arrangements at a lower percentage, even if,"economic theory suggests that preferential arrangements can bewelfare enhancing for member countries and for others... 1,32Jagdish Bhagwati, gives a possible explanation on why the UnitedStates, according to its prior trading policy, accepted thisdisposition which rejected regionalism. Bhagwati, asserts thefollowing:Politically, the U.S. tolerance of 100 percent preferencesseems to have been motivated by a presumption that Europeanstability would be aided by economic integration andtherefore the latter must be supported. There was perhapsalso an inchoate, if strong, feeling that integration with100 percent preferences somehow was special and consonantwith the objective of multilateralism. 33Whatever reasons might have led the United States and othercontracting countries to allow this 100 percent preferencesexception in 1948, which opposes GATT's main views onmultilateralism and non-discrimination, are yet to be confirmed.31 General Agreement on Tariffs and Trade, 1 January 1948, Geneva: GATT, 1986, at art.XXIV(8)(b)(hereinafter GATT).32 J. Bhagwati, The World Trading System at Risk (Princeton, New Jersey: Princeton University Press, 1991)at 62.33 Ibid. at 65.22Even though on GATT's early years, the United Statesrestrained itself, from resorting to Article XXIV; today, it isnot only accepting discriminatory trade arrangements, but it isexercising its member's right by constituting a 100 percentpreference free trade area, commonly known as NAFTA.An issue which must be clarified is the fact that GATTprinciples and regional trade agreements do not clash. I agreewith Bhagwati in the fact that "regionalism an the GATT are notincompatible...", rather, "GATT remains the central institutionoverseeing issues of world trade policy, despite regionalblocs."34 This statement can be ratified by looking at the mainreasons for including free-trade areas under GATT's agreement.In relation to the purpose for establishing free tradeareas, GATT's main document expressly asserts in its Article XXIV(4), that:The contracting parties recognize the desirability ofincreasing freedom of trade by the development, throughvoluntary agreements, of closer integration between theeconomies of the countries parties to such agreements. Theyalso recognize that the purpose of a customs union or of afree-trade area should be to facilitate trade between theconstituent territories and not to raise barriers to thetrade of other contracting parties with such territories.mIn other words, besides instructing nations to avoid regionalismwhen embarking into free trade, GATT aimed, by including thissection, at full integration and freedom of trade among itsmembers. Article XXIV, meant the establishment of a supplementalpractical route to one of GATT's ultimate goals: universal freetrade.34 Ibid. at 74.35 GATT, supra note 31 at 41.23b) Main Arguments Against Free TradeFree trade has received different types of criticism, whichinclude critics on the formal or procedural aspects of free tradeat a global level, such as the idea that international trade mustbe symmetrical because if not, "the efficient allocation ofactivity among trading nationsbe compromised by the licensethe assertion that free tradethat the regime must reflect willtaken by those who stray" 36 ; or,cannot be sustained when there isunfair trade because, among other things, "the use of muscle toimpose one's views and to extract one-way trade concessions willpoison the ethos of fairness in trade relations, without whichopen markets are hard to sustain." 37 Even though this type ofprocedural criticism is important, and we will talk about it,later, on this thesis; there is another sort of critic on freetrade which focuses on the substantial effects free trade has ata domestic level. We are referring, specifically, to thearguments brought up against free trade by protectionism. In thefollowing paragraphs, we will address some of the main arguments.In a broad sense, protectionists may use against free tradethe argument that they do not want any foreign interferance intheir domestic market because it hinders its country's internalgrowth and downgrades its nationals way of living.Some authors assert, that the main cause of protectionismmight be attributable to political pressures which are exertedby domestic power groups. Among other things, it is said that:36 Bhagwati, supra note 32 at 13.37 Ibid. at 56.24Within a national economy certain sectors, particularlythose that produce goods made more efficiently abroad andthat may be expected by economic theorists to shift fromtheir present activities because of import competition, arelikely to pressure their governments to interfere with freetrade in order to afford them protection from suchcompetition. 38The most efficient instrument used by such countries againstforeign exports is the Tariff. A Tariff is generally defined asa "tax levied on imports at the time of importation, whichusually has the effect of increasing the prices at which theimports are sold. " 39 By the means of tariff policies,protectionists present the following arguments against freetrade.1. Prior to David Ricardo's time, a common mercantilistargument undermining free trade was the notion that "thewealth of a nation is increased by promoting exports andrestricting imports. 110This argument derived from the general idea that money hadvalue only to the extent it could be exchanged for goods. Intoday's world, this idea has lost force. In relation tointernational trade, imports play a very important role in anation's development. It is well known, that in our society, acountry is able to exchange with another country not only goodsfor money, but can also obtain from others, services andtechnology, for example. It would be a valid counter-argument38 Jackson & Davey, supra note 28 at 15.39 Ibid.40 See Jackson & Davey, supra note 28 at 16.25that if, in our days, a country exports more than it imports, itsconsumers, in comparison with other trading nations, will have alower quantity and quality of goods and services.2. A common argument favoring isolationism is theone contending that "tariff protection will give domesticproducers a larger market share, thereby creating more jobsin the domestic economy. " 41First of all, as we said before, the imposition of tariffson products, reduces the quantity of goods available to thepublic; so, even if people can afford to buy goods they may nothave a diversity to choose from. Secondly, some critics arguethat "this is a policy that tries to 'export' unemployment to thecountry whose imports are reduced, u42 subsequently, that countrymay retaliate by imposing tariffs itself, leading to a chain ofretaliatory schemes that would decrease the volume of worldtrade.3. A very common argument, which has been usedlately, mainly by developed nations, against free trade isthat "interference is necessary to protect workers in ahigh-wage nation from 'pauper labor' in developingcountries." 43This is a strong argument, which has been recently used bythose opposing NAFTA. However, in order to raise this argument,41 Ibid. at 16.42 Ibid.43 Ibid.26a country's production should be competitive worldwide. If not,industries in a non-competitive nation tend to migrate to morelucrative grounds, taking along with them, its correspondinglabor force. On the other hand, if a country maintains a healthytrade relationship with other nations, exports motivate moredomestic production; creating wealth and jobs. It is accuratelystated, that "a highly productive labor force using advancedproduction machinery and techniques may well produce goods thatcan be sold at a lower price than those produced by pauperlabor. "44. Those who oppose free trade, argue that"tariffs should be imposed to equalize costs in theimporting and exporting nations."45Equalizing costs would not allow any type of trade, since,as we studied before46 , trade depends on comparative costsdifferences. Complete isolation is, definitely, not the answerfor a contemporary nation's economic needs.5. It is often argued in particular countries,basically less developed nations, that trade restrictionsshould be applied in order to satisfy peculiar nationalinterests.Even though this might be a valid argument, as somenations may have the need to 'protect' certain industries which44 Ibid.45 Ibid.46 See page 19.27are necessary for achieving specific national goals 47, there isthe possibility to look for alternative economic policies thatwould probably be better suited. In relation to this point, eachcase must be studied differently as countries policies may shift,according to their changing priorities. Thus, even if a priorityindustry might have been an obstacle for free trade before, itmay not represent any problem today.c) Main Arguments Favoring Free TradeOnce we have stated some arguments which downgrade freetrade, it is necessary to discuss several reasonings favoringtrade liberalization.A 1977, GATT document48 , establishes five of the most commonbenefits brought by trade liberalization. The first three, aresaid to be direct benefits from free trade, while the last twoare considered additional or fringe benefits.1. In the domestic arena, consumption gains are aprimary benefit nations receive from free trade.As we said before, an important beneficiary from tradeliberalization is the consumer, as he has the possibility ofacquiring more goods at lower prices. It is well known that highprices caused by tariff imposition, bring as a consequence thefall of domestic consumption. In other words, in a high tariff47 An example of such industry is evident in the protection given by the mexican Constitution to thiscountry's natural resources, specifically its oil. The Constitution, in its Article 27, prohibits theproduction and exploitation of oil by any other person different of the State. Thus, such industry in Mexicocan only be managed by a unique state oil monopoly: PEMEX.48 GATT, Studies in International Trade, Number Five (Geneva: 1977).28regime, consumers pay more for a product and have less money tospend in other commodities.Consumer's gains from free trade are not a new phenomena.In mid-19th century England, scholars such as Henry Dunckley,talked about the favorable effects free trade had in relation tofood importation and its influence over prices in that country.Dunckley stated the following:There is hardly an article of common consumption which isnot purchaseable at a much lower rate than formerlyt and insome the difference is as much as 40 or 50 per cent.49This results, based on facts and statistics of that time,reflected amazing advantages for consumers.2. Free Trade may also bring benefits to thesuppliers of services, capital and land, which translateinto production gains.It is accurately stated that by trade liberalization,"inefficiently produced domestic output is replaced by imports,permitting the reallocation of some domestic land, labour andcapital away from low productivity industries and into a moreproductive employment in thosehas a comparative advantage.""necessity for several nations tocommodities in order to exchangein which the countryThis situation also raises thespecialize in producing certainthem for others on which theirindustriescomparative advantage or efficiency is not so great.49 N. Dunckley, Free Trade and Its Results: An essay on the recent commercial policy of the United Kingdom(London: W. and F.G. Cash, 5, Bishopsgate Without, 1854) at 300.50 R. Blackhurst, N. Marian & J. Tumlir, Trade Liberalization, Protectionism and Interdependence  (Geneva:GATT Studies in International Trade, No.5, 1977) at 23.29The creation of internal wealth may have as one of its manyadvantages the effective diminish of pauperism. Statistics in theUnited Kingdom showed, in the past century, an outstandingimprovement in this matter as a consequence of free tradeimplementation. In relation to this issue, Dunckley narrates thefollowing:The highest point of pauper expenditure since thecommencement of our Free Trade policy, was reached in 1848,when it amounted to 6,180,764 pounds. Since that year it hascontinued to decline till, in 1851, it amounted to only4,962,704 pounds."It is evident that there are rather old statistics; however,the positive results free trade might have in diminishingpauperism may still be applicable today. It will be interestingto observe, in the long run, if this phenomena is solved byNAFTA, particularly in the case of Mexico, which has moreproblems of poverty than its partners.3. Economies of scale gains are revealed by freetrade implementation, as this practice enlarges the marketin which each country's tradeable-goods industriescompete. 52The main benefit obtained from a market expansion is that byhaving a larger scale of operations, a country diminishes itscosts. 53 Another advantage which derives from having a bigger51 Dunckley, supra note 49 at 307-08.52 With NAFTA, for example, the United States and Canada are gaining an eighty million people, mexicanmarket.53 An early bilateral example of such is the 1965 "Autopact", signed between the United States and Canada.30market is that a highly productive nation will have a demandwhich is able to match its supply.4. In relation to market's expansion, it issustained that a fringe benefit arises from the fact thatfree trade creates a more competitive domestic economy.In other words, the fact that the market is enlarged, bringsforeign and domestic firms to compete in the domestic arena. Anatural consequence of the above, is that production tends tobecome more efficient.5. Free trade can also contribute to domesticprice stability by being an aid in combating inflation.Trade liberalization is said to have two main effects whichhelp countries achieve this goal.^First, free trade reducesprices of goods as their availability increases.^Secondly,effective competition and the existence of a crediblegovernmental commitment in not returning to protectionistpolicies, brings a parallel restraint on both prices and wages.54In short, when trying to balance free trade's disadvantageswith its benefits, the latter seem to surpass the former.d) Free Trade and Globalization in Today'sInternational Arena54 See R. Blackhurst, supra note 50 at 29.31A free trade policy has not always been a nation's firstchoice when dealing with economic problems. It is obvious thatthe application of trade liberalization will depend on theevaluation of different circumstances, domestic andinternational, which could lead countries to follow such path.The contemporary economic international panorama facesseveral difficulties. The improvement of communication systems,among other things, has transformed our world into a unitaryarena, where different competing interests are involved. JagdishBhagwati describes this situation, in relation to trade, with thefollowing words:The change in the world economy that propels more forcefullythe unfair trade crusade is the increased crisscrossing offoreign investments, with associated dramatic increases intrade-to-GNP ratios of many countries, which is turning theglobalized world economy into a veritable spider's web...This 'spiders web' phenomenon has meant increasingly thateveryone tends now to be in everyone else's backyard, makingimport competition in one's own market, and exportcompetition in the other's market and in third markets, evenmore fierce. 55Thus, if Bhagwati is right, the globalization process the worldis experiencing today, is definitely being detrimental onnations. It could be stated that free trade might be a viableoption for groups of nations to take, in order to regionalizetheir economy and avoid loosing control over it.But, what are the main manifestations of this globalizationprocess? Opinions are divided, however, in the followingparagraphs we will refer to the most common.First of all, it is said that one of the main issuesindicating that the economy is becoming global resides in the55 Bhagwati, supra note 32 at 16-17.32fact that there has been a commoditization or an industrialconversion which aims at producing merchandise rather thanfinished products. 56^This production shift was said to becaused by the sudden raise on raw materials prices, whichobviously diminished their consumption by the public. The newmerchandise, defined as low cost but high quality products, isnow responding to the novel world market demands. Thus, acountry's economic success at a global level will not dependanymore on its raw material possesion but in its manufacturingcapacity.Another aspect of the world economy which shows a generaltendency towards globalization is the fact that marketcompetition is no longer taking place only at domestic levels.Instead, market competition is now a worldwide phenomena inwhich, the highest technology is combined with competitivelypriced labor, low capital cost, preferential financing forexports, lower taxes, and a gradual dissapearance of nationalmarkets. 57 Although the already mentioned characteristics couldbe generally found in a global economy, many of them are alsomanifested at a regional level.A third example of today's economic globalization could befound on the international financial system. Many assert thissystem has suffered a radical revolution. In other words, it issaid that the former national financial markets have beentransformed into a huge international market, in which, anyminimal political or economic change, at a national level, could56 See L. Rubio, "La Globalizacion de la Economia" in Hacia un tratado de Libre comercio en America del Norte (Mexico: Porrua, 1991) at 93.57 Ibid. at 96.33have worldwide repercussions." Thus, foreign debt renegotiationwith less developed nations, for example, is an issue whichshould not be forgotten by developed countries, if they intend tofacilitate the former's incorporation into international trade.Speaking about less developed nations, it is necessary toremember that in the last three decades, the increase of theirexports have allowed many of these nations' to activelyparticipate in the international market. This paticipationconstitutes a new challenge for world trade as a new element isincluded in its high competitive system: sophisticated labor withrelatively low wages.59 This element creates an additionalinterest on behalf of industrialized nations to obtain lessdeveloped nations services in order to reduce their costs andincrease their competitiveness." At the same time, lessdeveloped nations growth rate makes them natural markets foracquiring goods and services offered by developed nations. Allof these factors, have great influence in the globalization andregionalization of the economy.These developments show that, today, countries have a viabledevelopment option which relies, basically, on regionalinterdependence. Even though events have developed in such a waywhich appear to lead world's economy towards globalization, toeffectively achieve this is structurally rather difficult.Regionalization in the form of free trading economic blocs, onthe other hand, might be a more tangible option as its goals58 Ibid. at 110.59 Ibid. at 97.60 A tangible example of such, is the high interest developed by industrialized nations over severalmanufacturing countries in East Asia such as Taiwan and Hong Kong. Another example is the "maquiladoranindustry established in Mexico by United States' bussinesmen.34could be achieved easier, by aiming at a smaller number ofsubjects which could receive the benefits offered by free trade.CHAPTER II. DEPENDENCY AND NAFTAA. Dependency: A DefinitionGlobalism studies the interactions of States and otherinternational entities l within a global context. It placesextreme importance on the historical analysis of capitalism, inwhich, it subsequently argues for the existence of mechanisms ofdomination that keep less developed nations from developing.Under this ideology, the theory of dependence tries to give atheoretical explanation of the Third World's, basically LatinAmerica's, underdevelopment.The simplest economic definition of dependency, states that"a system is dependent when the accumulation and expansion ofcapital cannot find its essential dynamic component inside thesystem." 2 Although accurate, this definition does notsufficiently explain what the dependency theorists are reallypreaching. A broader and clearer definition of dependency is thefollowing:By dependence we mean a situation in which the economy ofcertain countries is conditioned by the development andexpansion of another economy to which the former issubjected. The relation of interdependence between two ormore economies, and between these and world trade, assumesthe form of dependence when some countries (the dominantones) can expand and can be self-sustaining, while other1 These international entities are created by means of an international agreement constituted by sovereignstates in order to accomplish common goals. The most evident example is the United Nations, created byagreement after the Second World War. A financial institution, such as the GATT (General Agreement onTariffs and Trade), is also considered an international entity, as it was created by international agreementon January 1, 1948.2 F.H. Cardoso & E. Faletto, Dependency and Development in Latin America,  trans. M. Mattingly Urquidi(Berkeley: University of California Press, 1979) at xvi.3536countries (thereflection ofpositive ordevelopment.3dependent ones) can do this only as athat expansion, which can have either aa negative effect on their immediateAuthors which use this theory to explain Latin America'sunderdevelopment, sustain that Western Europe and the UnitedStates drain less developed nation's capital through differentsources, such as repatriated profits, fees for royalties andinterest payments on loans, among other things.4 This dependentstatus impedes less developed nations from achieving anautonomous economic infrastructure.5To explain State's interactions under dependence, scholarsusually use the 'center-periphery' argument°. They sustain that:Peripheral economies remain dependent in a very specificform: their capital-goods production sectors are not strongenough to ensure the continuous advance of the system, infinancial as well as in technological and organizationalterms. So, in order to go ahead with economic expansion, adependent country has to play the "interdependency" game,but in a position similar to the client who approaches abanker.7This is one of the strongest arguments used by opposers of freetrade among developed and underdeveloped nations, as it isasserted that the latter are not able to sustain an effectivebargaining position with the former.3 R.H. Chilcote & J.C. Edelstein, Latin America: the struggle with dependency and beyond  (New York:Schenkman Publishing Company, Inc.) at 26.4 Ibid. at 27.5 Such status was recently suffered by Mexico with the tremendous foreign debt, which it carried until 1990,when such burden was renegotiated, and succesfully reduced 20%, with the international banking community.This renegotiation resulted in the forgiving of loans and the restructuring of capital and interest paymentsin order to bring net external transfers down to a level where the investment and growth rates weremanageable. This measure was of great importance because Mexico may now focus on achieving internal economicgrowth, without destining all of its income into foreign debt payment.6 See I. Wallerstein, The Modern World-System I: Capitalist Agriculture and the Origins of the EuropeanWorld-Economy in the Sixteenth Century (New York: Academic Press, 1974).7 Cardoso, supra note 2 at xxi-xxii.37B. Dependency in Mexico and the Rest of Latin America Once the meaning of Dependency has been discussed; I willdiscuss some of the most important historical developments,which ocurred in Latin America (especially Mexico) in order toexplain this region's underdevelopment from the dependencetheorists perspective.a) Historical BackgroundAccording to authors following the dependency theory, thecolonial past, which identifies most Latin American countries,explains several outcomes in these nations' economic evolution.The main argument is that, throughout history, these nations wereincorporated into the capitalist system as colonies and later asnational states (neo-colonies); remaining today as peripheraleconomies to the 'center' or industrialized nations. In otherwords, even after these countries achieved their independence,the dependent relation continued as "European investments weredirected mainly toward the sectors that local economies were notcompetent to develop, for example, transport." 8 In this way, thecenter controlled the output marketing of the periphery,supporting, at the same time, the local economic class thatinherited its production base from the colony. In the case ofMexico, it was established that, from a trading perspective,"Mexico's gold and silver fed the coffers of Spanishmercantilism; Mexico's ports connected the trade routes of Asia8 Ibid. at 66.38and Europe; and Mexico's internal class structure was shaped bythis dependent relationship vis-a-vis Spain."9 This situationled the colonized nations of America to rely only on a rawmaterial dependent economy. In relation to this issue, RonaldChilcote explains:Because the New World was from the outset intended to be asource of valuable mineral wealth and raw materials from thehomeland (Europe) and not a primary producer in its ownright, Spain set restrictions upon the development ofmanufacturing in Mexico."An example of the above is that Spain periodically outlawedproduction of olive, oil, wine, silken goods and textiles in thecolonies.After independence, political power remained in the domesticland-holding class, which was relieved from the responsability ofmaintaining the welfare of the working class and obtained, thisway, the gains of the monetary market, while leaving the rest ofthe population in a lamentable economic position. However, forthis dominating class, there was an organizational problemconsisting "in keeping local control of an export-orientedproduction system while creating a system of internal politicalalliance that would permit the group that maintained relationswith the outside (the world market and the national states of thecentral countries) a minimum of internal power to preservestability and represent the economic domination of the export-oriented production sector.""9 Chilcote, supra note 3 at 228.10 Ibid. at 231.11 Cardoso, supra note 2 at 35.39During the nineteenth century, Mexico suffered otherproblems such as foreign debt and budgetary deficit whichworsened this new independent nation's position. It is arguedthat by turning into free trade in order to solve these issues,it became an easy matter for foreigners to 'finance' Mexicandevelopment. Thus, economy was passed into the hands offoreigners with the encouragement of the Mexican dominatingclass. It is often stated that "because of the weakness of theirbourgeois sector, countries dominated by an enclave economy had arudimentary domestic market." 12 Under these circumstances,Mexico and other pre-colonized nations were not able to achievean autonomous internal growth.In the early twentieth century a number of armed revolutionstook place, as a response to the high levels of poverty andunequity suffered in most of Latin America. 