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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 THE NORTH AMERICAN FREE TRADE AGREEMENT by ARMANDO F. BETETA LL.B., Escuela Libre de Derecho (Mexico),1991 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF LAWS in THE FACULTY OF GRADUATE STUDIES (Faculty of Law) We accept this thesis as conforming  THE UNIVERSITY OF BRITISH COLUMBIA September 1993 ©Armando F. Beteta, 1993  In presenting this thesis in partial fulfilment of the requirements for an advanced degree at the University of British Columbia, I agree that the Library shall make it freely available for reference and study. I further agree that permission for extensive copying of this thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. It is understood that copying or publication of this thesis for financial gain shall not be allowed without my written permission.  (Signature)  Department of  6 1 adtletie. Sil 1 dik_S (F .c ify -  The University of British Columbia Vancouver, Canada  Date  DE-6 (2/88)  Ser10 triter  Is,  1913.  0( LAW)  ii  ABSTRACT  The North American Free Trade Agreement, signed by the United States, Canada, and Mexico in December 17, 1992, establishes an important example of a Common Market which includes the participation of both developing and developed nations. However, the fact that a less developed nation is included in this "first world" economic enterprise has created uncertainty regarding the Agreement's possibilities of success, since severe economic, political, and legal discrepancies separate the Parties. Legislation usually reflects a nation's economic, political and cultural, characteristics. Therefore, by comparing different legal systems, one is able to observe the discrepancies existing among the economics, cultures and politics of nations. The main purpose of this thesis is to find out if NAFTA is a proper instrument for the elimination of differences between developed and developing countries and; if this is the case, examining the means used to achieve such purpose.  This thesis consists of four chapters. The theoretical approach of the thesis will be developed in the first two, where an overview of the theories of free trade and dependency will be presented. The problem of how to regulate divergent economies under an international agreement will be approached in the last two chapters by making (in Chapter Three) a legal comparison between NAFTA and the European Economic Community; and by addressing (in Chapter Four) particular legal disparities among  iii North American nations in the area of intellectual and industrial property, and their treatment under NAFTA.  Benefits of free trade have encourage nations to forming international economic blocs, which will improve their competitiveness at both the domestic and international level. Less developed nations which are interested in participating in this new economic trend, have engaged in legal reform and trade liberalization, in order to satisfy the pressures and meet the standards of industrialized nations. NAFTA has proven to be an efficient instrument for the homogeneization of rules. Because, especially in the branch of Intellectual Property, the Agreement helps eliminate most differences between the Parties in establishing clear and unified principles and encouraging domestic legal reform in Mexico.  iv TABLE OF CONTENTS  ABSTRACT ^  ii  AKNOWLEDGEMENT ^  vi  INTRODUCTION ^  1  I. Overview of Free Trade in the Late Twentieth Century ^  7  A) The 'New World Order' ^ a) Political Change ^ b) Ideological Change ^ c) Economic Change ^  7 9 11 13  B) Free Trade, A Theoretical Approach ^ a) International Statutory Recognition of Free Trade ^ b) Main Arguments Against Free Trade ^ c) Main Arguments Favoring Free Trade ^ d) Free Trade and Globalization in Today's International Arena ^  17 20 23 27  II. Dependency and NAFTA ^  35  A) Dependency: A Definition ^ B) Dependency in Mexico and the Rest of Latin America ^ a) Historical Background ^ b) Today's Situation ^  35  30  37 37 43  C) Dependency and Free Trade: Myths and Realities ^ a) Domestic and International Domination ^ b) Unilateralism ^ c) Nationalism ^ d) Trade as Dependency's Instrument ^ e) Trade and Aid ^  45 48 49 50 51  D) Conclusion ^  52  45  III. The European Economic Community and NAFTA ^ 56  A) Concept ^ a) Definition ^ b) Historical Background ^ c) Main Objectives ^  57 57 58 60  B) Less Developed Nations Situation in the EEC ^ a) Integration ^ b) Participation and Benefits ^ c) Conclusion ^  63 63 65 68  C) Comparison Between the EEC and NAFTA ^ a) Incentives and Means ^ b) Objectives ^ c) Institutions ^  69 70 75 77  D) Conclusion ^  81  IV. NAFTA and Intellectual Property ^  84  A) Intellectual Property in North America ^ 88 a) Main Asymmetries ^ 88 b) Linkages ^ 89 B) Copyright ^ a) Definition ^ b) Asymmetries ^ aa) Main Differences ^ bb) Similarities ^ c) Linkages ^ aa) International Conventions ^ bb) NAFTA ^ d) Conclusion ^  93 93 94 95 105 107 108 110 118  C) Trademark ^ a) Definition ^ b) Asymmetries ^ c) Linkages ^ aa) NAFTA ^ bb) Mexico's New Industrial Property Legislation ^  119 119 121 124 124  D) Patent ^ a) Definition ^ b) Statutory Asymmetries ^ c) Linkages ^ aa) NAFTA ^ bb) Mexico's New Industrial Property Law ^  129 134 134 135 141 141 146  E) Other ^ 151 a) Enforcement of Intellectual Property Rights: General Provisions ^ 151 b) Cooperation and Technical Assistance ^ 155 F) Conclusion ^  157  CONCLUSION ^  161  BIBLIOGRAPHY ^  168  vi ARNOWLEDGEMENT  I would like to thank my thesis supervisor, Professor Robert K. Paterson, for offering me his friendship and advice during the LL.M. Program. I especially appreciate the fact that he was always available to give me academic advice and helped improve my English grammar.  