13The post-revolutionary era gave birth to a type of modernpaternalism in which the state assumed the responsability forprogress, development, and economic recovery. Fernando HenriqueCardoso describes how this phenomena began in countries such asMexico and Venezuela, in the following terms:By revolution the middle sectors entered the state apparatusand used it to create a national economy. In all cases, thedomestic economy developed through pressure from the middlegroups allied with the existing burgeois capitalist sector,or with the worker-peasant sector, or with both. 1412 Ibid. at 124.13 For example, Mexico's 1910 Revolution took place as a response to the low standards of living suffered bythe "campesino" class (peasants). Porfirio Diaz' dictatorship was not able to sustain a system characterizedby favoring a rich minority and forgetting a poor majority.14 Cardoso, supra note 2 at 125.40According to Cardoso, this fact was beneficial for such countriesbecause it helped them achieve certain degree ofindustrialization. By 1940, the industrialization achieved bymeans of modern paternalism depended on high protective barrierswhich would, supposedly, "assist infant industries and optimizeallocation of resources."15 This pattern shifted in Mexico,during Miguel Aleman's administration, in which industrializationwas achieved via foreign investment. However, the stronginfluence of nationalism made of this shift in policy only atemporary measure, which dissapeared after this administration,returning to more protectionist policies.By 1960, import-substitution industrialization had beencarried out indiscriminately, giving rise to high cost industrieswith limited capital and unskilled manpower.16 It is at thispoint, when dependency theory emerged in an effort to explain whyLatin America was not developing as anticipated.In response to the negative effects dependency brought overless developed nations, Latin American countries proceeded toimplement different types of policies in order to break theselinks of dependency. We can cite as an example, the wave ofexpropriations in the 1960's and 1970's, directed to assertsovereignty over dependent countries' natural resources.17 Alatter measure to fight dependency, mainly employed in the15 R.J. Radway, "The next decade in Latin America: anticipating the future from the past" (1991) 13 CaseWestern Res. J.Int.L. at 7.16 Technological-related industries are a good example of this phenomena. Particularly in the area ofelectronics, were people could not afford to buy a quality Television for an affordable price.17 It is important to point out the fact that such expropriations were preceeded by Mexico's oilexpropriation in 1938.411980's, was the nationalization of several economic activitiessuch as the telephone, airline, and banking services, in order tocreate a strong state infrastructure. However, these type ofmeasures brought negative results as the State showed tremendousincapacity in the management of such activities. 18International measures against underdevelopment were alsotaken in the 1960's by less developed nations, when demanding theUnited Nations (U.N.) for the establishment of a 'NewInternational Economic Order'. As a response, the U.N.'s GeneralAssembly unanimously declared a 'Development Decade', which wasto have the following characteristics:Less developed countries were to be assisted in achieving 5per cent annual growth in aggregate national income throughexpanded international trade and an annual flow ofinternational assistance and capital to the tune of 1 percent of the national income of the developed countries."Whatever positive the intentions of these measures might havebeen, this statutory provision was not able to have, in practice,the desired effect of creating internal and autonomous growth ofthese nations' economies.Nevertheless, exceptions to the rule could be found inspecific cases. A domestic phenomenon took place in theindustrialized countries of Latin America such as Brazil and18 An example of these measures was the 1982 banking system nationalization in Mexico. This was a mainlypolitical decision, taken by former President Jose Lopez Portillo, which turned the Mexican banking systeminto a highly inefficient service.However, not all of these measures were completely negative. In Mexico's case, for example, the 1938oil expropriation helped it become the fourth-largest nation in the world, regarding oil reserves; thus oilrepresented the most important income for the nation. Nevertheless, in the long run, Mexico was affected bysuch fact as it relied its whole economy on a fragile oil exporting policy. In other words, in 1985, oilrepresented approximately 64% of its total exports; today, when the price of oil has dropped considerably,such sum has reduced to a 26% of its exports.19 A. Akinsanya & A. Davis, "Third world quest for a new international economic order: an overview" (1984)33 Int. & Comp.L.Q. at 209.42Mexico, which permitted a great measure of autonomy of internaldecisions to be attained. In these nations, the public sectorparticipated in both, the economic regulation and formation ofnew capital.As stated in the former paragraph, Brazil and Mexico hadpolicy variants which allowed them to obtain a minimal level ofindustrialization. However, their general ideology did not varymuch from other less developed nations' ideological standards, inthe sense that they were basically biased against primaryproduction, had a high degree of state interventionism, as wellas a high degree of tolerance for inflation n and imbalancedgrowth .21 Besides these ideological barriers, there were otherpolitical pressures which obstructed a closer relationship withthe developed world, particularly with the United States.Roberto de Oliveira, classifies some of these tensions 22 in thefollowing manner:1. Reactive tensions, such as the geographic mutilationimposed by the United States on Mexico, by the annexation ofCalifornia and Texas in 1838.2. Economic domination, in the form of an overwhelminginfluence not exercised by the United States Government but byits private individuals. Examples are given, such as the oilcompanies which were established in Venezuela and the UnitedFruit Company in Central America.3. Institutional-Reform tensions are described by deOliveira as "attempts by the United States to influence the20 Mexico's inflation rate, for example, reached an outstanding 159% in 1987.21 R. de Oliveira Campos, Reflections on Latin American Development (US: University of Texas Press, 1967)at 6.22 Ibid. at 23-29.43political systems and/or to promote or stimulate reforms in theinstitutions of its neighbors from the south."23 In relation tothis topic, two recent examples come to my mind. In first place,the recent invasion of Panama by the United States in order tocapture Panama's President, General Manuel Noriega, so he couldbe judged for a crime punishable in the United States; shows anopen violation to international law, justified by the Americansin order to bring a change on the political system of thatcountry. Similarly, the recent 'legalization' by the U.S.Supreme Court of Dr. Alvarez Machain's kidnapping in Guadalajara,Mexico, by DEA agents, in order to be tried for drug relatedcrimes according to American laws; shows an open intention onbehalf of the U.S. to change the Mexican legal system even ifthey have to violate every international law concerning State'sjurisdiction.b) Today's SituationThe fact that these tensions exist, has been an impedimentfor a closer relationship between less developed nations and thedeveloped world. Latin America's policy- makers often turn tothe Dependency theory in order to justify its separation from theindustrialized world. Arguments about mercantile differences,such as "Latin America must avoid the preocupation withunnecessary goods and unnecessarily sophisticated products ifdependence is to overcome, are common between opposers ofconsumerism and free trade.23 Ibid. at 29.24 Chilcote, supra note 3 at 86.44Foreign investment is often rejected, reasoning that"investment decisions continue to be based on plans for improvedprofitability and balanced development of multinationalcorporations rather than domestic employment and productionneeds..." 25 For example, Mexico's, 1982, "Ley sobre el Control yRegistro de la Transferencia de Tecnologia y el Uso y Explotacionde Patentes y Marcas" (Law for the Control and Registration ofthe Transfer of Technology and the Use and Exploitation ofPatents and Trademarks) 26, shows an outstanding level of Stateinterventionism by regulating private contracts, regarding anyintellectual property investments or transmission oftechnological knowledge, with the registration of such contractson a National Registration System.Even though this pattern has lasted for many decades,today's leaders seem to be approaching the problem of LatinAmerica's underdevelopment from another perspective. In hisfourth address to the nation, President, Carlos Salinas deGortari, in relation to Mexico's international policy, stated thefollowing:Yesterday's great capital exporters are today's greatresource importers. Under these circumstances, we need tobe more efficient in order to export more dynamic markets.There will be more competition, however, by the internalreinforcement of our discipline in public finances,productivity encouragements, and the consolidation of clearand permanent trade rules, we will be able to get ahead ofother economies and attract resources for our growth. 2725 Ibid. at 28.26 Ley sobre Transferencia de Tecnologia, L.S.P.I.T.T.I.E. (Porrua,1990).27 C. Salinas de Gortari, Cuarto Informe de Gobierno 1992 (Mexico, D.F.: Presidencia de la Republica,Direccion General de Comunicacion Social, 1992) at 42-43.45This statement shows a new policy which implicitely rejectsdependency. Taking into account new and domestic circumstancesunder which Mexico is located today, a different approach to endunderdevelopment is taken by rejecting a protectionist policy andopening its economy to other world markets.C. Dependency and Free Trade: Myths and RealitiesPresident Salinas' statement is a good example of the newgoals less developed nations are aiming at in order to overcomethe effects of decades characterized by depressed economicgrowth. In today's world, Latin America's economic policies areshifting from having regulated markets and following import-substitution strategies into completely different policies whichembrace extensive deregulation, foreign investment promotion, andfree trade.a) Domestic and International DominationEven though these trade liberalization measures have astrong support from many members of the community, such issuestend to be really controversial.Those who oppose a dependent status, usually are againstfree trade because, from their point of view, an open market willsustain a dependent situation of less developed nations with theindustrialized world.However, the government is not the only one who receivesblame for implementing such policies. Internal factors are often46implicated as sources of dependency. For example, the followingstatement argues that:The inability to break out of a dependent situation is oftenstrengthened by citizens of a Latin American country whoaccrue selfish benefits at the expense of a country as awhole. mIn the case of free trade, many critics assert that an openmarket mainly benefits the burgeoisie, representing such class inthis particular case, the strong businessmen of a less developednation, which obtain great economic gains at the expense of therest of the population. This situation, is more explicitelyexplained by Cardoso and Faletto, in the following statement:The system of domination reappears as an "internal" force,through the social practices of local groups and classeswhich try to enforce foreign interests, not preciselybecause they are foreign, but because they may coincide withvalues and interests that these groups pretend are theirown. 29Although it is true that under a free trade agreement,entreprenuers are able to obtain high economic benefits, they arenot the only ones who benefit from it. As I stated beforem ,consumers might be receiving the highest advantages from freetrade. Thus, free trade does not necessarily involve aparticular class trying to obtain personal gain.Another strong argument against the possibility of havingfree trade between underdeveloped and industrialized nations28 P.R. Viotti & M.V. Kauppi, International Relations Theory (New York: Macmillan Publishing Company, 1987)at 409.29 Cardoso, supra note 2 at xvi.30 See page 27.47relies on the asymmetrical relations between them caused bydependency. In other words, it is argued that the unequity onthe levels of development in their economies, cause a dependentrelationship enforced by developed over less developed nations.Cardoso, explains:There exists among the developed and underdevelopedeconomies a difference not only of the stage or the state ofthe production system, but also of function or positionwithin the international economic structure of productionand distribution: some produce industrial goods; others,raw material. This requires a definite structure ofrelations of domination to assure an international tradebased on merchandise produced at unequal levels oftechnology and cost of labor force. 31There is no doubt about marked differences among developed andunderdeveloped nations. However, several circumstances have tobe taken into account in order to conclude a mandatory dependentrelationship in trade. In first place, the level ofunderdevelopment among less developed nations has to beconsidered, as it varies among each other. Not all of the lessdeveloped countries have the same level of development oreconomic potential. Thus, Mexico, for example, might be in abetter bargaining position than Nicaragua, when dealing withindustrialized trade partners. Secondly, a detailed agreement,such as NAFTA, has to be elaborated in order to help reconcile asmuch differences as possible. Finally, our economic era faces anew phenomena, in which, less developed nations are not exportingas much raw materials as before 32 ; therefore, these countriesmight have a valid bargaining position with industrializednations by being able to offer other goods and services. All of31 Cardoso, supra note 2 at 17.32 See pages 31-32.48these examples show that a 'relation of domination' might beavoided in free trade.b) UnilateralismSome efforts have already been made at an internationallevel in order to end with economic 'unjustice' against the lessdeveloped world. In 1974, the U.N. proclaimed the 'Declarationand Programme of Action on the Establishment of a NewInternational Economic Order', in which, some of the basicprinciples were the following:The need to secure progress towards equality of the nationsthrough an equitable sharing of world resources, transfer oftechnology, a just and equitable relationship between theprices of raw materials exported from and the manufacturedgoods imported by the developing countries and full exerciseof sovereignty over natural resources and other economicactivities, including the control of transnationalcorporationsEven though this is a valid effort which aimed at improving lessdeveloped nations' economies, it looks mainly as a one way dealwhich has a lot of nationalist characteristics. This might havebeen an important factor which kept developed nationsuninterested and therefore doomed the project.Following this general idea regarding unilateralism ininternational economic relations, some scholars which defend thetheory of dependence, recognize the possibility of having anindustrialized economy under a dependent regime. However, theyexcluded any chance for less developed nations from embarkinginto international trade, where a two-way deal is involved.33 Akinsanya, supra note 19 at 212.49Cardoso and Faletto, for example, assert this hypothesis bystating that:The basic economic conditions of development are an openmarket, the exclusion of the dependent economies from themarkets of the most developed countries, and the continuoustransfer of new units of external capital in the form ofadvanced technology, which are more appropriate to theintrinsic needs of the mature economies than to those of therelatively backward economies. The combination of theseconditions with the ideologies and legal relations amongsocial groups makes possible "industrial economies independent societies".34In other words, they recognize the existence of internationaltrade and its link with development, but only with the exclusionof less developed economies, which basically work as recipientsof the industrialized world.In my view, this statement is not accurate. The fact that aless developed nation is participating in international trade,does not mean that it is working at the service of the moredeveloped nations. Asymmetrical participation is always obtainedfrom a free trade agreement. In NAFTA, for example, while Canadamay participate by exporting its technology, Mexico participatesby manufacturing North American products at a low cost.Nevertheless, these asymmetrical actions translate into commonbenefits, as the three nations which participate, aim atfostering economic growth, creating jobs, and, in general,allowing North America answer the competive challenge coming fromother economic blocs.c) Nationalism34 Cardoso, supra note 2 at 175.50What all of these ideas show is a radical nationalist way ofthinking which basically gives less developed countries anirrational excuse for isolation. Roberto de Oliveira clearlyexplains this phenomena, in the following terms:Emotional nationalism may create a distorted sense of pridein traditional behavior and may inhibit economic change andthe absorption of foreign technology. It may lead toirrational decisions preventing a faster development ofnatural resources and condemning countries to a lower rateof development than might otherwise be achieved. It may beused as a device to close the door to more productive andefficient enterprises, perpetuating local monopolies...35Thus, countries might be paying, in the long run, a higher pricefor sustaining their nationalist ideologies and keepingoverprotective regimes.The last two decades in Latin America have proven that statepaternalism has not worked; as this policy usually "leads topremature attempts to redistribute income where it does notreally exist. "36 Having this thought in mind, Mexico, forexample, has engaged in a privatization process which includessome of the most important services, formerly and deficientlymanaged by the State, such as the telephone and bankingsystems.37 The object of this new policy is to createdomestically efficient services which can, in the long run,compete at international levels.d) Trade as Dependency's Instrument35 de Oliveira, supra note 21 at 5.36 Ibid. at 6.37 An example of such privatization process, is the formerly government owned telephone company "Telmex",which was sold, through a competitive bidding process, to a Mexican-French-United States consortium for atotal of U.S. $4.5 billion in 1990-91.51Writers which favor the dependency argument, usually blamethe dominating pattern of dependency as the mayor cause ofeconomic and social backwardness in less developed countries.From their point of view, free trade might be a proper instrumentto impose this domination and sustain underdeveloped nation'simpoverishment. This idea has a strong counter-argument, whichresides in the fact that there is no agreement on causality inrelation to dependency. In other words, "some critics questionwhether dependency creates economic and social backwardness (asglobalist claim), or whether it is economic and socialbackwardness that leads to a situation of dependency." 38 Ifthis statement is true, such theorists might have a difficulttime blaming free trade as a dependency instrument when, in myopinion, it could really be used as a tool for overcomingbackwardness by improving domestic economies and, therefore,eliminating dependency. 39e) Trade and AidIn many ocassions, the words trade and aid have beenconfused by scholars and politicians. Sidney Dell, in his book"Trade Blocs and Common Markets", establishes the importantdifference between these two terms. Dell, states that:The basic economic issue between the developed andunderdeveloped countries is trade not aid. It involves theentire role of the underdeveloped countries in the worldeconomy and not simply the crumbs that may fall to them fromthe tables of the rich. It concerns the earned income that38 Viotti, supra note 28 at 416.39 1 must point out that, in Mexico's case, however, NAFTA has not been an instrument of domination orimposition. In other words, NAFTA is not transforming Mexico; but Mexico is transforming itself by becoming,before NAFTA, a more dynamic and competitive nation.52should belong to the underdeveloped countries as of right,and not the charity which is theirs only at the discretionof, and subject to, the passing whims and predilections ofothers.°Just recently, in their first meeting as leaders of state,President Carlos Salinas of Mexico, had to clarify PresidentWilliam Clinton of the U.S., that what Mexico intended underNAFTA was trade not aid.Aid usually translates into a dependent relationship, as thedonating country usually sets the 'rules of the game'. Trade onthe other hand, presupposes a deal between two parties which areequally obliged and acquire the same rights.In relation to economic results, "trade plays a vastlylarger role than aid in providing the developing countries withthe wherewithal needed for financing the imporation ofdevelopmental goods and services."" Statistics show that in the1960's, the combined exports resulting from trade of developingcountries resulted in over thirty billion dollars; while theincome obtained from foreign aid and investment total eightbillion dollars.Aid might lead to dependency, trade leads tointerdependency.D. ConclusionLatin America faces a new era in which competition isstrongly involved. The historical and internationalcircumstances which guided less developed nations into dependency40 S. Dell, Trade Blocs and Common Markets (London: Constable, 1963) at 134.41 de Oliveira, supra note 21 at 101.53are changing; among others, raw materials are no longer the maininterest industrialized nations have in Latin America. Besides,experience has shown that "the economies of scale in modernindustrial production require that the industrialization of LatinAmerica be based on larger markets than those afforded by theindividual national unit." 42 Therefore, Latin America may needto start developing less protectionist policies in order to beable to grow.Unilateralism is another international practice which haslost force today; as developed nations are no longer eager to getinvolved on one-way deals. At the same time, some less developednations are ready to face international competition as well asother international obligations, which will lead them to embraceinterdependent relations with the developed world. In otherwords, some Latin American economies are now able to choose tradeand not aid.Nationalism does not mix with today's, international,economic liberalization process. In the past, most LatinAmerican nations used nationalistic arguments in order toirrationally justify their isolationism. A distorted sense ofpride led these nations to follow policies which inhibitedeconomic change by rejecting any form of foreign intervention,even if such was for the purpose of providing technologicaltransfer or for creating productive enterprises. However, statepaternalism has proven not to work, as its followers are beingkept on a state of backwardness.42 Ibid. at 6.54A multinational agreement involving international trade,such as NAFTA, does not translate into a dependency situation,where the less developed nations, involved in such a deal, areworking at the expense of their developed counterparts. On thecontrary, such an agreement helps developing nations in breakinga dependent status, by domestically creating more jobs;increasing investment opportunities; and improving internalcompetitiveness. All of these issues, help foster economic growthand, therefore, eliminate dependence.Some Latin American nations might not be ready yet for thistransition. However, the more developed nations of the ThirdWorld may gradually take the lead, even if it is at a slow pace.President Salinas, recently stated that:To recognize that the State is boundless, does not mean weare embracing its vanishing... It is not possible tosustain the thesis in which the state must expectindividuals to do everything; without a doubt, the reformedstate must encourage private investment; nevertheless, atthe same time, it is obliged to accomplish public investmentdestined to infrastructure and social development, inaddition to its productive participation on strategic areasor encouraging proyects and sectors.°President Salinas' words show that the fact that some nations,such as Mexico, might be embarking into international competitiondoes not mean the State is going to lose sovereignty or freeitself of any obligation at the domestic level.However, if a nation is ready to compete internationally,it must do so. Such competition is not so easy to achieve. Forexample, since 1983, with President De la Madrid's43 Salinas, supra note 27 at 43.55administration, Mexico has experienced a profound transformationresulting from fundamental changes in its economic strategy. It'smajor goals have been stabilization and structural reform.President Salinas has reinforced the policies undertaken between1983 and 1988. Among these, the most relevant are the following:a) strict control of public finances; b) tax reform; c)divestiture of non-strategic public enterprises; d)liberalization of foreign trade policy; e) deregulation offoreign investment; f) modernization of the financialsystem; g) restructuring of the external debt; and, h)improvement of social services."Therefore, this example shows that a developing nation may notembark into free trade without a proper economic infrastructure,which Mexico does have.By aiming at free trade, Mexico has taken the first step outof dependency and the first step inside an interdependent world.44 SECOFI (Mexico), Mexico and Canada: A Partnership for Prosperity, (Ottawa: Representative Office toCanada, 1993) at 6.56CHAPTER III. THE EUROPEAN ECONOMIC COMMUNITY AND NAFTAThere is no doubt that the global movement towards regionaleconomic integration, has found its latest manifestation inNAFTA. However, there is uncertainty regarding the origins ofthis bloc formation phenomena.As I stated before, GATT's, Article XXIV, promotesmultilateral trade liberalization by allowing regional economicintegration.1 Therefore, as soon as the GATT was established,economic bloc formations, such as the Benelux Union (customsunion formed by Luxemburg, Belgium and the Netherlands), began toemerge in Western Europe. Since then, stronger multinationalassociations such as the European Free Trade Association and theEuropean Community2 have appeared, and motivated the rapidexpansion of both intraregional and external trade.3NAFTA is often compared with the European Economic Community(EEC) because both represent regional trading bloc formations.Also, those favoring free trade have refered to the EEC as apositive example for NAFTA because it embraces a Common Market,which includes the participation of both developed and developingnations. However, it is not wise to assume that bothinternational associations have the same goals and means. In myview, some questions need to be answered before any parallel canbe drawn between these two institutions. Among these questions,the following come to my mind: can european bloc formations1 See page 20.2 These two groups partially blended into a European Economic Area in 1991.3 See J.A. McKinney, ed., Implications of a North American Free Trade Region  (Ottawa: Carleton UniversityPress, 1992) at x-xiii.57constitute a realistic precedent for NAFTA?; should study theirdeficiencies in order to avoid commiting similar mistakes inNorth America? Is it possible to compare the accession of lessdeveloped nations into the European Economic Community withMexico's participation in NAFTA?In the following Chapter, I will try to answer thesequestions as briefly as possible. Therefore, I will divideChapter III into three parts. In the first part, I will broadlyaddress what is understood by EEC and its main functions; thesecond part will be dedicated to less developed nation'ssituation under this bloc formation; finally, in the thirdsection of this Chapter a general comparison between the EEC andNAFTA will be made.A. Concept a) DefinitionThe European Economic Community (EEC) may be defined as aregional international organization created by the Treaty of Romeon March 25, 1957 "with the broad object of furthering economicdevelopment within the Community by the establishment of a CommonMarket and the approximation of the economic policies of memberstates." 4 The treaty came into force on January 1, 1958, forsix original member states which were Belgium, France, theFederal Republic of Germany, Italy, Luxembourg, and the4 Oxford Reference, A Concise Dictionary of Law, Second Edition (Oxford: Oxford University Press, 1990) at142.58Netherlands. Later, other nations such as Denmark, Ireland, theUnited Kingdom, Greece, Spain, and Portugal acceeded theagreement.Although the main objective has already been stated, otherimportant goals are clearly set under Article 2. These basicallyare to promote throughout the Community harmonious developmentof economic activities, a continuous and balanced expansion, anincrease in stability (basically monetary), an acceleratedraising of the standard of living, and closer relations betweenthe Member States.5Once a definition has been given, I will describe in thefollowing paragraphs, some of the most important historical factswhich preceded the formation of the EEC.b) Historical BackgroundOn May 9, 1950, Robert Schuman, French Foreign Minister,declared that "a united Europe was essential for world peace andthat a gathering of the European nations required the eliminationof the century-old opposition between France and Germany."Therefore, by mainly taking into account political reasons, heproposed to unify France and Germany's coal and steel productionunder a joint authority. However, this organization was open tothe participation of other European nations. Germany, theNetherlands, Belgium, Luxembourg and Italy accepted this offer.Thus, on April 18, 1951, by means of an international agreement,5 Treaty Establishing the European Economic Community, March 25 1957, U.K.T.S. 15 (1979) (with authoritativeEnglish language text), 298 U.N.T.S. 11, art.2 (hereinafter EEC).6 P.S.R.F. Mathijsen, A Guide to European Community Law, Fourth Edition (London: Sweet & Maxwell, 1985) at7.59the 'European Coal and Steel Community' (ECSC) was created,entering into force July 25, 1952. This agreement was the firststep taken by a group of nations regarding the formation of whatseemed to look as a European Federation.Following this agreement, in 1955, the Benelux countriesproposed their ECSC counterparts the setting up of a commonmarket and jointly developing specific areas such astransportation, classical and atomic energy. This idea wasstrongly taken into consideration and in 1956, a decision wasreached to "start negotiations for drafting treaties that wouldestablish a 'common market' and an Atomic Energy Community." 7 Tothat effect, two important treaties became a reality. On March25, 1957, Rome, Italy became the geographical site for thesignature of the European Economic Community (EEC) and the AtomicEnergy Community (EURATOM). Both treaties came into force onJanuary 1, 1958.The autonomy of these two treaties did not last long, as onApril 8, 1965, both agreements were merged, simplifying theinstitutional set up of the Communities by establishing a singleCouncil, a single European Commision, a single Court, and oneAssembly. 8On July 1, 1968, a Customs Union was fully operative. Thisimportant step meant that "tariff and quota restrictions betweenMember States had by then been completely abolished and that thereplacement of the national external tariff by the commonexternal tariff had been completed." 9 Such accomplisment gavecredibility to the common market deal. Therefore, on January 22,7 Ibid.8 See Ibid. at 8.9 Ibid.601972, the United Kingdom, Ireland, Norway", and Denmark accededto the community by signing the Treaty of Brussels. Thisaccession was followed by Greece's integration on May 28, 1979;and Portugal and Spain's application on March 28, 1977, and July28, 1977, respectively. II Today, the Community has a total oftwelve Member States.c) Main ObjectivesTrade liberalization in Europe was motivated by a number ofdifferent hypotheses which basically promised to improve domesticproductivity while increasing international competition.Elisabeth De Ghellinck, talks about these expectations in thefollowing statement:Access to an enlarged market would enable the firms toachieve economies of scale and hence increase theirproductivity, whilst at the same time confrontation withproducers from other countries would increase competition,drive prices down and favour innovation. In this way theprocess of industrial adjustment is automatically andcontinuously realized by a decentralized competitive system.The main instruments of such an implicit market-orientedindustrial policy, following the abolition of internaltariffs, were those designed to assure the Common Market,namely competition policy, a common external policy andauthority to favour harmonization of member state laws.12Thus, a regionalization of the European Economies seemed like aviable option.10 It is important to state that Norway did not ratify the Treaty.11 Both, Spain and Portugal's requests, were satisfied with their integration to the Community on January 1,1986.12 E. De Ghellinck, "The Industrial Policy of the European Communities: Between Cooperation and Competition"in P. Coffey & M.S. Wionczek, eds., The EEC and Mexico (Dordrecht: Martinus Nijhoff Publishers, 1987) 103 at103.61In order to achieve all of the above, the European Nationsfacing this task, devoted their time to the creation of anAgreement (Treaty of Rome) which could establish substantiverules, define a common market, and allow for a number of freedomsand common economic policies. Specific objectives" weredefined. However, in order to achieve such goals, the Communityestablished two basic means, which, in my view, constitute anessential part of the EEC: 1) a Common Market and 2) aprogressive approximation of the economic policies of the MemberStates.According to Professor Mathijsen, the creation of a CommonMarket entails the following:The abolition of all obstacles to free movement of goods,persons, services, capital and payments, although the phaseis also characterised by the adoption of a common policy inthe sphere of agriculture and of transport, the institutionof a system ensuring that competition is not distorted andthe establishment of special relations with the overseascountries and territories. 14The guidelines a Common Market must follow and respect areclearly stated in the Treaty. In other words, the Treaty of Romeestablishes, in its Part 2, what it calls the basic freedomswhich include the freedom to move goods within the Community; forworkers, the freedom to move from one Member State to another;the freedom of establishment; the freedom to provide servicesthroughout the Community; and the freedom to transfer capital andpayments within the EEC. Later on, when comparing the EEC withNAFTA, I will discuss these freedoms.13 See page 75.14 Mathijsen, supra note 6 at 109.62The second instrument established in order to accomplish theEEC's objectives consists in the progressive convergence of theeconomic policies of the Member States. It is clear that thissecond stage "concerns policy rather than law-making"15. Inother words, the successful integration of European economicpolicies depend on the development of specific economic andpolitical circumstances rather than on mere statements of law;and therefore, such actions cannot be limited by a term or pre-established on a written agreement.Thus, the EEC Treaty is broad and vague when it comes toestablishing an outline of this latter stage. Nevertheless, theagreement's effort consists in the establishment (either in theform of an specific provision or indirectly, by means of severalprovisions, protocols or reports) of common policies in mostfields of the economy. These policies include common actions inareas such as agriculture (including fisheries)16; transport";competition 18 ; regional 19; industryn; tax provisions21; economicand monetary policyn; socia123; energy; environment and15 Ibid.16 EEC, supra note 5 at art.38(4).17 Ibid. at art.61(1).18 Competition is considered one of the best stimulants for economic activity to take place, as itguarantees freedom of action.19 Such regional policies include actions to develop less developed nations economies.20 The EEC decided to focus on specific fields of industry such as information technology, steel, andautomobile industries, among others.21 Such provisions, which are included under sections 95 through 99 of the Agreement, are destined to"ensure free movement of goods by prohibiting any discrimination in taxation between imported products andproducts originating within a Member State".22 Regarding this issue, among others, Article 3(g), calls for "the application of procedures by which theeconomic policies of Member States can be co-ordinated and disequilibria in their balances of paymentsremedied".23 Social policies, established under articles 117 through 128, include close cooperation in employment,Labor law, working conditions and social security, among others.63consumers24 ; industrial and intellectual property25 ; and theapproximation of laws 26 .Finally, it is important to state another relevant taskwhich the EEC has accomplished during its 35 years of existence;mainly, that it has generated "the most developed form ofinternational economic law" 27, primarily created in the form ofrules and regulations by the Council and the Commission, andenforced by the European Court of Justice. But, I will get backto this issue when discussing the EEC's Institutions.B. Less Developed Nations Situation in the EECa) IntegrationMexico's participation in NAFTA vis-a-vis with twoindustrialized nations has brought high controversy regarding theviability of less develop nations' participation in internationaltrade with developed nations. This relationship contains aconsiderable number of asymmetries evolving from the differentlevels of development.Those favoring free trade among develop and developingcountries have been able to give theoretical explanations on the24 Regarding the environment, a programme proposed by the Commision was adopted by the Member States onNovember 22, 1973, in which eleven principles were established basically regarding preventive action andresposability of the polluter. Consumer policy on the other hand, mainly consists in providing theindividual with protection, consultation and representation.25 In this area, article 36, basically clarifies that industrial and commercial property can be justified asa limit to the general principle on prohibiting trade restrictions.26 EEC, supra note 5 at 3(h).27 M.N. Janis, An Introduction to International Law (Boston: Little, Brown and Company, 1988) at 216-217.64viability of such partnership. Among other things, it isasserted that:The theory of trade liberalization brings gains to allparties even when trade liberalization is between partnerswith significantly different living standards and wages.This is primarily due to the access which the less developedpartner gains to the markets of the more developed countriesin the trade arrangement. It is also due to the strongdemand in the less developed country for new and improvedtechnologies and consumer goods, which in turn are importedfrom the more developed partners. mEven though this statement contains accurate remarks, it israther broad and hypothetical. Therefore, in my opinion, itwould be wise to observe the concrete cases of Portugal, Greeceand Spain in the EEC in order to find out if this theory hasreally worked in practice. Also, these particular cases(especially Spain and Portugal's, which joined the EEC in 1986)could be a good point of comparison with what is happenning todayin North America.Like Mexico, Spain and Portugal used to have highlyregulated economies with significant industrial state ownershipand regulation of international trade. Therefore, the threeeconomies (Mexico, Spain and Portugal) have as a commondenominator their involvement in privatization programs andindustrial restructuring, just before entering an major tradedeal.In the following paragraphs, I will briefly discuss thedegree of participation less developed nations have achievedafter thier accession to the EEC, and talk about the benefits, ifany, this integration has brought them.28 SECOFI, Canada and Mexico: Forging a New Friendship  (Ottawa: Townsend Trade Strategies Inc., 1993) at 25.65b) Participation and BenefitsSince entering the EEC in 1986, Spain and Portugal haveobtained relevant and diverse benefits. Among them, an increaseon their productivity and investment rates stand out. At the sametime, one of the biggest fears related to free trade and low wagenations has been overcome, as migration of labour from develop todeveloping countries has not occured as expected. In thisregard, Joseph McKinney, asserts that:Spain and Portugal experienced dramatic increases in theirgrowth rates, with no apparent adverse effect on theEuropean Community economies. While the investment rate inSpain and Portugal increased, firms did not migrate on awide scale to these countries to take advantage of theirlower wage rates. Neither did labor migrate in largenumbers from these countries into the other EuropeanCommunity countries. Increased specialization in productionhas been accomplished primarily through intra-industryspecialization as opposed to the displacement of entireindustries, thus minimizing adjustment costs. 29Therefore, in the short run, some myths regarding free trade suchas the loss of jobs have been proven wrong in Europe.After some of the important benefits favouring lessdeveloped nations by economic regionalization have been stated,it is necessary to review the concrete actions taken to promotethis positive regionalization. It is important to point out thateconomic integration did not take place from one day to another,rather, developing nations had to prepare themselves by using avariety of means which included domestic reform, and joining29 McKinney, supra note 3 at xiii.66prior international trade agreements which set the pace forfuture Common Market negotiations.In the case of Spain, for instance, even though itsaccession to the Community goes back to June 12, 1985,progressive actions were established in order to avoid a drasticchange in its domestic economy and provide a favorable adaptationinto the Common Market. Thus, the European Community (EC)Accession Treaty established that free trade in industrialproducts between Spain and theJanuary 1, 1993.30 Therefore,EC was to be fully implementedSpain had an eight-year termontoaccomplish total free trade in industrial products. Also, byacceding the Treaty of Rome, Spain is to implement by January 1,1996, free trade for most goods in agricultural products. It isevident that agriculture is an area of the Spanish economy, whichmay need a longer term to be liberalized, therefore, it has beengiven almost an eleven-year term.Aside from these adjustment terms, Spain had already began atrade liberalization process by signing a partial PreferentialAgreement in 1970, which included several concessions regardingindustrial products.31 Spain had also been preparing itself forfree trade in agricultural products by signing the 1970Preferential Agreement.3230 See A. Tovias, "The Impact of the Second Enlargement of the European Community on Latin AmericanEconomies" in P. Coffey & M.S. Wionczek eds., The EEC and Mexico (Dordrecht: Martinus Nijhoff Publishers,1987) 167 at 171.31 This Agreement basically aimed at establishing institutional links between the EC and Spain. Among otherthings, it favored a 60% reduction of the Common External Tariff (CET) on most industrial importsoriginating in Spain; established preferential tariff quotas on Spanish refined petroleum products; andprovided for a 25% reduction on most industrial imports from the EC.32 In this area of the economy, the Agreement provided for partial tariff preferences on a number of Spanishagricultural exports (including food products) comprising a 30% to 50% reduction of the CET, but none at allon other agricultural products.67Portugal's case does not vary much from Spain. After itsEEC's accession on June 12, 1985, Portugal acceded to theelimination of the remaining preferential tariffs on the EC andthe EFTA's industrial exports. 33 As it is clear, Portugal hadestablished closer institutional links with the EC34 which madethe transition to an open market easier.Greece, on the other hand, joined the Community in 1979.However, full implementation was attained until 1988. Unlike itsless developed counterparts, Greece had been developing stronginstitutional links with the EC since 1961, when the 'Greece-ECAssociation Agreement' was signed35 . Its definite integration tothe EEC allowed for the elimination of remaining Greek-preferential tariffs on EC's industrial exports. 36I have already stated some of the particular actions andbenefits less developed European nations got from joining theEEC. I will now mention some of the general consequences drawnupon developing nations' integration to the EEC.In the first place, it is important to notice that theCommunity now has free access into Spanish, Greek and Portugueseagricultural markets. 37 This measure is an important aid for thecomplementation of European economies, as agriculture plays aprimary role in Europe's economic integration.In second place, and also related to the primordial roleagriculture has under the EEC deal, is the fact that the three33 See Tovias, supra note 30 at 172.34 In 1972, Portugal signed and agreement with the EC which established, among other things, free trade inindustrial products, and preferential tariff reductions on Portuguese agricultural exports to the EC.35 This early Agreement provided for free trade in industrial products and partial tariff preferences onagricultural products.36 See Tovias, supra note 30 at 172.37 Ibid. at 173.68developing nations joined, upon accesion, the Common AgriculturalPolicy (CAP) which entails benefits as well as obligations.38In third place, less developed nations had to agree uponaccession that they would "withdraw from a scheme of tradepreferences among developing countries, which includes six LatinAmerican countries."39 From my point of view, this action is agood example of how regional economic bloc formation might leadto the segregation of non-participating nations.°c) ConclusionGreece, Spain and Portugal's accession to the EEC not onlyhas proven asymmetrical economies can be harmonized under aCommon Market, but it has showed that overall productivity can beachieved. Statistics show that the average annual growth of percapita GDP accelerated in the EC, in Portugal and in Spain; grossfixed capital formation strenghthened on all sides; and importdemand rose dramatically. 0Not all of the less developed nations have received the samebenefits and treatment under the Community. For instance, changesin the industrial field are much more significant for Spain thanfor Greece and Portugal, as the latter were already receivingseveral benefits in that area even before acceding the Community.Nevertheless, common policies had to be taken by these nations inorder to afford economic integration in a Common Market. In other38 The benefits include overall advantages such as export refunds and guaranteed prices; while theobligations mainly consist in respecting, after a while, certain common disciplines such as productionrestraints and quality requirements.39 Tovias, supra note 30 at 174.40 This is a coamon fear sustained by opposers of free trade, which must be avoided by NAFTA's drafters.41 See SECOFI, supra note 28 at 26.69words, domestic economic reform and previous trade links withtheir EC counterparts were necessary for the deal to take place.Even though Mexico's case under NAFTA has to be analizedindependently, it is useful to take into account the Europeanexperience in order to find out if the deal is going to work forMexico. It has to be considered as positive, the fact thatMexico has already accomplished two goals which wereprerequisites for its European counterparts to join theCommunity: economic domestic reform 42 and previous tradingrelations with its counterparts 43 .However, as I stated before, Mexico's situation in NAFTA hasto be analyzed separately. In other words, even though, both,NAFTA and the EEC constitute multinational economic blocs, theirstructure and functions differ, thus, it is not easy to state aparalel between them.C. Comparison Between the EEC and NAFTAThe EEC has often been offered as an example of what shouldbe understood by economic regionalization. With the creation ofNAFTA, several comparisons have been drawn between the twointernational agreements. Even though it is always wise tocompare common past experiences, one should be careful todistinguish the differences. Severe differences exist between theEEC and NAFTA. The incentives which could have motivated the42 Mexico's commitment to economic reform, which started in 1983, include the restructuring of the externaldebt; a strict control of public finances to control inflation; tax reform; liberalization of foreign tradepolicy; deregulation, privatization, or divestiture of non-strategic public enterprises; deregulation offoreign investment; and improvement of social services.43 Besides acceding to GATT in 1986, Mexico imports from the United States have developed a trade surplus of$7 billion; while it is Canada's largest trading partner in Latin America, with bilateral trade whichamounted to $3.5 billion in 1992.70formation of the EEC, vary from those NAFTA drafters experienced.At the same time, the functions and objectives may also differbetween the two treaties.In this section, I will focus my study on differing pointsbetween the two agreements such as the incentives, means,objectives and institutions which separate them.a) Incentives and MeansApart from economic well-being, some of the main incentivesEEC founders had in order to achieve European integration,relied on political and military matters. They basicallyhypothesized that if economic integration could be achieved,political and military union would follow.On the other hand, economic motivations were clear, the goalto achieve was to constitute a "more efficient European-widemarket for goods and services, labor and capital."" However,political considerations such as ending decades of "bloodyantagonism between France and Germany"45, and providing a commonfront against Soviet expansion in Europe, transformed anoriginally-mented economic treaty into a rather complex and broadagreement.Unlike EEC's drafters, NAFTA's creators were motivated byeconomic factors, basically trade liberalization. In other words,NAFTA's main incentive is to establish a free trade area not afully integrated (political and military) and complex NorthAmerican Community.44 Janis, supra note 27 at 218.45 ibid.71Explicit means were established in order to accomplish theTreaty of Rome's main objectives. These means basicallyconstitute the different freedoms molded in the Agreement: freemovement of goods; free movement of workers; freedom ofestablishment; freedom of services; free movement of capital; andthe free movement of payments. I will briefly address themeaning of each of these guarantees.The free movement of goods is made possible by theestablishment of a customs union and the elimination ofquantitative restrictions on imports and exports." I must pointout that a customs union47, in this case, covers all trade ingoods (including industrial and agricultural products) andinvolves the prohibition between Member States of customs dutiesand exports and of all charges having an equivalent effect. Italso entails the adoption of a common customs tariff in therelations with third countries.The free movement of workers is directed to eliminate anytype of discrimination based on nationality between workers ofthe Member States. 48 Administrative procedures and practiceswhich also formed an obstacle to the free movement of workershave also been abolished.A noticeable difference is found in NAFTA, regarding thefree movement of workers. Under NAFTA, such freedom does not46 See EEC, supra note 5 at art.30.47 Ibid. at art.9(1).48 Ibid. at art.48(2).72exist. Instead, there are provisions, such as Article 1601, whichallow a partial movement of workers by permitting the temporaryentry for business persons. This provision's objective isexpressed in the following terms:This Chapter reflects the preferential trading relationshipbetween the Parties, the desirability of facilitatingtemporary entry on a reciprocal basis and of establishingtransparent criteria and procedures for temporary entry, andthe need to ensure border security and to protect thedomestic labor force and permanent employment in theirrespective territories .49Therefore, it is evident that NAFTA's drafters avoided protectingevery non-commercial issue by excluding political matters such astransnational migration. NAFTA even maintains that the existingimmigration measures in each country will prevail."Freedom of establishment implicitely includes the liberty tomove from one place to another. The Treaty of Rome describes itas "the right to take up and pursue activities as self-employedpersons and to set up and manage undertakings, agencies, branchesor subsidiaries."" NAFTA's Article 1601, which allows thetemporary entry of business persons, is not comparable with thefreedom of establishment as the latter requires a more or lesspermanent settlement.The freedom to provide services52 also assumes freedom ofmovement, as it "concerns nationals of a Member State who are49 The North American Free Trade Agreement, 17 December 1992, United States-Mexico-Canada, CCH InternationalNo.39, art.1601 (hereinafter NAFTA).50 See Ibid. at Appendix 1603.A.3.51 EEC, supra note 5 at art.52.52 Ibid. at arts.59-66.73established in a state other than the one of the person for whomthe services are intended."" Therefore, the freedom consists inthe right to temporarily pursue activities in the state where theservices are provided. It must be noted that this freedom alsoimplies a right for the beneficiary of a service to move intoanother State in order to obtain such service.In relation to services, NAFTA includes a provision entitled'Cross-Border Trade in Services', which applies to the followingacts:a) the production, distribution, marketing, sale anddelivery of a service;b) the purchase or use of, or payment for, a service;c) the access to and use of distribution and transportationsystems in connection with the provision of a service;d) the presence in its territory of a service provider ofanother Party; ande) the provision of a bond or other form of financialsecurity as a condition for the provision of a service. 54The object of this provision is to award national treatmentto services providers of other Member States. Therefore, Article1202(1), asserts that "each Party shall accord to serviceproviders of another Party treatment no less favorable than thatit accords, in like circumstances, to its own serviceproviders."" Even though the rights awarded by this provisionare similar to what is understood as freedom of services in theEEC, NAFTA only protects the right to provide a service and doesnot imply the right of the beneficiary to move into anotherMember State in order to receive a service.53 Mathijsen, supra note 6 at 130.54 NAFTA, supra note 49 at art.1201(1).55 Ibid. at art.1202(1).74Free movement of capital% translates into the progressiveabolishment of "all restrictions on the movement of capitalbelonging to persons resident in Member States and anydiscrimination based on the nationality or on the place ofresidence of the parties or on the place where such capital isinvested...57 Even though the Treaty talks about abolishing"all restrictions"; there is a limit: the elimination is onlyrequired "to the extent necessary to ensure the properfunctioning of the common market." This undetermined limit andthe complexity of the provision itself, makes implementationdifficult. In relation to this provision, the Court of Justiceaccurately stated the following:The scope of that restriction..., varies in time and dependson an assessment of the requirements of the common marketand on an appraisal of both the advantages and risks whichliberalization might entail for the latter, having regard tothe stage it has reached and, in particular, to the level ofintegration attained in matters in respect of which capitalmovements are particularly significant.8Therefore, even though this freedom is explicitely included inthe Treaty, it constitutes an ideal goal but not a reality.NAFTA does not go that far regarding free movement ofcapital. However, it does establish an specific provision inwhich Member States are allowed to own a financial institution ina State other than his/her. Thus, Article 1403(1), provides that"the Parties recognize the principle that an investor of anotherParty should be permitted to establish a financial institution inthe territory of a Party in the juridical form chosen by such56 EEC, supra note 5 at arts.67-73.57 Mathijsen, supra note 6 at 140.58 Case 203/80 Casati (1981) E.C.R. 2595.75investor." 59 Even though this provision does not entail anabsolute freedom of capital movement, it is clearly expressed anddoes allow immediate implementation.Finally, the free movement of payments" provision obligesthe Member States to authorise payments from a debtor in oneMember State to a creditor or beneficiary residing in another.However, it only applies to payments connected with free movementof goods, services and capital. This provision is necessary inorder to obtain legal certainty in a whole region.b) ObjectivesThe EEC's main economic objectives reside on the promotionof domestic competition and the creation of a common competitivemarket. In theory, the acheivement of such goals does not seemto be complicated, "once domestic tariffs are abolished, themeasures introduced are designed to guarantee this common market,that is to say, a competitive policy, a common foreign policy andthe power to harmonize the laws of the member states."'"However, the means provided by the Treaty of Rome seem to belimited.The Agreement provides in first place for the establishment,functioning and the development of a common market. This primarystage is provided by the Treaty with precise rules andtimetables. The second stage, however, which aims at the59 NAFTA, supra note 49 at art.1403(1).60 EEC, supra note 5 at art.106.61 F. De Mateo, "Mexico and the European Economic Community: Trade and Investment" in P. Coffey and M.S.Wionczek, eds., The EEC and Mexico (Dordrecht: Martinus Nijhoff Publishers, 1987) 3 at 6-7.76progressive approximation of the economic policies of the MemberStates, is described in very general terms. This vagueness hasnot prevented Community activities to penetrate other social andeconomic spheres, even though they are not explicitely includedunder the Treaty. 62 This situation gives us a huge and complexinternational organization, which lacks of the legal instrumentsto function properly.NAFTA's main objectives are explicitely stated underArticle 102. These are, to eliminate barriers to trade in, andfacilitate the cross-border movement of goods and services;promote conditions of fair competition; increase substantiallyinvestment opportunities; provide protection and enforcement ofintellectual property rights; create effective procedures for theimplementation and application, administration and disputeresolution; establish a framework for further trilateral,regional and multilateral cooperation to expand and enhance thebenefits of the Agreement.° These objectives are clear andtheir content reduces to regulate trade and the main consequencestrading relations might bring. In other words, its mainobjectives do not go beyond the possibility of establishing acommon market.Some of the areas aimed at the progressive aproximation ofMember States policies, but not explicitely contemplated in theTreaty of Rome, are molded into NAFTA. For example, while commonenergy policies are considered EEC activities, it is notexplicitely provided as such under the Treaty of Rome. NAFTA on62 Such activities include, among others, energy, regional policy, environment, consumer protection and theEuropean Monetary System.63 NAFTA, supra note 49 at art.102(1).77the other hand, explicitely recognizes that "it is desirable tostrengthen the important role that trade in energy and basicpetrochemical goods plays in the free trade area and to enhancethis role through sustained and gradual liberalization. 11,64Therefore, NAFTA legitimates Member States on energy matters andliberates them of the necessity to recur into paralel activitieswhich might be surpassing the agreement's jurisdiction.c) InstitutionsThe EEC is runned by four main institutions: the Assembly(European Parliament); Council; Commission; and Court ofJustice. 65 Each of them empowered to take binding decisions.The European Parliament is composed of 437 members. France,Germany, Italy, and the United Kingdom have 81 each; Spain has60; the Netherlands 25; Belgium, Greece and Portugal have 24each; Denmark has 16; Ireland, 15; and Luxembourg, 6 members.The Assembly's main activities relate to budget, externalrelations and legal affairs. In particular, the Parliamentparticipates in the legislative and budgetary procedures,probably being the latter its most authoritative role as it mayreject the EEC budget and send it back to the Council forref ormation. 66The Council of the European Communities is constituted byone member, per government, participating at the EEC. Its main64 Ibid. at art.601(2).65 See EEC, supra note 5 at art.4(1).66 See Janis, supra note 27 at 219.78objective is to "ensure co-ordination of the general economicpolicies of the Member States."7 However, its functions alsoinclude decision-making powers in the field of legislation,budget and international agreements.68 The Council also hasjurisdiction over political co-operation.The Council is considered "the repository of the sovereignpowers of the EEC."69 Therefore, it is considered by some moreimportant than the European Parliament.The Commission is integrated by seventeen commissioners. Twoeach from France, Germany, Italy, Spain and the United Kingdom;and one each from the smaller countries.Its main attributes consist on being the EEC's principaladministrative organ70, and having legislative initiative. Someauthors such as Mathijsen, point out this institution'srelevance, by stating that:The Commission... is responsible for the functioning anddevelopment of the Common Market and is the guardian of theCommunity legislation; it administers the Communities'finances, negotiates the international agreements andrepresents the Community both within the Community and inthe international field; it also has its own powers ofdecision. In short, it should be seen as the executivebranch of the Community.fl67 EEC, supra note 27 at art.145.68 For example, the Council may enact legislation through regulations, directives and decisions. Itsintervention outside of the community resides in concluding the international agreements negotiated by theCommission.69 Janis, supra note 27 at 219.70 Its administrative functions include to enforce the application of Community law; implement the budget;and publish an annual General Report on the activities of the Communities, as Article 155 provides.71 Mathijsen, supra note 6 at 42.79However, in my opinion, if it is considered the executivebranch of the Community, it should be more democraticallyintegrated by allowing every State to have two representatives. 72The European Court of Justice is integrated by thirteenjudgesm , assisted by five Advocates-General 74 . Its main task isto "ensure that in the interpretation and application of theTreaty the law is observed." 75 It is important to point outthat, following the common law tradition, the European Court doesnot only interpret the Treaty but also is empowered "to statewhat the law is when the existing legislation does notexplicitely provide for it." 76 This attribution allows theEuropean Court to create common European legal precedents.The EEC contemplates other important bodies besides the fourmain Institutions, already mentioned. Among them, the EuropeanInvestment Bank" projects itself because of its fickleness; asit has capacity to finance Community's development regions aswell as industrial projects. This occurs because its basicobjective is to "facilitate the economic expansion of thecommunity by opening fresh resources." 7872 In my opinion, the Community evades the criticism on having an equal) , integrated Commission by stating inArticle 10(1), first paragraph, of the 'Merger Treaty', that members "shall be chosen on the grounds oftheir general competence" and their "independence" must be "beyond doubt". Therefore, impartiality ispressumed.73 Accession Treaty, 12 June 1985, concerning the Accession of the Kingdom of Spain and the PortugueseRepublic to the European Economic Community and to the European Atomic [Energy] Community, art.17, 28Official Journal of the European Communities 9 (November 15, 1985).74 Ibid. at art.18.75 Mathijsen, supra note 6 at 54-55.76 See Ibid. at 55.77 EEC, supra note 27 at 129-130.78 Mathijsen, supra note 6 at 79.80NAFTA is a free trade agreement. Therefore, it is evidentthat its Institutions will not be as complex and multifunctionalas those embraced by the European Community. NAFTA has only twomain Institutions: a Free Trade Commission79; and a Secretariatm.The Commission comprises cabinet-level representatives ofthe Parties or their designees. Its faculties are the following:a) supervise the implementation of this Agreement;b) oversee its further elaboration;c) resolve disputes that may arise regarding itsinterpretation or application.d) supervise the work of all committees and working groupsestablished established under this Agreement,...; ande) consider any other matter that may affect the operationof this Agreement.81Therefore, the Committee basically absorves every facultyregarding implementation, further elaboration, and disputeresolution in the NAFTA agreement itself.The Secretariat functions as an aid to the Commission byproviding it with its general assistance; or givingadministrative assistance to other panels, committees orgroups82, also established by NAFTA.It is obvious that NAFTA does not need such a hugeinstitutional basis as the EEC does to be functional. NAFTA'sFree Trade Commission is able to handle some of the activitieswhich are delegated into four different institutions under theEEC. It is true that NAFTA's Institutions cannot, for instance,legislate; but, being basically a free trade agreement and not a79 NAFTA, supra note 49 at art.2001.80 Ibid. at art.2002.81 Ibid. at 2001(2).82 Such panels include, for instance, the panels and committees established under Chapter Nineteen, whichparticipate in the review and dispute settlement in antidumping and countervailing duty matters.81multiple-function Community, it does not require to exercise thatfaculty. Thus, a free trade deal requires a simple institutionalapparatus.D. ConclusionAlthough the EEC and NAFTA share some common goals they arenot completely alike. It is true that both constituteinternational agreements embracing the idea of a common market.However, their incentives, functions, means, objectives andinstitutions differ in many ways.The EEC is more than a free trade agreement. Rather, itembraces a complex agreement, in which, several issues includingsovereignty are subordinated to the achievement of a common goal:European integration. In relation to the European Communities'integration, Mathijsen accurately asserts the following:They (European Communities) were not, like so many countriesbefore them, merely creating mutual obligations; they weredoing much more: they were limiting their own sovereignrights, transferring them to institutions over which theyhad no direct control and endowing them with powers they didnot always possess themselves. Furhtermore, they were notonly binding the states they represented to assume newrights and obligations, they were also directly includingtheir citizens, who became subjects of the community. 83This statement clearly explains what European nations understandas an International Community. For them, sovereignty can becompromised in order to achieve the agreement's objectives. Ithas been stated that the European Court, for instance, "views83 Mathijsen, supra note 6 at 1.82state sovereignty as divisible and delegable;" therefore, "it isentirely possible for the EEC Member States to give up a portionof their sovereignty to an international institution."84 On theother hand, in the case of a trade agreement such as NAFTA, evenif such deal involves some sovereignty issues, these are not opento any bargaining. In other words, NAFTA tries to avoid anycicumstance where a Party's sovereignty might be put injeopardy.85 Therefore, the EEC has priority against nation-states, national laws, and national courts, while NAFTA shouldmerely enforce mutual obligations regarding trade.Although the EEC and NAFTA may differ in many issues, thisdoes not mean that the latter should ignore the experiencesacquired by the former in common specific areas. Less developednations experiences in free trade with developed nations, forexample, should be taken into account in order to apply favorableresults and avoid making the same mistakes. It is clear thatMexico's economic background coincides with that of Europeandeveloping nations, integrated under the EEC. 86 It is alsoevident that positive results have been obtained from thesenations' participation in free trade.87 Therefore, Spain,Portugal, Greece and the European Community's positive experiencewould indicate that Mexican participation in NAFTA, will likelylead to the enhancement of regional competitiveness.84 Janis, supra note 27 at 228.85 For example, NAFTA's Article 601(1) explicitely assures the Parties, confirmation of respecting theirConstitutions in relation to Energy and Basic Petrochemicals. These issues embrace a high content ofsovereingty concerns as they are related to some of the Parties (particularly Mexico and its oil policy)primary and non-renewable sources of income.86 See page 69.87 See pages 63-68.83Thus, even though the EEC and NAFTA are not analogous, theformer's experience with less developed nations should beconsidered as a positive example of economic integration amongasymmetrical economies.84CHAPTER IV. NAFTA AND INTELLECTUAL PROPERTYThe aftermath of the 'Cold War' has brought a newinternational era characterized by hope and change. This 'NewWorld Order' encompasses a global change in the ideological,economic and political spheres.At an international level, a common pattern has emergedregistering the creation of different economic poles of powerwhich are causing the regional integration of neighboringnations. This regional integration brings, at the same time, anincreasing need for interdependent relations among integratednations. As a result of the above, financial, commercial, andtechnological issues, among others, are now transcendingfrontiers.Simultaneously, at a domestic level, Latin Americancountries such as Mexico, face a double task: recuperatingeconomic growth; and improving its nationals' living conditions.However, optimism exists as new theoretical currents arereplacing old ideologies, and some of these nations are aiming atachieving a reasonable equilibrium between market forces andstate intervention. These countries are also beginning torealize that some sort of regional organization is needed fortechnical advances and industrial growth to proceed. For theabove reasons, free trade is considered as a viable option.Free trade relies on David Ricardo's 'theory of comparativeadvantage', which sustains that a country may export the productin which it has the greatest or comparative advantage and import85the commodity in which a comparative disadvantage exists.1Thus, this theory proves that trade among nations with differentlevels of development is possible even if an absolute gain oradvantage is not obtained.Practical benefits are encouraging nations to embark intofree trade. Among these, we can stateworld, imports have the same importanceformer's proneness to promote highergoods and services (tariffs, on theavailability of goods and services).the fact that in today'sas exports because of thequality and quantity ofother hand, reduce theTherefore, the economicisolation policies which several nations used to rely on becauseof the capital gains derived within, are no longer applicable ascontemporary nations cannot depend entirely on their exports;imports, consisting of goods and services, are an importantelement on the level of success of today's domestic economies.Several economic changes have also influenced protectionisteconomies in their decision for shifting and fitting theirpolicies into a global economy. In the first place, today,countries recognize that market competition is a worldwidephenomena, as high technology is combined with othertransnational factors such as competitively priced labor and lowcapital cost. Secondly, countries are now producing merchandisewhich is characterised by its low cost but high quality, ratherthan finished products which strongly relied on raw materials.Finally, less developed nations competitiveness has increased inrecent years by combining sophisticated labor with relatively lowwages; this action reduces costs on developed nations and1 See D. Ricardo, The Principles of Political Economy and Taxation, Int. by Donald Winch (London: Dent,1973) at 88.86increases their competitiveness. All of the above, makes ofregional economic integration a viable option for developed anddeveloping countries in the late twentieth century.Economic regionalization and free trade are opposed by thosewho explain underdevelopment by reference to the dependencytheory; which basically interprets Latin America'sunderdevelopment by asserting that these countries' economies areconditioned by the development and expansion of strongereconomies. 2 The 'center-periphery' argument is used to explainhow peripheral or less developed economies remain dependent astheir production sectors cannot ensure an advance in financial,technological and organizational terms. Therefore, it issustained that such economies have to remain dependent in orderto reach 'economic expansion'.It is said, that Mexico has been in a dependent situationsince colonial times. 3 Therefore, in the past decades,protectionist measures, such as an open rejection to foreigninvestment, have been implemented in order to avoid any sort offoreign dependence. Free trade is said to be detrimental toperipheral nations as, with its implementation, a dependentstatus from economically stronger nations is accentuated.Even though these ideas prevail over certain regions inLatin America, many of its leaders are rejecting protectionismand beginning to move towards free trade. Regulated markets andimport-substitution strategies are giving way to newer ideas2 See R.H. Chilcote & J.C. Edelstein, Latin America: the struggle with dependency and beyond  (New York:Schenkman Publishing Company, Inc.,1978) at 26.3 See F.H. Cardoso and E. Faletto, Dependency and Development in Latin America, trans. M. Mattingly Urquidi(Berkeley: University of California Press, 1979) at 23.87which include an overall deregulation leading to investmentpromotion and free trade.Free trade does not mean dependence. Several reasons can begiven. In the first place, the situations of domination whichformerly kept less developed nations in a dependent status havechanged and some developing nations have gained better bargainingpositions vis-a-vis its developed counterparts. Secondly, underfree trade, interdependence is a must, as one of its mainobjectives is to impose bilateral rights and obligations, anddoes not intend allowing any unilateral action which can lead todependence; in other words, trade and aid must not get confused.In the third place, nationalistic ideologies have lost strengthin Latin America and are being replaced by other tendencies whichaim at market liberalization. From all of the above, I am able toconclude that free trade does not promote but, rather, eliminatesbackwardness.Mexico has decided to play an important part in thiseconomic liberalization era, where it will face new and differentinternational tasks. Trade and interdependence constitute two ofits main priorities. The different political, cultural and legalbackgrounds, which separate Mexico from nations with a higherlevel of development (particularly its NAFTA counterparts),constitute a major obstacle for regional integration; suchasymmetries must be overcome in order to reach the economicregionalization of North America. Therefore, in the domesticarena, Mexico is undergoing a rapid transformation of itsinternal markets and business culture. In order to achieve suchgoals, legal reforms in many areas are needed. The existing88legal asymmetries with its NAFTA's counterparts regardingintellectual property, for example, have been a motor forcemotivating domestic legal reform in this area.In the following chapter, I will analize some of theexisting differences between NAFTA Parties domestic intellectualproperty legislation (Copyright, Trademarks, and Patents). Iwill also address, NAFTA's effort and effect on correcting suchasymmetries, particularly from the Mexican point of view.Finally, I will refer to how Mexico's interest in being part ofthe new economic order is reflected in the implementation of newand advanced domestic legislation, which regulates industrialproperty.A. Intellectual Property in North America a) Main AsymmetriesWithin NAFTA, Intellectual Property is one of the topicstending to include several asymmetries, which derive from maintrading difference among the Parties. On the one hand, theUnited States and Canada, commonly considered as technologicallycreative and innovative nations, are usually producers andexporters of goods, and are in need of intellectual propertyprotection on such items as software, movies, books, and soundrecordings. Statistics show that copyright-dependent U.S.exports to Mexico and Canada have drastically increased from $.8billion dollars in 1985 to nearly $3 billion dollars in 19914. In4 Office of the U.S. Trade Representative, The North American Free Trade Agreement: Intellectual PropertyRights (Washington, D.C.: US Trade Representative, 1992) at 1 (hereinafter U.S. Trade Representative).89relation to high-tech exports such as scientific instruments,computers, and chemicals, among others, an outstanding $5.3billion dollars was exported from the U.S. to Mexico in 1991. 5Mexico, on the other hand, could be classified as a country whichprimarily imports such goods. It is well known that "Mexicorelies on imported technology in its efforts to modernize andupgrade its infrastructure and develop a more sophisticatedmanufacturing capability." Thus, Mexico's demand for industrialmachinery and technology such as metalworking equipment, machinetools, and plastics production machinery and equipment, amongothers, are expected to exceed $6 billion dollars by 1994. 7b) LinkagesAlthough these issues are regulated by each country'sdomestic legislation, it must be acknowledged that on manyoccasions the topics included under this area of law areintangible and do not respect national boundaries. It isrecognized that "the fact that information is intangible alsomeans that it is indivisible: an unlimited number of users canconsume it without depleting it." 8 This situation engenders ahigh priority on behalf of the U.S. and Canada to find a promptsolution with Mexico dealing with transnational problemsregarding intellectual property protection. 9 In other words,5 Ibid. at 2.6 Government of Canada, North American Free Trade Agreement: An Overview and Description (Ottawa:Government of Canada, 1992) at viii.7 Ibid.8 P. Goldstein, Copyright, Patent. Trademark and Related State Doctrines  (New York: The Foundation Press,Inc., 1990) at 1.9 These countries are aware, for instance, of the utility international treaty definitions have inintellectual property, by providing uniformity to disparate state practice and, therefore, avoidingambiguity of concepts.90with the implementation of NAFTA, the Parties aim at anhomogenization of rules with effective enforcement procedures.NAFTA's, Part Six, Chapter Seventeen, is dedicated toIntellectual Property. Besides being built in accordance withvarious intellectual property treaties, the provisions includedin this Chapter, are similar to those proposed in the GATTUruguay Round and are consistent mainly with American andCanadian interests. The fact is that "NAFTA provides a higherstandard of protection for patents, copyrights, trademarks, andtrade secrets than has been established in any other bilateral orinternational agreement. ilioArticle 1701, establishes the nature and scope of theParties' obligations. Section 1 reads as follows:Each Party shall provide in its territory to the nationalsof another Party adequate and effective protection andenforcement of intellectual property rights, while ensuringthat measures to enforce intellectual property rights do notthemselves become barriers to legitimate trade.11This disposition establishes a broad obligation on the signingcountries regarding foreign intellectual property rightsprotection. Before NAFTA, there was no compromise that couldassure the resolution of a number of specific irritants regardingtransnational enforcement of such rights. At the same time, theimplementation of this section reduces the threat of piracy ofintellectual property rights by allowing every citizen of eachnation to exercise its rights throughout North America.10 U.S. Trade Representative, supra note 4 at 1.11 North American Free Trade Agreement, 17 December 1992, Can. CCH International (1992), "art.1701(1)"(hereinafter NAFTA).91In order to achieve an efficient implementation of NAFTA,the Parties are required under Article 1701, section 2, to giveeffect to the substantive provisions of four differentinternational agreements. These are, the 'Geneva Convention forthe Protection of Producers of Phonograms Against UnauthorizedDuplication of their Phonograms', 1971; the 'Berne Convention forthe Protection of Literary and Artistic Works', 1971; the 'ParisConvention for the Protection of Industrial Property', 1967; andthe 'International Convention for the Protection of New Varietiesof Plants' (UPOV), 1978 or 1991. 12 While the U.S. is asignatory to all four Conventions, Mexico has not yet acceeded toUPOV, and Canada is not a Member of the 1971 Geneva Convention.NAFTA perceives this situation and therefore prescribes thatif any of the Parties has not yet acceded to any of thesetreaties, they are encouraged to do so. However, in the case ofMexico, this 'encouragement' becomes obligatory. Annex 1701.3,states that Mexico shall:a) make every effort to comply with the substantiveprovisions of the 1978 or 1991 UPOV Convention as soon aspossible and shall do so no later than two years after thedate of signature of this Agreement;... 13The obligation for Mexico to accede to the UPOV Convention, twoyears after signing NAFTA, is a clear example of how NAFTA dealswith some asymmetries. By not being part of such treaty, Mexicohas an advantage over the U.S. and Canada, as it does not have torespect the obligations established in the Convention. WithAnnex 1701.3, in the short run, Mexico will have to join the UPOV12 Ibid.13 Ibid.at annex 1701.3.92Convention in order to receive other intellectual propertybenefits from NAFTA, such as an increase in foreign technologyand investment.Although for Canada and the U.S. this obligation might bedifficult to implement; for Mexico the task is not ascomplicated. The Mexican Constitution establishes, in Article133, that every treaty which is in accord with the Constitutionand celebrated by the President with the Senate's approval willautomatically be the "Supreme Law of the Nation. 104 Thus, assoon as the President gets a treaty ratified by a majority of theSenate, it is automatically implemented and becomes part ofMexican law.The strong desire Mexico has for the agreement's success isreflected not only by its acceptance, in the near future, of newinternational legislation (NAFTA), but is also shown in itsprompt reform of domestic legislation in accordance to NAFTA. Inexercise of the right embedded in Article 1702, which states that"a party may implement in its domestic law more extensiveprotection of intellectual property rights than required underthis Agreement, provided that such protection is not inconsistentwith this Agreement"15, Mexico has already implemented the "Leyde Fomento y Proteccion de la Propiedad Industrial" (Law for thePromotion and Protection of Industrial Property)m. This Lawtakes into account each and every issue discussed in NAFTA. Themain goal of this legislation is to offer legal security to14 Constitucion Politica de los Estados Unidos Mexicanos 95a. ed. (Porrua, 1992) at "art.133" (hereinafterConstitucion Politica).15 NAFTA, supra note 11 at "art.1702".16 F. Serrano, La propiedad industrial en Mexico: Nueva Ley para su fomento y proteccion (Mexico, D.F.:Editorial Porrua, 1992).93inventors and foreign investors which would like to contributewith their capital and knowledge in Mexico.Even though Mexico understands that NAFTA will bring highbenefits for its industry in the branch of intellectual property,Mexican electronics businessmen have some reservations regardingits application. During NAFTA's negotiations, such businessmenproposed that the Agreement should follow three main principles:gradualism, reciprocity, and selectivity. Gradualism aims at agradual opening of the mexican market, not all sectors being opento trade at the same time. Reciprocity is understood asfurnishing similar participation in the trade flow, recognizingeach nation's state of development. Finally, selectivity wasproposed so it could be decided which specific sectors wereparticipating in NAFTA in order to establish the strongest tradezone as possible."From all of the above, it is apparent that there arenumerous different interests involved in this deal. In thefollowing paragraphs, I will talk about some of the mainasymmetries regarding Copyright, Trademark and Patents, and howthis problem is dealt with under NAFTA and Mexico's new domesticlegislation.B. Copyrighta) Definition17 J. Guevara & J. Palacios, "Retos y Oportunidades de la Industria Electronics", El Financiero (Mexico, 28April 1993) 32A.94Copyright can summarily be defined as "the exclusive rightof multiplying copies of an original work or composition, andconsequently preventing others from so doing. Even thoughthis is an accurate definition, when trying to find out whichissues does copyright protect, it is necessary to look into thestatutory definition.H.G. Fox, summarizes section 3 of Canada's Copyright Act,and describes it as:The sole right to do, and to restrain others from doing,certain acts with relation to original literary, dramatic,musical and artistic works. Its essential characteristic isthe sole right to produce or reproduce any such work or anysubstantial part thereof in any material form whatsoever.19The latter definition is broader and more useful whentalking about copyright protection at an international level,because it includes the specific works protected by such right.b) AsymmetriesThe fact that a general definition of copyright was givenbefore, does not mean that under an international agreement suchas NAFTA, the parties will totally agree on a unified concept ofthis legal figure. On the contrary, if the domestic legislationof each of the Parties is examined, several differences can befound.In the following paragraphs I will address some of the maindifferences as well as similarities of Copyright legislation inCanada and the United States on the one hand, and Mexico'slegislation on the other.18 Walter v. Lane, (1900) A.C. 539 at 545,550.19 H.S. Fox, The Canadian Law of Copyright and Industrial Design,  Second Edition (1967) at 1-2.95aa) Main DifferencesIn order to find out what are the main asymmetries onCopyright law among these nations, it is necessary to look intothe legal nature of such institution in each country.In the case of Canada and the U.S., their common lawtradition guides them to understand Copyright as a pragmaticinstitution which its main objective being to provide an authorwith a right which could prevent others from copying his work.It originated with the creation of the printing press in England,where it was used as an instrument for censorship by thegovernment and later was "transferred to the printers themselveswith the formation of the Stationers' Company to prosecuteprinters who published seditious matter or who infringed others'licensed works."m As years went by, government's censorshipdeclined; thus, the Stationers asked the Parliament for aid.The Parliament then created the "Statute of Anne" in 1709, whichis considered the first English Copyright Act, having a greatinfluence over Anglo-Saxon nations. American colonies adoptedthe English Copyright system. In the opinion of some jurists,this system follows the theory of Copyright as a statutory right;according to which, "the producer of a work of the mind has nonatural property in it and has and enjoys only such rights inrespect thereof as the public through the legislature chooses toconfer. 1,21 All of the above shows that this system is in manyways wedded to the technology of the printing press and, as it20 Goldstein, supra note 8 at 528.21 Fox, supra note 19 at 2.96will be stated later on, it understands Copyright more as apractical tool for technological improvement rather than taking amoral or natural right approach, as the civil tradition does.The case of Mexico is different. Even though Mexico's legalsystem is based on the civil law tradition which gives primaryimportance to statutes; the nature of the main right protected byCopyright legislation, resembles the natural right's theory,where "intellectual creations are property like other species ofproperty, but belong to their originators by right of the highestpossible title."22 This resemblance is shown by including theprotection of authorship rights under the individual's guaranteedrights established by the Mexican Constitution.In other words, Mexico's Copyright legislation or "LeyFederal de Derechos de Autor"(LFDA)23 is considered areglamentary law of Article 28 of Mexico's highest statute: theConstitution. Such Article, in its paragraph seven, establishesan exception to the general prohibition of monopolies in Mexicoby stating the following:Art. 28 (paragraph 7).- Neither will the privileges grantedfor a limited time to authors and artists on the productionof their works constitute monopolies...24Article 28 is one of twenty-nine articles which protect theindividual's guarantees in Mexico. Even though the statute grantsauthors and artists limited rights, to include "derechos deautor" (author's rights) under the individual's guaranteed22 Ibid.23 Ley Federal de Derechos de Autor, Mex. L.S.D.A. (Porrua, 1990) 7-53 (hereinafter LFDA).24 Constitucion Politica, supra note 14 at 34.97provisions implies a tacit recognition of the moral nature suchinstitution has in Mexico.Even when comparing the name given to this institution inMexico with the one given to it in Anglo-Saxon countries, it iseasy to point out the differences. The former calls it 'author'srights', taking an eminently moral or natural rights approach;while the latter simply calls it a 'Copy right', which is easierto justify as a statutory right.This idea will be clarified in the following paragraphs,when I will discuss the main rights assigned to Copyright bydomestic legislations.Mexico's LFDA, on its Article 2, recognizes and protects inevery author's work, three main rights:1. The recognition of his/her authorship.2. The right to oppose any unauthorized deformity,mutilation, or modification of his work. At the same time,an author may oppose any action which could demerit or causeany harm on his/her honor, prestige or reputation.3. The temporarily and profitable use or exploitation of awork by himself/herself or by an assignee. 25It is obvious that Mexico gives great importance to therelationship between the author and his/her work. At the sametime, it is observed that all of these primordial rights have ahigh moral content.25 LFDA, supra note 23 at 8.98In relation to the main rights protected by Copyrightlegislation in the United States, the U.S. Code, Title 17,section 106 (Code), establishes the following exclusive rights:Subject to sections 107 through 120, the owner of copyrightunder this title has the exclusive right to do and toauthorize any of the following:1) to reproduce the copyrighted work in copies orphonorecords;2) to prepare derivative works based upon the copyrightedwork;3) to distribute copies and phonorecords of the copyrightedwork to the public by sale or other transfer of ownership,or by rental, lease, or lending;4) in the case of literary, musical, dramatic, andchoreographic works, pantomimes, and motion pictures andother audiovisual works, to perform the copyrighted workpublicly; and5) in the case of literary, musical, dramatic, andchoreographic works, pantomimes, and pictorial, graphic, orsculptural works, including the individual images of amotion picture or other audiovisual work, to display thecopyrighted work publicly. 26American legislation addresses Copyright's main rights froma pragmatic perspective. It establishes in detail possibleactions protectable under Copyright. It definitely focuses onthe author's works rather than protecting the author itself, asthe Mexican legislation does.27The above statement does not mean that the U.S. Code ignoresthe author's 'moral' rights. It refers to them in Section 106A.However, they are given a secondary position with relation to theexclusive rights which Section 106 embraces. In other words,these types of rights are classified as "Rights of attribution26 Copyrights, 17 U.S.C. us.106" (1991) (hereinafter Copyrights Code).27 This does not mean that Mexico's legislation completely ignores the rights established by U.S. Copyrighton Section 106. The "Ley Federal de Derechos de Autor" includes such rights under Article 4, however, theyare complementary to the rights established on Article 2.99and integrity"m and its scope is reduced to the protection ofan author's work of visual art.Canada's Copyright Act (Act) 29 also includes a comparativelysmall section (in comparison with Mexico's legislation),regarding moral rights. Under that title, Section 14.1,subsection 1, of the Act states the following:The author of a work has,... the right to the integrity ofthe work and, in connection with an act mentioned insubsection 3(1), the right, where reasonable in thecircumstances, to be associated with the work as its authorby name or under a pseudonym and the right to remainanonymous. 30This example shows that Canada's legislation main interestalso relies on protecting the work rather than the author. TheAct establishes, under its Section 3, the main purpose ofCopyright in Canada; which is, "the sole right to produce orreproduce the work or any substantial part thereof in anymaterial form whatever, to perform, or in the case of a lectureto deliver, the work or any substantial part thereof in publicor, if the work is unpublished, to publish the work or anysubstantial part thereof •"31For all of the above, it is clear that one of the maindifferences between Mexico's legislation on the one hand, and itsNAFTA's counterparts on the other, is the importance given to themoral aspect of the author's work in the case of the former;28 Copyrights Code, supra note 26 at "s.106A".29 The Copyright Act and Regulations, An Office Consolidation (Butterworths Canada Ltd, 1989) (hereinafterCopyright Act).30 Ibid. at "s.14.1(1)".31 Ibid. at "s.3".100rather than focusing on the work itself, as in the case of thelatter.In relation to Copyright's subject matter, the three nationsbasically agree on which issues should be protected.Nevertheless, there are some important differences.The U.S. legislation addresses this issue in Section 102,subsection "a", which states the following:a) Copyright protection subsists, in accordance with thistitle, in original works of autorship fixed in any tangiblemedium of expression, now known or later developed, fromwhich they can be perceived, reproduced, or otherwisecommunicated, either directly or with the aid of a machineor device. Works of authorship include the followingcategories:1) literary works;2) musical works, including any accompanyingwords;3) dramatic works, including any accompanyingmusic;4) pantomimes and choreographic works;5) pictorial, graphic, and sculptural works;6) motion pictures and other audiovisual works;7) sound recordings; and8) architectural works.32This long list's primordial goal is to include a wide variety ofworks.Canadian legislation does not divide the protected works inso many categories. It rather includes all of these works infour broader subjects: literary, dramatic, musical and artistic32 Copyrights Code, supra note 26 at "s.102(a)".101works. 33 However, in general, there are few differences with theAmerican legislation regarding subject matter.Mexico's legislation treats subject matter in a similar wayas the U.S. Code does. Article 7 of the LFDA enumerates basicallythe same works than the American Code does. However, somedifferences are evident. Mexico precisely protects scientific,technical, legal, pedadogical, and didactic works 34 ; the U.S.Code, on the other hand, does not include any of these categoriesunder its Section 102. At the same time, the LFDA does notinclude under Article 7 any protection for dramatic works andsound recordings.The fact that some types of works are not explicitely statedunder Article 7, does not mean that the LFDA excludes itsprotection completely. Under this Article, subsection "j" opensthe possibility of implicitely including other works. Subsection"j" states as protected works, the following:j) Every other, which by analogy could be included under anyof the generic types of the artistic and intellectual works,mentioned before. 35Thus, if a wide interpretation is applied, either dramatic worksor sound recordings could be included under any of the remainingsubsections of Article 7.In relation to the latter, Article 77 reenforces the factthat, even if they are not included in Article 7, soundrecordings are protected under the LFDA by explicitely mentioningan exception to the protection discs or phonograms have under the33 Copyright Act, supra note 29 at ns.5(1)".34 LFDA, supra note 23 at "art.7".35 Ibid. at "art.7(j)".102law. It establishes that "the authorization to record in discsor phonograms does not include the faculty to use them in orderto obtain profit."36 In other words, the unauthorized profitableuse of any of these works is prohibited. Even though, it doesnot make specific reference to sound recordings, both discs andphonograms are considered sound recordings.Still, Mexico's legislation lacks any connotation regardingparticular rights which might be protected under soundrecordings, as other legislation specifies. For example, U.S.law establishes under Section 114(a) that "the exclusive rightsof the owner of a copyright in a sound recording are limited tothe rights specified by clauses (1), (2), and (3) of section106,..."37, which basically include the rights to reproduce;prepare derivative works; and distribute copies or phonerecordsof the works to the public by sale, rental or lease.38 Mexico,on the other hand, reduces the protection in sound recordings tothe prohibition of using a protected work in order to obtain anyprofit.An important omission exists in the Mexican legislationregarding computer programs. There is no article in the LFDAwhich explicitely refers to such works. The possible explanationfor this gap is that this law was published in 1963, long beforecomputers gained importance and became part of our daily lives.However, a broad and flexible interpretation of Article 7(j),36 Ibid. at "art.77".37 Copyrights Code, supra note 26 at "s.114(a)".38 Ibid. at "s.106".103could allow for the inclusion of computer programs as protectedworks.On the other hand, the U.S. and Canada's legislationconsider computer programs to be literary works, and protect themas such. 39 These statutes explicitely mention these type ofworks. For example, the U.S. Code defines, under Section 101, acomputer program as "a set of statements or instructions to beused directly in a computer in order to bring about a certainresult." 40 This Code even includes Section 117, whichestablishes certain limitations on computer program author'sexclusive rights. 41Canada began protecting computer programs in 1988, eightyears after the U.S. did. Both statutes deal with this issue ina similar way by authorizing the single reproduction for acomputer's program. However, when dealing with the justificationsof taking such action, the Canadian legislation seems to be moreflexible by allowing more elements of proof than the U.S. Codedoes. Canada's Copyright Act, Section 27(1)(1), when referringto acts which do not constitute copyright's infringement,establishes the following:(1) the making by a person who owns a copy of a computerprogram, which copy is authorized by the owner of thecopyright, of a single reproduction of the copy by adapting,modifying or converting the computer program or translatingit into another computer language if the person proves that:i) the reproduction is essential for the compatibilityof the computer program with a particular computer.39 For example, Canada's Copyright Act, Section 2, defines literary work as that which "includes tables,compilations, translations, and computer programs".40 Copyrights Code, supra note 26 at "s.101".41 Ibid. at "s.117".ii) the reproduction is solelyuse, andiii) the reproduction is destrperson ceases to be the ownercomputer program;... 42This subsection has an important element which is notincluded in the U.S. legislation: the authorization ofreproducing a computer's program for the copiers' own use. Inother words, even though Section 117 of the U.S. Code doesinclude similar conditions as the ones stated under subsections(i) and (iii) of the Copyright Act, it does not contemplate thepossibility of copying a computer program for one's own use.°This statutory difference, added to the fact that there was aneight-year gap in which these works lacked protection in Canada,might have encouraged copyright infringers in the U.S. to migrateinto Canada in order to seek protection under the former'slegislation.An important similarity in this area is that bothlegislations include the possibility of copying a computerprogram for long term storage purposes. The U.S. defines it asbeing for 'archival purposes' while Canada prefers to justify itas 'backup purposes'."Every Copyright legislation needs to allow certainlimitations or exceptions to the author's absolute right, inorder to achieve a just and flexible statute which can actuallywork. However, these limitations may vary in number and scope,depending on each country's policies and needs.42 Copyright Act, supra note 29 at us.27(1)(1)".43 Copyrights Code, supra note 26 at ms.117".44 As established by Section 117(2) of the U.S. Code and Section 27(2)(m) of Canada's Copyright Act.104for the person's ownoyed forwith when theof the copy of the105Such is the case among Canada's, the U.S.', and Mexico'slegislations. Section 27 of Canada's Copyright Act, forexample, includes the highest number of limitations bycontemplating fourteen different exceptional hypotheses. TheU.S. Code on the other hand, includes fewer exceptions; however,it describes each hypotheses with more detail by dedicating acomplete Section for each. 45 Finally, Mexico's LFDA onlycontemplates, under Article 18, five broad limitations."Under these limitations to Copyright, some similarities canbe found among these nations' domestic laws. Generally acceptedprinciples such as fair dealing or use, the publication ofcollections for didactical or scientific purposes, and the makingor publishing of a work of sculpture or artistic craftmanship inpublic places, are good examples of the above- 47bb) SimilaritiesI have stated some of the main differences separatingNAFTA's Parties with relation to Copyright law. From what hasbeen stated before, it may look like the different positionstaken by each country's legislations, mainly a common law againsta civil law approach, would not allow for having any reconcilableor common issues. Nevertheless, there are some importantsimilarities which I will briefly address in the followingparagraphs.45 These are Sections 107, 108, 109, 110, 111, 112, 117, and 119 of the United States Code.46 LFDA, supra note 23 at "art.18".47 See Article 18(c)(d)(e) of Mexico's LFDA; Section 27(a)(c)(d) of Canada's Act; and Sections 107, 108, and113 of the U.S. Code.106In the first place, registration in order to get Copyrightprotection is not required by any of the North Americancountries. Mexico's LFDA, Article 8, establishes that anycopyrightable work will be protected "even if it has not beenregistered, made publicly known, or is unpublished, andindependently from the end at which it is destined."48Registration of Copyright is justified in Canada, basically, forevidential purposes; as every official register of copyrights"shall be admissible in evidence in all courts without furtherproof of production of the originals-"49 Meanwhile, the U.S.Code, in its Section 408, is consistent with the two othercountries legislations by stating that although "at any timeduring the subsistence of copyright in any published orunpublished work, the owner of a copyright or of any exclusiveright in the work may obtain registration... Such registration isnot a condition of copyright protection."" It is my opinionthat even if registration is not required in any of thesenations, it is advisable for an author to register his/her work.The fact that with NAFTA, North America might become a morecompetitive area, indicates that author's should be able to have,at least, an element of proof of their creation.Another common principle amongst Canada, the U.S., andMexico is the term for which copyright is protected. The threelegislations assert, as a general rule, that an author's workwill be protected for his/her whole life plus a fifty year48 LFDA, supra note 23 at "art.8".49 Copyright Act, supra note 29 at us.52(1)".50 Copyrights Code, supra note 26 at us.408".107term." The existence of a transnational homogeneous principle,such as this, makes it easier for nations to have aninterdependent relationship. Consensus is important as it leadsto legal certainty.A third and, in my opinion, most important similarity amongNorth American nations derives from the international principleof reciprocity. By signing an international agreement, nationsare able to receive several benefits from other Parties' domesticlegislation. An example, which is also related to a copyright'sduration, is given by Mexico's LFDA, Article 28. 52 This Articlestates that when the author of a work is a national of a foreigncountry which does not have a treaty or convention with Mexico,the author's right will be protected for seven years, but only ifthere is reciprocity with Mexico. This example shows theimportance treaties have in making possible the unification ofasymmetrical principles among nations.c) LinkagesIn the former subsection, I stated some obvious differencesas well as similarities, regarding copyright, amongst thedomestic legislation of Canada, Mexico, and the United States. Abroad conclusion of such comparison could be summarized with theassertion that the differences surpass similarities. At thispoint is where international documents gain importance as51 See Mexico's LFDA, Article 23; U.S.' Code, Section 302; and Canada's Copyright Act, Section 6.52 LFDA, supra note 23 at "art.28".108instruments of guidance or legal links for the homogeneization oflaws.In the following paragraphs, I will briefly give a quickreference on the importance international conventions have forthe purpose of unifying legal criteria in a certain region.Afterwards, I will get into the main focus of this thesis: NAFTAitself; and deal with some of the main improvements, if any,which this international agreement has brought for Copyright law.aa) International ConventionsReciprocity among nations is one of internationalconventions' main principles. It is clearly stated underMexico's LFDA, Article 30, that copyright protection will begranted to all copyrightable works of a nation which has a treatyor convention, in force, with Mexico." The Berne Conventionre-enforces this statement by obliging each signing Party toextend domestic copyright protection to the nationals of otherConvention's members.54 The above is an example of a generalbenefit obtained from these international instruments. However,in the following paragraphs, I will point out a different type ofbenefit which can be achieved by specific nations.It is evident that civil law tradition's influence overMexican Copyright legislation places a legal and practical53 Ibid. at "art.30".54 Decreto por el que se Promulqa el Texto de la Convencion de Berna para la Proteccion de las Obras Literarias y Artisticas, 20 de Diciembre de 1968, Mex. L.S.D.A. (1992), "art.4(1)" (hereinafter BerneConvention).109distance between Mexico and the rest of North America55 , whichfollow the common law tradition.While jurisprudence plays a primordial role within the U.S.and most of Canada's legal systems, Mexico might only cite it forthe purpose of re-enforcing written law principles, which havesupremacy over the former. This difference is relevant when acountry needs to fill out gaps left by domestic legislation. Inthe case of common law nations, jurisprudence can do so withoutreforming a statute, as long as it does not contradict it. Underthe civil law tradition is different, as domestic reform isneeded when judicial interpretation is not able to fill out alegal gap. However, in the latter case, a treaty orinternational convention might be able to do that job without thenecessity of having an immediate domestic legal reform. In otherwords, as stated before 56, a treaty which is ratified by theSenate of Mexico, for example, automatically becomes law.Therefore, an international convention, besides serving as amultinational instrument which unifies different criteria, isalso a practical tool when it comes to filling gaps in domesticlegislation.The fact that some of Mexico's statutes have not beenreformed in a considerable amount of time, even thoughcircumstances and practices have changed, is a good example ofhow treaties might be a practical alternative to legal reform.For example, with its 1974 accession to the 'Geneva Conventionfor the Protection of Producers of Phonograms AgainstUnauthorized Duplication of their Phonograms', Mexico is now able55 Another exception in North America is the province of Quebec, Canada, which also follows the civil lawtradition.56 See page 92.110to contemplate issues which were not included under its 1963LFDA, such as protecting phonogram producers from theimportation into Mexico of their works for public distributionpurposes . 57bb) NAFTAThe North American Free Trade Agreement reflects anoutstanding legal effort, aiming at the homogeneization ofcopyright laws in North America.This treaty focuses on some of the main issues which areleft out of some country's domestic legislation and by otherinternational documents, such as the Berne Convention.In the following paragraphs, I will, briefly, analize themost relevant improvements brought by NAFTA in order to unifyNorth American Copyright legislations.1. NAFTA clarifies which type of works are protectedunder the North American region.Article 1705(1), entitled Copyright, states that "each Partyshall protect the works covered by Article 2 of the BerneConvention, including any other works that embody originalexpression, within the meaning of that Convention."58 The BerneConvention explicitely protects all literary, scientific, andartistic productions; such as books, conferences, dramatic works,musical compositions, coreographic works, cinematographic works,57 Decreto por el que se Promulga el Convenio para la Proteccion de los Productores de Fonogramas Contra laReproduccion No Autorizada de sus Fonoqramas, 29 de Octubre de 1971, Mex. L.S.D.A. (1992) "art.2".58 NAFTA, supra note 11 at "art.1705(1)".111and sculptures, among others.59 It must be noted, that thisConvention includes 'dramatic' as protected works, while Mexico'sLFDA does not do so, under the protected works enlisted inArticle 7. Therefore, by acceeding to NAFTA, Mexico's law nowautomatically includes such, as protected works.It should also be observed that even though the BerneConvention talks about protecting literary works, it neverspecified if computer programs are included under that category.There is no doubt that such work are included in Canadian andAmerican legislation. However, as stated earlier, Mexicanlegislation does not talk about considering computer programs asliterary works. NAFTA provides a solution to this problem byclarifying, in Article 1705(1)(a)(b), that the works covered byArticle 2 of the Berne Convention will be protected but, inparticular, it states that "all types of computer programs areliterary works within the meaning of the Berne Convention andeach Party shall protect them as such;.. "60. This subsection isimportant because it is directed at modernizing and broadeningMexico's concept of literary works without the necessity ofamending domestic legislation. It, will also help combat piracyof computer's programs across North America.2. NAFTA provides authors with specific rights whichthey can exercise throughout North America.In other words, NAFTA's Article 1705(2), establishes thefollowing obligation on the Parties:59 Berne Convention, supra note 54 at "art.2(1)".60 NAFTA, supra note 11 at art."1705(1)(a)(b)".112Each Party shall provide to authors and their successors ininterests those rights enumerated in the Berne Convention inrespect of works covered by paragraph 1, including the rightto authorize or prohibit:a) the importation into the Party's territory of copiesof the work made without the right holder's authorization;b) the first public distribution of the original andeach copy of the work by sale, rental or otherwise;c) the communication of a work to the public; andd) the commercial rental of the original or a copy of acomputer program. 61This given faculty, which allows an author to authorize orprohibit any of the enumerated acts in relation to his/her work,is aimed at giving transnational legal security to the nationalsof each signing country.I find subsection "b" especially relevant because itspecifies the different ways in which public distribution of awork is achieved: sale, rental or otherwise. This specificationis important because Mexico, for example, does not protect acopyrighted work from being rented. I understand that the word"otherwise" means to include, as American and Canadianlegislation does, the lending or leasing of a protected work.Another gap in Mexico's domestic legislation is filled byincluding, under subsection "d", the commercial rental of acomputer program.3. NAFTA gives explicit protection to sound recordings.61 Ibid. at "art.1705(2)".113Article 1706 provides the producer of a sound recording withthe right to authorize or prohibit any of the acts which werestated under subsections (a) and (b) of Article 1705, plusauthorizing or prohibiting "the direct or indirect reproductionof a sound recording" and "the commercial rental of the originalor a copy of the sound recording, The same commentariesgiven for Article 1705 are applicable in this case.National Treatment or, in other words, the multilateralconsensus giving "nationals of another Party treatment no lessfavorable to that it accords to its own nationals"63 isapplicable regarding the protection and enforcement of allintellectual property rights. In the case of sound recordingsthis principle is not absolute. Although producers are entitledto such treatment, performers have limited rights in respect ofsecondary uses of sound recordings, where the reciprocityprinciple applies.This provision may also have a cultural perspective.Secondary uses of sound recordings are defined by NAFTA as "theuse directly for broadcasting or for any other publiccommunication of a sound recording."64 This limitation might bedirected at protecting national performers in their domesticmarket. By applying the reciprocity principle, each country willbe able to allow foreign performances only in the amount which isgranted to its nationals by the other nation. This could help, atthe same time, as a regulatory device for preventing a possibleforeign cultural invasion.62 Ibid. at "art.1706".63 Ibid. at "art.1703(1)".64 Ibid. at "art.1721(2)".114Cultural invasion is not a new concern among NAFTA Parties.When Canada and the United States negotiated the bilateral FreeTrade Agreement (FTA), cultural industries became a common topicfor discussion. For a considerable number of Canadians, the FTAwas jeopardizing Canada's culture and values by putting intoeffect America's major cultural machine. Among other things,Canadian nationalists sustained that:In a trade context, and in a free trade agreement context,the U.S. doesn't care a whit about Canadian culture orCanadian values. To Americans, provisions which allowfreedom of capital flows of investment, regardless of sectoror company, is an all-embracing safeguard to allow U.S.interests to invest where they may, independent of acountry's cultural heritage, tradition, or vulnerability. 65This worry was diminished by the FTA with the exemption ofcultural industries (with specific exceptions) from itsprovisions . 66Even though NAFTA also includes such excemption 67, Mexicoshould be ready to face U.S. cultural conglomerates which haveglobal strategies to penetrate Mexico and other areas in LatinAmerica. Fortunately, NAFTA includes other legal remedies toprevent a cultural invasion from other Member States such as theone which limits perfomers' rights in the case of soundrecordings.4. NAFTA unifies the term of protection for works inwhich such is calculated on a basis other than the life65 C.J. McMillan, "Riding on Emotion: Cultural Industries and a NAFTA Accord", in Implications of a NorthAmerican Free Trade Region (Ottawa: Carleton University Press, 1992) 195 at 204.66 See Canada-United States Free-Trade Agreement, 9 December 1987, U.S. Department of Commerce 1987,"art.2005".67 NAFTA, supra note 11 at "art.2106".115of a person.Article 1705(4) establishes the following:Each Party shall provide that, where the term of protectionof a work, other than a photographic work or work appliedart, is to be calculated on a basis other than the life of anatural person, the term shall be no less than 50 years fromthe end of the calendar year of the first authorizedpublication of the work or, failing such authorizedpublication within 50 years from the making of the work, 50years from the end of the calendar year of making.68An example of the above would be the term of copyright in recordsand perforated rolls which is calculated by referring to themaking of the original plate from which the contrivance wasindirectly or directly derived.Even though there is general agreement, among the threenations, regarding the term in copyright, a problem could befound in Mexico's LFDA in relation to the legal concept of the"certificados de reserva" (reserve certificates). Suchcertificates are given, for example, when it comes to protectingfictional characters in Mexico. Instead of acquiring acopyright, the author receives a reserve certificate which lastsfive extendable years.69 In my opinion, these certificates maycreate confusion regarding the uncertainty of whether such worksare protected for fifty or, rather, five years.5. NAFTA protects new and important copyright subjectmatter: the Encrypted Program-Carrying SatelliteSignals.68 Ibid. at "art.1705(4)".69 LFDA, supra note 23 at "art.25".116It is clearly understood that satellite signals carry allsorts of information, including copyrighted works. These type ofsignals can travel enormous distances without being subjected toany restriction or regulation outside national borders.Transnational piracy of satellite signals is a common practicederived from the above.Another problem coming from technological developments, suchas the improvement in communication systems, is that countriesare subjected without control to the invasion of negativeinfluences from other countries' cultures. In relation to thisdanger, Charles J. McMillan states the following thoughts:Television - the machine that the Canadian scientistMarshall McLuhan predicted, accurately, would create theglobal village - introduces the same expectations, values,and wants in Monterrey, Mexico, as in Minnesota, U.S.A. , orMontreal, Canada, regardless of income, race, language, orgeography. mThis idea reflects a main concern Mexico and Canada have, inrelation to a possible U.S. cultural invasion which would come asa consequence of NAFTA's implementation. It is believed that theU.S.' supremacy in the communications field might also dominatemost copyright areas. A typical commentary made by some criticsis the following:The U.S.A. has the biggest cultural machine in the world -Hollywood and Los Angeles and NBC and ABC and CBS and nowCNN. This cultural machine is about to expand to Time-Warner-type conglomerates which will dominate books,magazines, local broadcasting, radio, cassettes, movies, andeven the news itself... The product is the American way oflife. 7170 McMillan, supra note 65 at 197.71 Ibid. at 201.117Although this is a valid statement, it must be acknowledgedthat even if it seems impossible to regulate the transnationalflow of culture, an international agreement such as NAFTA couldbring important solutions.As stated before, satellite signals are one of today'sprimary national as well as transnational communication's means.By using this media, countries are able to communicate differentworks which might reflect a particular culture. A double-sidedproblem derives from this issue. In the first place, anunauthorized reception of such signals might lead to piracyregarding copyrighted works. Secondly, an uncontrolabletransmission of such signals might affect the receiving Party'scultural interests.NAFTA tries to correct these problems by forcing NorthAmerican nations to regulate and protect Encrypted Program-Carrying Satellite Signals. NAFTA defines an Encrypted Program-Carrying Satellite Signals as a "program-carrying satellitesignal that is transmitted in a form whereby the aural or visualcharacteristics, or both, are modified or altered for the purposeof preventing the unauthorized reception, by persons without theauthorized equipment that is designed to eliminate the effects ofsuch modification or alteration, of a program carried in thatsignal."72 Once it has clearly defined the subject matter,NAFTA's Article 1707 obliges each country to implement, within ayear, the following double offense for infringers:72 NAFTA, supra note 11 at nart.1721(2)".118a) a criminal offense to manufacture, import, sell, lease orotherwise make available a device or system that isprimarily of assistance in decoding an encrypted program-carrying satellite signal without the authorization of thelawful distributor of such signal; andb) a civil offense to receive, in connection with commercialactivities, or further distribute, an encrypted program-carrying satellite signal that has been decoded without theauthorization of the lawful distributor of the signal or toengage in any activity prohibited under subparagraph (a).ThThis provision combats piracy in the strongest possible wayby imposing criminal sanctions under each country's domesticlegislation, which obviously include the possibility ofimprisoning the active infringer. The passive infringer orreceiver of the unauthorized signal will also be punished with acivil sanction.The fact that the transmission as well as the reception ofencrypted program-carrying satellite signals is now regulated,helps nations preserve their cultural identities by working as acontrol instrument against a foreign, unvoluntary, 'culturalinvasion'. Only enterprises willing to pay for an authorizedreception of a foreign satellite signal, will receive it.However, it must be stated that NAFTA does not sanction, in anyway, the reception of an unauthorized encrypted program-carryingsatellite signal for private viewing, as it only punishes suchreception for distribution or commercial purposes.d) ConclusionIt is evident that many asymmetries separate North Americancountries' copyright domestic legislation.^International73 Ibid. at "art.1707".119Agreements such as the Geneva and Berne Conventions are importantlinking instruments for the homogeneization of laws.NAFTA's importance resides in the fact that it fillsimportant legal gaps left by domestic legislation and otherinternational conventions. This gap-filling function is clearlymanifested in issues regarding new subject matter. For instance,NAFTA explicitely includes 'computer programs' as protectablesubject matter, while under the Berne Convention, aninterpretation was needed to include and therefore protect suchworks as literary materia1.74 First time protection of'encrypted program-carrying satellite signals' constitutesanother tangible example of how NAFTA provides protection for newand highly technological subject matter. Regarding this areaNAFTA even establishes criminal sanctions for this provision'sinfringement.mC. Trademarka) DefinitionA Trademark is, in a broad sense, defined as "a distinctivesymbol that identifies a particular products of a trader to thegeneral public."m Even though this definition might be usefuldomestically; at an international level, where general wordings74 See page 111.75 See page 117-118.76 Oxford Reference, A Concise Dictionary of Law, Second Edition (New York: Oxford University Press, 1990)at 418 (hereinafter Oxford Reference).120could be interpreted in several ways, a more specific definitionis needed.NAFTA gives, for its own purposes, a specific definition ofTrademark. Article 1708(1), states that:A trademark consists of any sign, or any combination ofsigns, capable of distinguishing the goods or services ofone person from those of another, including personal namesdesigns, letters, numerals, colors, figurative elements, orthe shape of goods or of their packaging. Trademarks shallinclude service marks and collective marks, and may includecertification marks."This definition is useful to avoid any ambiguity among thecontracting nations.A trademark has two basic functions. On the one hand, ithelps consumers identify quality from non-quality goods. On theother hand, it allows producers to be able to protect anddistinguish their goods and services from cheap imitations. PaulGoldstein summarizes trademark's justification, in the twofollowing points:The primary reasons for the existence and protection oftrademarks are that (1) they facilitate and enhance consumerdecisions and (2) they create incentives for firms toproduce products of desirable qualities even when these arenot observable before purchase. Both of these effects are aconsequence of the fact that trademarks permit consumers todistinguish between goods which look identical in allfeatures that are observable before purchase. 78Even though this reasoning is basically applied at adomestic level, it may also be valid when dealing withinternational trade relations. Today's world economy ischaracterized by the commercialization of the same products in77 NAFTA, supra note 11 at "art.1708(1)".78 Goldstein, supra note 20 at 16.121different geographically situated markets. The fact that atrademark relies on the existence of goods or services which, atthe same time, are subjected to the flow of market forces and notto the will of private individuals or corporations, makes theeffective enforcement of trademark laws difficult to accomplish.Thus, a proper international control of such goods and/orservices is rarely obtained.Regional agreements, such as NAFTA, focus on solving thesetype of problems by establishing a common legal framework. In thefollowing paragraphs, I will briefly compare some of thedifferences existing among the Parties legislation in this areaand how they are dealt by NAFTA and Mexico's new domesticlegislation.b) AsymmetriesTrademark's regulation does not differ much among NorthAmerican nations. When comparing NAFTA Parties' domesticlegislations regarding this particular area, substantialsimilarities can be noticed. For example, every nation agrees onincluding goods as well as services under trademark protection.Prohibited trademarks' provisions are also similar among thethree nations except for the fact that each nation protectsdifferent official symbols. Also, the fact that registration ineach nation's legislation gives the owner of a trademark theexclusive right to use a mark, is useful when it comes to thehomogeneity of rules in a certain region, as it clarifies who theregistered owners in each country are.122As stated above, similar trademark provisions link NAFTAParties' domestic legislations. However, some importantdifferences should be stated.One of the most conflicting issues is related to atrademark's use. Formal and substantive requisites to prove suchuse vary from legislation to legislation. Canada's TrademarksAct, for example, establishes under section 4(1) that:A trade-mark is deemed to be used in association with waresif, at the time of the transfer of the property in orpossession of the wares, in the normal course of trade, itis marked on the wares themselves or on the packages inwhich they are distributed or it is in any other manner soassociated with the wares that notice of the association isthen given to the person to whom the property or possessionis transferred. 79This provision demonstrates that Canadian legislation requires amere exteriorization to prove a trademark is being used.Mexico's 1976 legislation (LIM), on the other hand, understands atrademark is being effectively used when the ware or service itis protecting is being produced and commercialized in an amountand conditions which could be claimed as corresponding to aneffective commercial exploitation in the national territory. 80Obviously, Mexican requirements seem harder to prove.In order to obtain a trademark's renewal, all three nationsrequire the owner to prove he is currently using such mark.However, the degree of proof varies among NAFTA's Parties'domestic regulations. The United States, for example,establishes that:79 Trademarks Act, T-13 us.4" (1985) (hereinafter Trademarks Act).80 Ley de Invenciones y Marcas, Mex. L.P.I.T.T.I.E. (Porrua, 1987) "art.118" (hereinafter LIM).123Each registration may be renewed for periods of ten yearsfrom the end of the expiring period upon payment of theprescribed fee and the filing of a verified applicationtherefor, setting forth those goods or services recited inthe registration on or in connection with which mark isstill in use in commerce and having attached thereto aspecimen or facsimile showing current use of the mark, orshowing that any nonuse and it is not due to specialcircumstances which excuse such nonuse and it is not due toany intention to abandon the mark...81Although the American legislation explicitely requires the proofof use on a mark, its requirements of proof are not very strictas it only asks for "a specimen or facsimile showing current useof the mark". Mexico's former legislation, on the other hand,strictly stated that the renewal of a mark's registration onlyproceeded if the interested person "verifies in an authenticmanner the effective and continuous use. eg 82 This proceduraldifference made renewal of a mark's registration in Mexico moredifficult than in the U.S.Finally, another important difference dividing NAFTA'sParties in relation to Trademarks is the different term underwhich each nation's marks are protected. Canada's legislationallows a fifteen year term before the registration of a trademarkmay be renewed.83 The U.S. differs from the Canadianlegislation's term by allowing a ten year period before acertificate of registration is renewed. 84 Finally, Mexicocontemplated the shortest period of protection by assigning marksa five year renewable term.85 Even though neither of the terms81 Trademarks, 15 U.S.C. "s.1059(a)" (1991) (hereinafter Trademarks Code).82 LIM, supra note 80 at "art.140".83 Trademarks Act, supra note 79 at "s.46".84 Trademarks Code, supra note 81 at "s.1058".85 LIM, supra note 80 at "art.112".124coincide, every nation's legislation contemplates the possibilityof renewing registration. The only problem is that in Canada andthe U.S., renewal will be easier and less frequent than inMexico. This fact implied a loss of time and money whenregistering a trademark in Mexico.c) Linkagesaa) NAFTAThe North American Free Trade Agreement has become the mostimportant instrument to achieve the homogeneity of trademarkrules in North America. NAFTA's Article 1708, which regulatestrademarks, has two main objectives: The elimination ofcultural and legal barriers among North American countries; andthe simplification of legal requirements in order to facilitatetrademark regulation in North America.I will briefly address some of the issues which NAFTAcontemplates in order to eliminate the existing cultural andlegal barriers among Canada, Mexico, and the U.S.The main legal barrier that NAFTA's Parties could face whendealing with a problem which is related to trademark lawhomogeneization, resides in the fact that transnationalrecognition of domestic trademark rights might not exist.However, this is not the case for North American nations, as eachis, also Party to the "Paris Convention for the Protection ofIndustrial Property" which, under Article 2(1), imposes an125obligation to give national treatment to every other signingcountry's nationals, regarding intellectual property rights.86NAFTA goes further, by stating that:Each Party shall provide to the owner of a registeredtrademark the right to prevent all persons not having theowner's consent from using in commerce identical or similarsigns for goods or services that are identical of similar tothose goods or services in respect of which the owner'strademark is registered, where such use would result in alikelihood of confusion.87By including this provision, NAFTA is being more specific thanthe Paris Convention, which solves this gap by providing aNational Treatment clause. NAFTA focuses on providing everyParty's nationals with the right to prevent use in commerce ofidentical or similar signs, to those protected in their own or inanother signing Party's territory. This Article is usefulbecause it does not give domestic legislators the opportunity todetermine what should be protected under intellectual property,as the Paris Convention does.Another important NAFTA provision deals with thetransnational recognition of well-known trademarks. Article1708(6), states that:Article 6bis of the Paris Convention shall apply, with suchmodifications as may be necessary, to services. Indetermining whether a trademark is well-known, account shallbe taken of the knowledge of the trademark in the relevantsector of the public, including knowledge in the Party'sterritory obtained as a result of the promotion of thetrademark. No Party may require that the reputation of the86 Convenio de Paris para la Proteccion de la Propiedad Industrial,  14 de Julio de 1967, Mex. L.P.I.T.T.I.E.(1990), "art.2" (hereinafter Paris Convention).87 NAFTA, supra note 11 at "art.1708(2)".126trademark extend beyond the sector of the public thatnormally deals with the relevant goods or services . mAgain, NAFTA is being more specific than the Paris Convention.In the first place, it extends trademark protection to well-knownservices. Secondly, it does not leave the local registrar todetermine what must be understood as a well-known good (as theParis Convention does )89 but establishes a criterion fordetermining such circumstance; primarily, that "account shall betaken of the knowledge of the trademark in the relevant sector ofthe public...". Thus, a more realistic and tangible criteria isfollowed by taking into account the public's concern, rather thanleaving such decision to the discretion of local authorities.An important inconsistency is overcome by NAFTA requiringeach Party to have a minimal ten year initial registrationterm." This provision is directed to avoid any less protection,as Mexico's LIM did, by providing the right-holder with a fiveyear term.In relation to trademark use, NAFTA gives each of itsmembers the choice to make capacity to register depend on the useof the mark. 91 However, it does oblige the Parties to requiresuch use in order to maintain registration. The Agreementprovides the Parties with important international tradeexceptions for justifying a trademark's non-use. In the Accord'sown words, each nation has to recognize as valid reasons for non-88 Ibid. at "art.1708(6)".89 Paris Convention, supra note 86 at "art.6 bis".90 NAFTA, supra note 11 at "art.1708(7)".91 See Ibid. at "art.1708(3)".127use, "circumstances arising independently of the will of thetrademark owner that constitute an obstacle to the use of thetrademark, such as import restrictions on, or other governmentsrequirements for, goods or services identified by thetrademark."92 Thus, the addition of these internationaljustifications will aid trademark owners in dealing moreeffectively with international trade flows, which may now have adirect influence on their rights.Finally, the cultural barrier of language is broken withNAFTA, by stating that:Each Party shall prohibit the registration as a trademark ofwords, at least in English, French or Spanish, thatgenerically designate goods or services or types of goods orservices to which the trademark applies.°This means that, from now on, the scope of trademarks isbroadening to include marks in three different languages.As stated before, NAFTA also has as a primary objective thesimplification of legal and administrative procedures, in orderto facilitate the regionalization of different issues in NorthAmerica. In relation to trademarks, the Agreement provides itsmembers with the obligation of installing in their domesticregimes a system for the registration of such marks, whichbasically should aim at improving the legal and administrativerelations among them. Such system's procedures must include thefollowing guarantees:92 Ibid. at "art.1708(8)".93 Ibid. at nart.1708(13)".128(a) examination of applications;(b) notice to be given to an applicant of the reasonsfor the refusal to register a trademark;(c) a reasonable opportunity for the applicant torespond to the notice;(d) publication of each trademark either before orpromptly after it is registered; and(e) a reasonable opportunity for interested persons topetition to cancel the registration of atrademark."This provision aims at the protection of trademarkapplicants by establishing certain procedural obligations foreach country's local authorities. It certainly achieves one ofits main goals, which is that of providing trademark applicantswith legal security in home as well as abroad. For example, thesystem provides each country's nationals with the right to knowif a trademark has already been taken or if it is stillavailable, by compeling each nation, under subsection (d), tomake a "publication of each trademark either before or promptlyafter it is registered". Nevertheless, in my opinion, this systemis still lacking of procedural agility. The fact that many vagueterms, such as "promptly" and "reasonable", are used, does notestablish any real obligation for domestic authorities to follow;as they can interpret such terms as broadly as they wish. Forexample, Mexico's former trademark law established a two monthterm for an applicant to respond a notice. Could this beconsidered a "reasonable" opportunity for a trademark applicant?Only domestic authorities will know. The caution displayed by94 Ibid. at "art.1708(4)".95 LIM, supra note 80 at "art.104".129NAFTA's Parties as to the establishment of specific legalprovisions which could clash with domestic concerns isunderstandable, as any of these clauses could be interpreted asan external imposition on a sovereign state's domesticlegislation.bb) Mexico's New Industrial Property LegislationThe modern trend towards economic regionalization in NorthAmerica, has not only encouraged a developing country, such asMexico, to embark into international trade agreements, but it hasalso awakened a need for domestic legal reform, which couldprepare it to face its new economic challenges.One of the many necessary modifications in Mexico's domesticlegislation comes in the area of industrial property, where newlegal instruments are necessary to help support the Mexicaneconomy's participation in international markets.Responding to such needs, on June 28, 1991, the new "Ley deFomento y Proteccion de la Propiedad Industrial" (LFPPI) (Law forthe Development and Protection of Industrial Property) 96 becamein force, abrogating the former 1976, "Ley de Invenciones yMarcas"97 and the 1982, "Ley sobre el Control y Registro de laTransferencia de Tecnologia y el Uso y Explotacion de Patentes yMarcas" (Law for the Control and Registration of the Transfer of96 Ley de Fomento y Proteccion de la Propiedad Industrial,  Mex. LFPPI (Porrua, 1991) (hereinafter LFPPI).97 See LIM, supra note 80.130Technology and the Use and Exploitation of Patents andTrademarks), which used to regulate this matter.The LFPPI broadly aims at becoming a constant support forMexico's improvement in its productive, innovative, andtechnological sectors; satisfying consumer's quality demands; andgiving Mexico more advantage in the international economy. 99 Inthe area of trademarks, the new law brings several benefits whichcould be summarized in the following four improvements.1. The term of protection for trademarks, commercialadvertisements, and commercial names is broadened from fiveto ten years. Such term can also be consecutively renewedby the owner.Besides giving the applicant a procedural benefit, thisprovision assures some legal security for the right-holder. Inother words, by having to renew his/her registration every teninstead of five years, the applicant will be able to save timeand money. At the same time, by eliminating the requirement ofsuch a frequent renewal, the right-holder is at less risk oflosing such a term and, therefore, losing his/her right, as aconsequence of such carelessness.Article 95 of the LFPPI, establishes that the ten year termwill begin at the time the application is presented." ° This isan important difference between LFPPI and Mexico's formerlegislation, under which the term ran from when the mark was98 Ley Sobre el Control y Registro de la Transferencia de Tecnologia y el Uso y Explotacion de Patentes yMarcas, L.P.I.T.T.I.E. (Porrua, 1982).99 Serrano, supra note 16 at 69-73.100 LFPPI, supra note 96 at "art.95".131registered. Thus, the authority will only require about essentialinformation before a trademark can be valid. This measure willsave him/her time and facilitate administrative procedures.Even though there are reasons, as the ones stated above, forincreasing a trademark's term of protection; it is possible thatthe strongest cause for Mexico's legal domestic reform might havedeveloped from NAFTA. LFPPI's Article 95 is in accord with theminimal ten-year protection term NAFTA provides for each nation.This short-term implementation is tangible evidence of Mexico'sefforts towards the homogeneization of its laws with the rest ofNorth America, in order to facilitate its adjustment in a newregionalized economy.2. When it comes to the renewal of trademark registration,there is no longer a need for the registered owner toefficiently provide proof of use. Rather, a simple underoath statement is sufficient for such renewal to takeplace.loiThe main purpose of this provision is to simplifyadministrative procedures. A concern may arise in relation tothe fact that this Article may encourage non-users to renew theirtrademark by putting in jeopardy other legitimate users' rights.However, the law provides that if a third person opposes suchrenewal, proof of use will then be required.As I stated before, the importance of provisions such as theabove, resides in the fact that they are tangible examples of theadministrative simplification that is happening under some of101 Ibid. at Hart.134H.132Mexico's most important regulations. This procedural shifttowards simplification, tends to encourage outsiders which wereformerly reluctant to invest and register their products andsigns in Mexico.3. Variations in the use of a trademark are now allowed withthe only condition that its distinctive characteristics arenot essentially altered. 102This provision helps trademark holders in preserving theirmodified marks while, at the same time encouraging them toimprove such marks without losing their rights.The flexibility expressed by this provision represents astrong effort towards legal modernization on behalf of Mexico,bringing it into line with the laws of its industrializednorthern neighbors.4. Protection is broadened to include the possibility ofregistrating tridimentional forms."3This improvement on trademark's subject matter is congruentwith Mexico's new policy of adjusting with contemporary marketingpractices. In accord with this new ideology, the LFPPI alsoprotects combinations of letters, numbers, and colors, withdistinctive characteristics.104 These sort of provisions assurelegal security in Mexico for foreign trademark holders which102 Ibid. at "art.128".103 Ibid. at "art.89(II)".104 Ibid. at "art.90(V)".133already enjoy the protection of such forms under their nativecountries' legislation.5. Foreign trademark owners will have a longer term todemand the nullity of an illegaly acquired trademark inMexico .105In many occasions, individuals used to submit an applicationin order to acquire a trademark in Mexico which was alreadygranted by another country. This action brought a double-sidedproblem. On the one hand, it harmed the commercial interests ofthe original foreign right-holders, as cheap imitations competedwith his/her mark or even displaced it from the Mexican market.On the other hand, the Mexican consumer was also damaged ashe/she was induced into error, when relating an original markwith a false product or service.Mexico's LFPPI has solved thisterm a foreign trademark owner has toToday, the right holder has a yearinstead ofprovided.problem by increasing theexercise a nullity action.to exercise his/her rightthe six month period, which the former legislationIt is important to point out that internationalreciprocity is a condition for this provision to apply.The new Mexican law also enables the authority to reject theregistration of any well-known mark of any country with whichMexico has reciprocity. Thus, the reciprocity brought by NAFTAwill enable Canadian and American trademark holders to enjoyadditional rights, such as the one stated above.105 Ibid. at "art.151(III)".D. Patent a) DefinitionA Patent is, generally, defined as "the grant of anexclusive right to exploit an invention. 006 A patent must beunderstood as an absolute monopoly given by the state to aninventor so he/she could use or sell a new and useful product orprocess to others. The legal nature of a patent is, accurately,explained in the following words:The grant of a patent monopoly is in the nature of a bargainbetween the inventor on the one hand and the Crownrepresenting the public on the other hand, consisting of thegrant of a monopoly to the inventor in return for thedisclosure to the public of a full and accurate descriptionof a new and useful invention and its method of constructionor use. 107Thus, the grant of a patent brings simultaneous benefits for thestate or society on the one hand, and inventors or individuals onthe other.A patent's societal worth, partly consists on providing anincentive on research, development, and innovation. It alsostimulates the investment of additional capital, needed forfurther development and marketing of an invention which the Statemight not be able to provide, while motivating individuals inregistering their inventions in order to seek a further economicremuneration."8106 Oxford Reference, supra note 76 at 295.107 Fox, supra note 19 at 4-5.108 Goldstein, supra note 20 at 10.134135Nevertheless, for this study's purposes, I shall focus onthe international benefit which nations could receive from patentregulation, such as the fact that it "promotes the beneficialexchange of products, services, and technological informationacross national boundaries by providing protection for industrialprotection of foreign nationals." 109 North Americans are nowaware of such benefits, and are, thus, putting an emphasis on theregulation of this intellectual property's branch.In the following, I will analyze how NAFTA Parties' domesticlegislation differed before this agreement was envisioned, andhow it has subsequently influenced Mexico in the renewal of itspatent law.b) Statutory AsymmetriesSome important differences arise when comparing the patentlaws of Mexico, Canada, and the U.S. It is accurate to statethat, in general, rules among these countries do not differ asmuch regarding patents as they do in copyright. However, it isalso noticeable that some of these differences are similar to thetrademark differences analyzed above.The following, are some of the most relevant differencesamongst North America's domestic legislation.The scope of the subjects protected under patent law,clearly differ amongst the three countries. This fact might beattributed to existing differences as to levels of technological109 Ibid. at 11.136development. The U.S., being the most developed nation in NorthAmerica, considers patentable subject matter an invention ordiscovery of "any new and useful process, machine, manufacture,or composition of matter, or any new and useful and usefulimprovement thereof... um Thus, the U.S. accepts as possiblesubject matter anything that could be included under these broadcategories. In addition to these categorization, the U.S. Codeincludes a complete chapter, in which it contemplates thepossibility of patenting the invention or discovery of plants.Section 161, establishes that:Whoever invents or discovers and asexually reproduces anydistinct and new variety of plant, including cultivatedspores, mutants, hybrids, and newly found seedlings, otherthan a tuber propagated plant or a plant found in anuncultivated state, may obtain a patent therefor, subject tothe conditions and requirements of this title.111This provision shows how the high level of technology existing inthe U.S., has forced its legislation to regulate and consider ashuman inventions specific forms of plant life.The Canadian Patent Act includes a broad categorization ofpatentable subject matter, which is almost identical to the onecontemplated by the U.S. Code.112 Nevertheless, the Canadianstatute does not include any section which specifically regulatesthe patentability of plant life.Mexico's former legislation on the other hand, did notinclude any definition of what could be considered as aninvention. Instead, Mexico's LIM tried to define an invention,by exclusion. It enumerates in detail, sixteen categories which110 Patents, 35 U.S.C. "s.101" (Bureau of National Affairs, 1991) (hereinafter Patents Code).111 Ibid. at "s.161".112 See Patents of Invention Act, p-4 "s.2" (1985) (hereinafter Patents Act).137cannot be considered inventions. 113 Among these, the mostrelevant issues excluded from patentability are biotechnologicalprocesses for obtaining pharmochemicals and medicines; chemical-pharmaceutical products; products with biological activity;genetic processes used to obtain plant and animal species; andplant and animal species or the biological processes used toobtain them. 114 The law also stated that some of these issueswould gain patentability by 1997.These legal differences made the United States the safestplace to invest in certain inventions.The term of protection is another important issue whichdiffered amongst the three nations. Again, Mexico's LIM givesthe least protection by assigning the patent owner a non-renewable fourteen year term. 115 Canada's Patent Act gives theowner more protection by assigning him/her a twenty year term. 116The U.S. Code gives a shorter protection term of seventeen years,however, this term could be extended under severalcircumstances." 7The existing differences regarding patent protection terms,translated into a difficult hurdle when it came to economicregionalization. Where there is no homogeneity of norms, nolegal certainty is obtained nor can equal investmentopportunities can be achieved as nations and individuals willfocus their inventions on the country which assures him/her morelegal security.113 See LIM, supra note 80 at "arts. 9-10".114 See Ibid. at Hart.10(I)(VIII)(XI)".115 Ibid. at "art.40".116 Patents Act, supra note 112 at "s.44".117 Patents Code, supra note 110 at "ss.154-156".138Patent publication creates legal security by allowing thepublic to know which rights are already assigned or in theprocess of being assigned to its respective inventors. It alsoestablishes the basis for calculating term limits. Even thoughthis topic is considered by all three of the formerly mentionedlegislations, some differences existed among them.Mexico's LIM obliged the authority to make a monthlypublication of every patent which had been assigned. 118 However,it did not establish any obligation for the authority regardingthe time such patent must have been made public.The U.S.' Patent Code does not establish an obligation but,rather, a prerrogative of the Commissioner to print and makepatent publications.119 The authority also, "may supply printedcopies of specifications and drawings of patents to publiclibraries in the United States which shall maintain such copiesfor the use of the public... on ; however, there is no specificprovision stating the time at which this prerrogative might beexercised.Canada's Patent Act obliges the Commissioner to publish, atleast once a year, a list of every patent issued in that year. 121Additionaly, however, it does state the Commissioner's obligationto keep open for public inspection "all applications for patentsand documents filed in connection with applications for patentsand all patents and documents filed in connection withH122patents.^Even though some exceptions apply123, Canada's patent118 LIM, supra note 80 at "arts.201-202".119 Patents Code, supra note 110 at "s.11".120 Ibid. at "s.13".121 Patents Act, supra note 112 at "s.26.1(1)".122 Ibid. at "s.10(1)".139legislation makes public any patent from the moment anapplication is submitted.It is evident that, among the three statutes, the CanadianAct allows more availability to the public than the Mexican orthe American legislation, regarding patent's information. Thisfact might make patent procedures more simple in Canada, asapplicants know beforehand whether they can apply for a patent orif it has already been granted. Finally, it is also interestingto observe that while Mexican and Canadian legislation makespublication mandatory for the authority, the U.S. leaves this tothe authority's prerrogative.Mexico's LIM contemplated another type of industrialproperty right, commonly known as "certificados de invencion"(invention certificates) 124. These legal instruments weresimilar to patents, however they did not have the same status.Under this law's provisions, a patent applicant had the option tochoose between getting his/her invention patented or obtaining aninvention certificate instead. 125 An invention certificate hadthe advantage that it could protect non-patentable subject mattersuch as procedures used for obtaining food and beverages forhuman consumption; and biotechnological procedures used to obtainpharmochemicals, medicines in general, food and beverages foranimal consumption, fertilizers, and other products withbiological activity. 126 Invention certificates also protected theholder for a fourteen year term. Although they were practical,123 See Ibid. at "s.10(2)(3)".124 LIM, supra note 80 at "arts.65-80".125 Ibid. at "art.80".126 Ibid. at "art.65".140these certificates had several disadvantages in comparison withpatents, as the former could be exploited by anyone who enteredinto an agreement with the right holder.127 In other words, itdid not confer an absolute monopoly on the certificate's holder.I could not find any similar instrument to the inventioncertificates under the American legislation. However, Canada'sPatent Act includes the possibility of giving licences underpatent, particularly "in the case of any patent for an inventionintended or capable of being used for the preparation or028 _production of food... or "in the case of any patent for aninvention intended or capable of being used for medicine or forthe preparation or production of medicine... 029 This possibilityof giving individuals limited licenses in certain areas issimilar to the creation of the invention certificate underMexico's previous legislation.Finally, there is an important difference among NorthAmerican Patent legislation, which derives from varied tendenciesinfluencing each nation's political regimes. I am referring tothe issue of patent expropriation.On the one hand, Mexico's LIM considered the possibility ofpatent expropriation by the Executive Power."° This Act isjustified under Mexican law when public utility causes exist.131I should add that even if the LIM did not mention compensation,such was provided for in the Mexican Law of Expropriation.127 Ibid. at "art.68".128 Patents Act, supra note 112 at "s.39(3)".129 Ibid. at "s.39(4)".130 LIM, supra note 80 at "art.63".131 A "public utility cause" is a rather vague term which can basically include any possible cause under itsbroad meaning. Therefore, it usually came to a Presidential's subjective decision if a patent should beexpropiated or not.141Canada's Patent Act does not deal directly withexpropriation. However, the possibility for the government ofusing a patent is prescribed under s.19(1), which states that:The Government of Canada may, at any time, use any patentedinvention, paying to the patentee such sum as theCommissioner reports to be a reasonable compensation for theuse thereof. 132Even though this provision might be confused as an act ofexpropriation, it must not be taken as such. In this case, thegovernment is only using an invention, while in the case ofexpropriation, the government acquires title to the patent.The U.S.^Patent Code also does not contemplateexpropriation.For all of the above, it is possible to observe how domesticlegislation may reflect some of the political ideologiesprevailing in any country, at a certain time. By includingexpropriation, Mexico's LIM reflected the nationalist viewpredominating in Mexico during this law's enactment. It showed astrong interventionist tendency from the Mexican State, whichcompromised an individual's right to own a patent. On the otherhand, the Canadian and American legislations by not includingsuch figure reflect individualist principles.c) Linkagesaa) NAFTA132 Patents Act, supra note 112 at "s.19(1)".142One of NAFTA's main purposes is to correct some of thepreviously stated asymmetries, among its Parties, regardingpatent legislation. Even though this agreement aims at assuringlegal security for its Parties, it must do so without undulyinterfering in each country's domestic affairs.In the following paragraphs, I will outline some of the mainissues NAFTA deals with regarding Patents.1. NAFTA obliges each Party to "make patents available forany inventions, whether products or processes, in all fieldsof technology, provided that such inventions are new, resultfrom an inventive step and are capable of industrialapplication."133This provision makes recognition of patentability mandatory,for every signing country, in "all fields of technology". Someexceptions to this rule are allowed. In other words, plants andanimals other than microrganisms; diagnostic, therapeutic andsurgical methods for the treatment of humans or animals; andessentially biological processes for the production of plants oranimals; might be excluded from patentability. 134 The main reasonfor allowing such exceptions might be that the patentability ofsuch topics is still controversial in some nations. Thus, byexcluding such issues, NAFTA is not interfering with some of itsParties domestic regulations.133 NAFTA, supra note 11 at Hart.1709(1)H.134 See Ibid. at "art.1709(3)".143It is evident that such requirements were promoted by theU.S., as its domestic legislation was demonstrably the mostadvanced regarding this subject matter. 135 Even though Mexico'sLIM did not protect all fields of technology, the newlegislation, already in force (LFPPI), does include theprotection of such matters. However, Mexico still has a long wayto go in incorporating these fields of technology into itslegislation. NAFTA realizes this fact and, therefore, in itsAnnex 1701.3, exclusively imposes on Mexico the obligation tocomply, either, with the substantive provisions of the 1978 orthe 1991 International Convention for the Protection of NewVarieties of Plants (UPOV Convention), no later than two yearsafter the signing of the Agreement. 1362. NAFTA allows any Party to "exclude from patentabilityinventions if preventing in its territory the commercialexploitation of the inventions is necessary to protect ordrepublic or morality,..." 37This provision responds to the international concern,surrounding every multinational agreement, respecting theprinciple of state sovereignty. In this particular case, eachParty is allowed to have a discretionary margin in order todecide exceptional cases over the absolute rule 138 , established bythe international agreement, on patentable subject matter.135 See page 136.136 NAFTA, supra note 11 at Annex 1701.3.137 Ibid. at "art.1709(2)".138 The treaty includes as some of the possible exceptions the protection of "human, animal or plant life orhealth" or avoiding "serious prejudice to nature or the environment". However, the exception is not limitedto these.144This provision could lead to a controversy, in which Mexico,for example, might be able to "justify", unjustifiableexpropriatory acts, reasoning that such action was motivated toprotect the morality or ordre public of its country, as thelatter term would be interpreted by some government officials asa public utility cause.139 The only limitation included inArticle 1709 is to exclude from patentability an invention "basedsolely on the ground that the Party prohibits commercialexploitation in its territory of the subject matter of thepatent. Therefore, there is always a risk that if Mexicoexcedes the use of this exceptional clause, the U.S. might takeretaliatory action by establishing unilateral trade sanctions.Another provision which touches on sovereignty issues isArticle 1709(10). This Article limits an inventor's monopoly byauthorizing each Party's domestic legislation to "allow for useof the subject matter of a patent,... without the authorizationof the right holder, including use by the government or other041persons authorized by the government... This governmentallimitation to an individual's absolute right must be adequatelyjustified.142 Among other things, it is stated that "any such useshall be authorized predominantly for the supply of the Party'sdomestic market;" and "the right holder shall be paid adequateremuneration in the circumstances of each case, taking intoaccount the economic value of the authorization. 11143 These two139 See page 140.140 NAFTA, supra note 11 at "art.1709(2)".141 Ibid. at "art.1709(10)".142 Under art.1709(10), twelve different requirements must be followed by each Party in order to authorizeanyone the use of another's patent.143 NAFTA, supra note 11 at "art.1709(10)(f) and (h)".145justifications might just look like a couple of requirementswhich the government can use in order to justify anexpropriation. However, this provision is not aboutexpropriation as it only authorizes the use of a patent and notthe transfer of property in such rights. 144 On the contrary, itbasically sets a mechanism to control each country's authorities,in order to avoid an irrational use of such authorizations.Therefore, this mechanism could be interpreted as aninternational instrument limiting each signing country'ssovereignty.3. NAFTA makes mandatory for each Party to "provide a termof protection for patents of at least 20 years from the dateof filing or 17 years from the date of grant." 145This provision combines two different patent-protectionterms, contemplated by the American^and Canadian domesticlegislation. It aims at assuring a patent's owner to aprotection term of at least 17 years; which, by the way, is thesame term granted by the American legislation. However, it alsoallows for the possibility of considering a 20 year protectionterm, which would run from the filing of the application; as theCanadian domestic legislation asserts. 146 This Article's mainobjective is to provide equal or rather similar protection allover North America. As I stated before, by the homogeneizationof norms and the incorporation of longer patent protection terms,144 This provision also differs from expropriation in the fact that it benefits individuals as well asgovernment. Expropriation, on the other hand, only benefits the government.145 NAFTA, supra note 11 at "art.1709(12)".146 See page 137.146inventors will be eager and legally secure to invest theirknowldege in any country in North America, including Mexico.bb) Mexico's New Industrial Property LawThe economic regionalization process taking place in NorthAmerica today, which includes as one of its major objectivesMexico's insertion into the world market, did not happenovernight. Prior to NAFTA, Mexico had already been setting solidbases in order to achieve the economic development needed to facethese new international tasks. The modernization process whichhas been taking place in Mexico for the last six years, aims atstreghthening its internal market with the deregulation of mosteconomic activities.147 Such activities include two elements:productive processess and technological knowledge; which, at thesame time, strongly rely on inventions. This is the reason whyMexico's new Industrial Property Legislation (LFPPI), whichregulates patents and trademarks, is so important, as it reformsMexican intellectual property law in accordance with new economicrealities.The new LFPPI makes patentable every invention which canfulfill three basic characteristics: novelty, originality, andapplicability. 148 Although this might be considered as a newapproach to patent regulation in Mexico, it basicallydemonstrates a strong effort towards the deregulation of economicactivity as patentability relies today on broader and more147 See Serrano, supra note 16 at 35-36.148 LFPPI, supra note 96 at "art.15".147practical requirements, such as the fact that the invention mustbe new, must develop from an inventive activity, and must besusceptible for industrial use.From these three main characteristics come an importantnumber of substantive and procedural changes in Mexico's patentlegislation, which represent a vehicle for this nation'sinternationalization process. In the following paragraphs, Iwill address some of the most important of these.The following are some of the most important substantivereforms achieved by the new LFPPI, regarding patents;1. New patents are granted for inventions in technologicalareas such as plant varieties; micro-organisms; andbiotechnological processes for obtaining pharmochemicals,general medicine, beverages and food destined for animal andhuman consumption, fertilizers, plaguecides, herbecides,funguicides or products with a biological activity. 149This provision's main objective is to provide equalstimulation in every technological sector in Mexico, while at thesame time, promote investment in the industrial development ofnew processes and products.Mexico could not afford to wait until 1997, to authorize thepatentability of certain inventions such as biotechnological andgenetic processes, as LIM ordered. Rather, by broadening thescope of patentability to include certain forms of living matter,Mexico is modernizing its patent law in accordance with other149 Ibid. at "art.20".148advanced countries which had already contemplated this type oflife form as patentable subject matter.2. For the first time in Mexico, additional protection isprovided for distinctive improvements on pre-existingobjects, tools and utensils, with the incorporation of alegal figure called "Modelos de Utilidad" (UtilityModels) .150With this provision, Mexico is recognizing the rights ofeveryday inventors and innovators who may accomplish small butdistinctive improvements on tools, utensils and/or other objects.At the same time, with this legal figure's incorporationinto its new legislation, Mexico is now in accordance with theParis Convention which already provided for the protection ofordinary inventions.The procedure for obtaining a utility model is easier thanthe one granting a patent. The problem is that the former, onlylasts for ten years. However, the existence of this simplifiednew model may bring a lot of benefits to Mexico as inventors fromthe U.S. and Canada will be eager (at least initially) to usesuch legal instrument as more inventions are likely to be of thistype.3. Revalidation of certain types of foreign inventions infavor of the original inventor is now possible, if suchinvention is new and has not been exploited in Mexico.151150 Ibid. at "arts.27-30".151 Ibid. at "arts.40-41".149Besides the fact that this provision provides legal securityto foreign inventors; it also aims at closing the technologicalgap formerly generated by the exclusion of certain types ofsubject matter which were already contemplated by other foreignlegislation, such as that analyzed in point number one.4. "Certificados de Invencion" (Invention Certificates) areno longer granted.Today instead, patents are being granted to protect most ofthe technological areas formerly protected by thesecertificates. 152 In my view, this is a positive provision as suchcertificates used to reduce any incentive to invest ontechnological areas which were protected under a shorter termthan the one provided for patents. At the same time, thesecertificates did not have any parallel in most foreignlegislations; thus, by eliminating them, Mexico is taking a stepforward towards the homogeneization of its rules with, at least,the rest of North America.Some of the most relevant procedural improvements achievedby the LFPPI, are the following.1. The term of protection is redefined from 14 to 20 years ,starting from the time the application was presented. 153152 See page 139.153 LFPPI, supra note 96 at "art.23".150This provision is similar to the one established by Canada'sPatent Act 154 , and fits the minimum term required by NAFTA.Although the general rule provides for an unrenewable twentyyear protection term, in the specific case of pharmochemical orpharmoceutical products and the processes to obtain them, suchterm might be extended for three more years.This is a positive amendment because, in my view, afourteen-year protection term was too short. Besides, a similarprotection term allows Mexico to compete with the other NorthAmerican nations in no less favorable terms as, by means of thisnew rule, inventors will be motivated and confident enough toafford long term investment in Mexico.2. A prompt publication of the patent application is nowmandatory. 155The LFPPI establishes that a patent application must bepublished eighteen months after the application was presented, oreven before that date, if the applicant should request it.Besides assuring legal certainty among patent applicants, byestablishing a system which can provide them with information onwhich patents are taken and which are still available, thisprovision will help in determining the novelty of an inventionand, thus, its patentability all over North America.154 See page 137.155 LFPPI, supra note 96 at "art.52".151It is evident that pre-existing patent legislation in Mexicostrongly differed from other North American domestic legislation.Thus, Mexico has embarked in a strong legal effort which includesa more active participation in international conventions andradical domestic legal reform.Economic factors have been a main incentive for suchreforms as, among other things, Mexico's productive sectors arelooking for a more flexible legislation that could allow for abetter diffusion of technological knowledge from abroad.Additionaly, in preparation for NAFTA, Mexico has had tomodernize its domestic rules regarding patents in order to dealas an equal partner along with its other two trading partners.Thus, the LFPPI aims at allowing into Mexico more innovationand technology in order to raise the efficiency levels of itsproductive sectors; protecting consumer's interests; and,generally, modernizing this country's legislation in accordancewith contemporary developments occuring at an international levelregarding patents.E. OtherIn the following paragraphs, I will address two otherimportant issues, contemplated by NAFTA, which constitute asignificant step in the homogeneization of intellectual propertylaws in North America.a) Enforcement of Intellectual Property Rights: GeneralProvisions152When it comes to international treaty enforcement, thepossibility of encountering problems is high as state sovereigntyusually obstructs coercive international action. Even though thelevel of success on enforcement procedures will definitelydepend on the type of domestic action taken by each contractingnation, NAFTA provides its members with mandatory generalguidelines.Thus, NAFTA's Article 1714(1) provides the following:Each Party shall ensure that enforcement procedures, asspecified in this Article and Articles 1715 through 1718 areavailable under its domestic law so as to permit effectiveaction to be taken against any act of infringement ofintellectual property rights covered by this Chapter,including expeditious remedies to prevent infringements andremedies to deter further infringements. Such enforcementprocedures shall be applied so as to avoid the creation ofbarriers to legitimate trade and to provide for safeguardsagainst abuse of the procedures.156The specific enforcement procedures which NAFTA refers t ,under Articles 1715 through 1718, consist of "procedural andremedial aspects of civil and administrative procedures"157;certain "provisional measures u158 ., "criminal procedures andpenalties"159; and a unique procedure to enforce intellectualproperty rights at border regions160.The procedural and remedial aspects referred to, underart.1715, basically include the guarantee of civil judicialprocedures, such as the defendant's right to written notice; andthe establishment of means to protect confidential information.156 NAFTA, supra note 11 at "art.1714(1)".157 Ibid. at "art.1715".158 Ibid. at "art.1716".159 Ibid. at "art.1717".160 Ibid. at "art.1718".153At the same time, judicial authorities must also be provided byeach Party with certain faculties, such as "to order theinfringer of an intellectual property right to pay the rightholder damages adequate to compensate for the injury the rightholder has suffered because of the infringement... uuoProvisions such as these, carry out a double objective: theyprovide every individual in North America with legal securityregarding his/her intellectual property rights and they give eachsigning country's domestic authority equal coercive power.Provisional measures are also contemplated under NAFTA, as anecessary tool used by local judicial authorities "to prevent aninfringement of any intellectual property right, and inparticular to prevent the entry into the channels of commerce intheir jurisdiction of allegedly infringing goods, includingmeasures to prevent the entry of imported goods at leastimmediately after customs clearance; 11 162 and "to preserve relevantevidence in regard to the alleged infringement. " 163 Suchmeasures, which must be exercised by the local authority, providea domestic right holder with prompt and effective protection fromany sort of infringement. However, at the defendant's request,the Party's judicial authorities "shall revoke or otherwise ceaseto apply the provisional measures... if proceedings leading to adecision on the merits are not initiated" 164, within a reasonableperiod of time which cannot exceed twenty working days.161 Ibid. at "art.1715(2)(d)".162 Ibid. at "art.1716(1)(a)".163 Ibid. at "art.1716(1)(b)".164 Ibid. at "art.1716(6)".154More severe enforcement measures may be used by the domesticauthority, as criminal procedures and penalties are allowed "incases of willful trademark counterfeiting or copyright piracy ona commercial scale.1065 Infringing goods may be also seized,forfeited and destroyed in specific cases.A specific procedure is also established by NAFTA in orderto assure the enforcement of intellectual property rights at theborder regions of Canada and the U.S. on the one hand, and theU.S. and Mexico on the other. Regarding this issue, NAFTAprovides that:Each Party shall.., adopt procedures to enable a rightholder, who has valid grounds for suspecting that theimportation to counterfeit trademark goods or piratedcopyright goods may take place, to lodge an application inwriting with its competent authorities, whetheradministrative or judicial, for the suspension by thecustoms administration of the release of such goods intofree circulation.m6The fact that this provision is destined to protect trademarksand copyright (basically sound recordings) at border regions;demonstrates how such issues tend to reach transnational bordersfaster than patents do, as the former strongly depend on theinternational flow of market forces, while the latter'sinfringement is easier to control within national boundaries.Each Party is obliged to ensure that its enforcementprocedures are fair and equitable, not unecessarily complicatedor costly, and do not entail unreasonable time-limits or165 Ibid. at "art.1717(1)".166 Ibid. at "art.1718(1)".155unwarranted delays. 167 These minimal procedural guarantees aredestined to ensure an homogeneous enforcement of intellectualproperty rights. Its main purpose is to avoid the possibility ofcorruption in domestic judicial and administrative practices, andensure a quick and fair application of law.Even though NAFTA establishes general guidelines in order toensure the enforcement of intellectual property rules all overNorth America, there is no obligation to change any of theParties' domestic judicial systems in order to achieve this goal.Therefore, NAFTA clearly states, under Article 1714, that:Nothing in this Article or Articles 1715 through 1718 shallbe construed to require a Party to establish a judicialsystem for the enforcement of intellectual property rightsdistinct from that Party's system for the enforcement oflaws in general. 168By enclosing this provision, NAFTA respects nationalsovereignty, by having no direct intervention in each of itsmembers internal legal systems, while at the same time, providinggeneral rules, which are needed for the treaty's success.b) Cooperation and Technical AssistanceIn any multinational agreement, international cooperation isa decisive factor in order to determine such agreement's success.NAFTA recognizes this fact and specifies which type ofcooperation must be promoted by its members. Thus, Article1719(1), states that:167 Ibid. at "art.1714(2)".168 Ibid. at "art.1714(5)".156The Parties shall provide each other on mutually agreedterms with technical assistance and shall promotecooperation between their competent authorities. Suchcooperation shall include the training of personnel.wiThis provision benefits countries with reduced technologicalknowledge by promoting international cooperation regardingtechnical assistance. Mexico, for instance, has highly benefitedfrom an inflow of Canadian technology regarding cellularcommunicationsm and electronical engineeringm.Besides technical assistance, NAFTA also aims at promotinginter-governmental cooperation. In this regard, it states thefollowing:The Parties shall cooperate with a view to eliminating tradein goods that infringe intellectual property rights. Forthis purpose, each Party shall establish and notify theother Parties by January 1, 1994 of contact points in itsfederal government and shall exchange information concerningtrade in infringing goods.172An elimination of trade in goods infringing intellectual propertyrights cannot be achieved without the cooperation of each signingnation's authorities. The fact that it contains a deadline, makesthis Article a tangible provision likely to give rise to shortterm results.169 Ibid. at Hart.1719(1)".170 Northern Telecom, Ltd., a high skilled Canadian company, is well into a 300 million dollar contract toprovide Mexico with cellular communication equipment. In addition to this company, BCE Ventures Corp. ofToronto has built several cellular networks in Mexico. Sales of thousands of cellular phones have surprisedthe latter industry.171 Capilano Electronics, a Vancouver based company, has dealt with Mexico's government in order to sendexperts in electronics to train Mexican personnel.172 NAFTA, supra note 11 at Hart.1719(2)".157F. ConclusionThe strong differences in intellectual property legislationwhich existed among NAFTA Parties before 1991, translated into adifficult hurdle for regional economic integration. Until today,Canada and the United States, which are both considered to beintellectual property exporters, have not been prone to the ideaof investing this type of property in Mexico, where as legalprotection was poor.In preparation for NAFTA, Mexico has undergone a process ofstrong domestic legal reforms which has tried to correct existingasymmetries respecting its NAFTA's counterparts. The new MexicanIndustrial Property Law (LFPPI), contains a lot of novelprovisions, regarding Trademarks and Patents, which reach, andmay even improve over the standards set by the other two NorthAmerican nations. In Copyright, however, improvement has notbeen so evident, as this institution is perceived differently bythe civil law tradition of Mexico. Civil law perceives Copyrightfrom a 'moral approach', as the protection is directed to theauthor's personal rights, rather than to the work itself. Thecommon law tradition focuses, instead, on a more pragmaticapproach, which gives priority to the protection of theindividuals proprietary interest of the work. These issues mightbe a strong factor impeding the harmonization of Copyrightstandards in North America.Nevertheless, NAFTA does aim at correcting most of theexisting asymmetries in the three areas which cover intellectualproperty: Copyright, Patents, and Trademarks.158In Copyright, for example, NAFTA clarifies which types ofworks will be protected in North America. Among these, itcontemplates protecting new technological-related works such ascomputer programs, which were not covered at all by Mexico'sdomestic legislation.in NAFTA also gives explicit protection tosound recordings, in order to avoid transnational piracy in sucha lucrative business.rn Finally, another important provisionestablished by NAFTA is that protecting encrypted program-carrying satellite signalslm; this Article also combatsinternational piracy, by establishing a control mechanism on via-satellite signals.International trade treaties usually confront problems withtrademarks; as these signs, protect and identify goods andservices which are subjected to the flow of market forces. NAFTAdeals with this issue by having as one its main goals, thetransnational recognition of trademark rights.lm For example, itmakes transnational recognition of well-known trademarksmandatory in each of the Parties' territories.177 In order toachieve the previously mentioned goal, NAFTA also obliges everyNorth American nation to provide trademark protection in threedifferent languages;lm and have a minimum protection term of tenyears:79 NAFTA also establishes a trademark registration systemwhich helps eliminate legal and administrative difficulties:8°Finally, by establishing a common legal framework, NAFTA will173 See page 110.174 See page 112.175 See page 115.176 See page 124.177 See page 125.178 See page 127.179 See page 126.180 See page 127-128.159facilitate consumer's decisions when it comes to choosing qualityfrom non-quality goods, and will create incentives on quality-goods' producers by providing them with appropriate protection. 181Patents play a very important role in international trade,as, among other things, patentability encourages the export oftechnology. This is one of the reasons why NAFTA makes patentsavailable for any invention, in all fields of technology, allover North America. 182 NAFTA also encourages inventiveness, inthe whole North American region, by increasing protectionterms. 183As I stated before, the new Mexican Industrial Property Lawintroduces a modern conception of Patent and Trademarkprotection. It reforms Mexico's domestic legislation inpreparation and in accordance with NAFTA. Among some of theseimprovements are an increase on the duration of protection terms;a broadened scope of protection; and, simplified administrativeprocedures. 184 All of these, will help Mexico gain internationaleconomic competitiveness.It is important to point out that prior to NAFTA, othertreaties already regulated intellectual and industrial propertyat a transnational level. North American nations are Parties tomost of these treaties. 185 This fact has made harmonization ofintellectual and industrial property rules easier in NorthAmerica. Also, the existence of prior obligations leading to the181 See pages 120-121.182 See page 142.183 See page 145.184 See pages 129-133 and 146-151.185 See page 91.160establishment of common principles might explain why intellectualproperty discrepancies are obtaining, in the short run, tangibleand prompt solutions.Besides filling up important gaps left by otherinternational conventions regarding intellectual property, NAFTAhas helped eliminate most relevant differences in this areabetween three North American Parties. It has done so byestablishing clear and unified principles; and by encouragingdomestic legal reform. Thus, intellectual property has been oneof the greatest beneficiaries of the process of regionalizationeffected under NAFTA.CONCLUSIONAt an international economic level, the late twentiethcentury is being characterized for its proclivity towards aglobalization process. Such process has had, among its manyeffects, a general shift in each countries' production offinished products into the generation of merchandise; a newinterest in nations for getting involved in market competition atan international level, rather than being satisfied with its owndomestic competition; and an increase on developing nations'participation in the international market. 1 These developmentshave provided nations with an alternative option for economicgrowth: regional interdependence.Nations which have decided to follow this path, are nowinvolved in the formation of economic blocs, which include tradeliberalization as one of its main objectives. Open markets arebeing favored against isolationism.Today, protectionism is being rejected because, among otherthings, imports give an important boost on domestic economies'productivity 2; trade barriers such as tariffs have proven toreduce the quantity and quality of goods and services 3 ; andmarket's expansion has proven to create domesticcompetitiveness 4 . Therefore, it seems like free trade's benefitsovershadow its disadvantages.1 See pages 30-34.2 See page 24.3 See page 25.4 See page 30.161162The participation of less developed nations in this "newworld" trend embracing economic regionalization has raised somedoubts regarding Latin America's state of underdevelopment. Thedependency theory might be able to explain why Latin America wasnot able to grow at the same pace developing nations have; itmight also be of some help in understanding why developingcountries decided in the past, to clasp at protectionist policiesinstead of aiming at an open market. Nevertheless, theprotectionist measures endorsed by this theory are no longerjustifiable in Mexico and other Latin American countries.Historical hurdles and international mechanisms whichformerly justified these nations' isolation from theindustrialized world have changed. 5 For instance, the extractionof raw materials from the developing world is not a commonpractice among industrialized countries anymore; therefore,developing nations are now capable of opening their markets inorder to allow foreign investment which can foster domesticproductivity. Under these circumstances, unilateral practicesaimed at helping the developing world, such as foreign aid,should be reduced; as some Latin American countries are now eagerand able to face international competition. 6 State paternalismshould be put aside and nations should prepare themselves for acompetitive world.I must point out that not all developing countries areready to take such a step. Trade liberalization should not betaken as an isolated attempt at market-oriented reform within astatist framework. Rather, a broader policy shift which includes5 See pages 35-45.6 See page 48.163encouragement of exports and foreign investment; legal reform;the modernization of the financial system; and the privatizationof industry; should be implemented. 7 Mexico is a vivid exampleof the above.By signing NAFTA, Mexico is taking the first step towardsthe creation of an autonomous productive infrastructure byfostering domestic economic growth. A free trade agreementcontains reciprocal rights and obligations. Therefore, aninterdependent relationship among the Parties is established.NAFTA means free trade, and free trade means interdependencynot dependency.NAFTA and the EEC are projected internationally as palpableexamples of economic bloc formation. Parallels between the EECand NAFTA are often made, either to reject or justify thelatter's creation. Even though it is valid to compare bothinternational associations, one must also aknowledge that markeddifferences separate these agreements.The EEC constitutes a complex international community whichinvolves its participants in a deal which includes broad andnumerous issues. The agreement, itself, is not complicated. Itsgoals are rather clear: establish substantive rules; define acommon market; and allow for a number of freedoms and commoneconomic policies. Nevertheless, when it comes to achieving theprogressive convergence of economic policies, the EEC implicatesother areas not explicitely stated on the Treaty of Rome. 8 Thisalters the nature of a basic economic treaty into a complex7 See pages 52-55.8 See pages 61-63.164organization which is entangled with a whole variety of issues,besides economic. NAFTA on the other hand, is meant to be aneconomic treaty destined to regulate free trade. North Americannations should try to avoid the involvement of other issues whichcould increase the complexity of such agreement.The EEC and NAFTA may also be compared for having othernoticeable disparities. As I stated before, there are severediscrepancies on the incentives which motivated NAFTA's creationfrom the ones perceived by the EEC's drafters. 9 Also, theobjectives" and means" to achieve them, vary considerablybetween the two agreements. Finally, as a consequence of theabove, the institutions regulating each international associationdiffer radically from one agreement to the other, as the EECobviously needs a more developed institutional organization whichshould be able to deal with all the different issues that couldarise in a community. 12Notwithstanding the previously stated differences, someparticular situations experienced under the EEC should be takeninto account by NAFTA, either to avoid making the same mistakesor to follow the correct path. A good example of the above, isEurope's less developed nations' experience in the EEC. Thecases of Greece, Portugal and Spain are a clear example onhomogeneization of divergent economies. 13It is true that Mexico's economic, historical, and politicalbackground may be different than that of Europe's developingnations; therefore, the process of integration in North America9 See pages 70.10 See pages 75-77.11 See pages 71-75.12 See pages 77-81.13 See pages 63-69.165might be slower. Nevertheless, Mexico's past does coincide withEurope's developing nations' background regarding highlyregulated economies. 14 Another common ground resides in theprogressive actions, such as adjustment terms 15 and economicreform 16, which were taken by developing nations in bothcontinents in order to afford integration.Thus, the Treaty of Rome and NAFTA cannot be consideredanalogous documents. However, regarding trade and economicissues, the EEC constitutes a realistic precedent for NAFTA.Additionaly, Spain, Portugal and Greece's possitive experiencesin the European economic arena should be taken into account byMexico, in order to facilitate its adjustment in a North Americancommon market.The European experience has taught us that economicinterdependence between developed and developing countries ispossible. The existence of a European Common Market ratifies thehypothesis that divergent economies may coexist and grow at thesame time. But, what means may be used in order to reach a levelof homogeneity which would simplify such interdependence in NorthAmerica? NAFTA responds to this question by promoting thehomogeneization of laws. Political, cultural and socialbehaviour is usually reflected on each country's legislation.Therefore, by promoting legal reform, a reasonable amount ofdiscrepancies may be overcome.Intellectual Property is a good example of how legaldiscrepancies have been eliminated amongst North American nations14 See page 64.15 See page 66.16 See page 69.166in order to facilitate free trade. Before 1991, strongasymmetries were separating NAFTA Parties regarding Industrialand Intellectual Property; such differences constituted aconsiderable obstacle for the proper functioning of a NorthAmerican Market as Canada and the United States, which may beconsider as Intellectual Property exporters, did not have theproper legal incentives to invest in Mexico.Mexico on the other hand, is in need of foreign investmentregarding this type of property. Technological investment, forinstance, is highly welcomed by Mexico; therefore, its domesticpatent law has been reformed in order to provide legal securityto foreign inventors." Thus, Mexico's interest to improve itsinternational competitiveness and modernize its legislation camebriefly before NAFTA was signed and in accord with suchAgreement's basic principles.I must point out that even though NAFTA homogeneizes bothIndustrial and Intellectual Property's main concepts all overNorth America n, at a domestic level, such homogeneization hasnot yet been attained, mainly because Intellectual Property(Copyright) embraces a high content of cultural and legalasymmetries which are more difficult to reconcile. 19 Therefore,so far, Mexico has only embarked into domestic reform in the areaof Industrial Property.Benefits of free trade have encourage nations to forminginternational economic blocs which will improve theircompetitiveness at both the domestic and international level.17 See page 148-148.18 See page 90.19 See page 95.167Less developed nations which are interested in participating inthis new economic trend, have engaged into legal reform and tradeliberalization in order to satisfy the pressures and meet thestandards of industrialized nations. Besides, ruleshomogeneization has become a mandatory pattern in order toachieve competitiveness as a unitary economic bloc.NAFTA has proven to be an efficient instrument for thehomogeneization of rules. Because, especially in the branch ofIntellectual Property, the Agreement helps eliminate mostdifferences between the Parties in establishing clear and unifiedprinciples and encouraging domestic legal reform in Mexico.BIBLIOGRAPHYArticlesJ.F. Addicott, "The United States of America, Champion ofthe Rule of Law or the New World Order?" (1990) 6 Fla. J.Int.L.63.A. Akinsanya & A. Davis, "Third world quest for a newinternational economic order: an overview"^(1984)^33 Int. &Comp. L.Q. 208.G. Arevalo & F.R. Sagasti,^"America Latina en el nuevoorden mundial fracturado: perspectivas y estrategias" (LatinAmerica under a fractured new world order) (1992) vol.42, 12Comercio Exterior (Foreign Trade). 1102.R. Barnet, I. Buruma & 0. Harris, "Defining the New WorldOrder" (1991) Harper's Magazine. 59.B. 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