Special thanks to our Graduate's Dean, Professor Pitman B. Potter, for offering his friendship and guidance which helped me overcome the different hurdles a Master's Degree embraces. I also appreciate his valuable commentaries as my thesis' second reader.  I really like to thank Professor Lincoln Quintana for his comments and advice in the area of Intellectual Property.  Finally, I would like to thank my father and friend, Armando Beteta Monsalve, for his economic and moral support during my stay at Vancouver.  1  INTRODUCTION  The end of the Cold War has shifted international attention into a new brand of global issues such as the environment, public health, human rights, and transnational trade. The ninetees, an era in which military 'protection' from the United States is no longer required, is being characterised by a renewed international need for unifying interests and views in the economic sphere. One of the most tangible manifestations of this phenomena is the intention among several nations on establishing regional economic blocs which can face new challenges, such as international economic competitiveness. The formation of these transnational blocs relies on the assumption of an existing Common Market which allows free trade among several participating nations. At the same time, free trade is justified by those aiming at economic regionalization because it "promotes a mutually profitable division of labor, greatly enhances the potential real national product of all nations, and makes possible higher standards of living all over the globe.° Notwithstanding these positive effects, in practice, free trade faces opposition as not all of the promised effects are always proven. In June of 1990, both Presidents, Carlos Salinas from Mexico, and George Bush from the United States of America, decided to be part of this new world's regionalizing trend by issuing a declaration which stated their intention to negotiate a 1 Jackson and Davey, Economic Theory and International Economic Policy (1986) at 11.  2 free trade pact, the North American Free Trade Agreement (NAFTA). A few months later, Prime Minister Brian Mulroney announced Canada'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, the United States and Mexico. NAFTA is expected to join the three countries "in the largest and richest free trade market in the world - over 360 million people and $7 trillion worth of annual output." 2 The Agreement will enter into force once it overcomes the necessary legal procedures each country requires. The expected date for this event to happen is January 1, 1994. I must point out that even though Mexico represents the weakest economy in North America, it is welcoming this new era of closer trade and economic ties with its North American partners. In order to prepare itself for this and other new challenges, it has been undergoing a rapid transformation of its internal markets and business culture, its economic and social structures.  NAFTA's is setting an important example on the establishment of a Common Market which includes the participation of both developed and developing nations. However, the fact that a less developed nation is included in this "first world" economic enterprise has created uncertainty regarding the Agreement's possibilities of success, since severe economic, political, and legal discrepancies separate the Parties. It is evident that under any international arrangement economic, social, political and legal asymmetries exist. The word "asymmetry" describes a situation where there is no regularity of 2 SECOFI, Canada and Mexico: Forging a New Friendship (Ottawa: Townsend Trade Strategies Inc., 1993) at 25.  3 accordance of form. In the present work, I decided to use this word in order to describe particular disparities (primarily legal) existing amongst North American countries embarking in a unitary project (free trade), and to explain how such differences might jeopardize this project's sense of proportion. In other words, these existing disparities or asymmetries constitute hurdles which may endanger the succesful achievement of such Agreement's goals, as international cooperation amongst the Parties becomes more complicated because of existing discrepancies. Therefore, an international agreement may also need to consider as one of its primary goals, the reduction of such differences and establish linkages which could erase or, at least, compensate any negative effect which these differences may cause. In the case of NAFTA, for example, Canada and the United States may have to give economic related assistance to Mexico such as debt considerations, investment promotion and/or direct economic support for development programs. In exchange, Mexico may need to reciprocate with strong state reform which includes economic, legal and political reform; all of these issues embrace a high content of historical, cultural and sovereignty concerns. Legislation usually reflects a nation's economic, political and cultural characteristics. Therefore, by comparing different legal systems, one is able to observe the discrepancies existing among the economics, cultures and politics of nations. There is a possibility of abolishing or correcting such asymmetries by means of such international agreements and encouraging domestic reforms. Thus, the main purpose of this thesis is to find out if NAFTA is a proper instrument for the elimination of differences  4 between developed and developing countries and; if this is the '  case, examining the means used to achieve such purpose. In the following paragraphs, I will explain the methodology which I will use in order to prove my point.  First of all, I would like to point out that the particular topic I am approaching, asymmetries in international trade, not only has to do with legal matters but economic and political issues are involved as well. Therefore, in order to obtain a well-founded and objective conclusion, economic and political topics will be addressed, mainly in the theoretical part of this thesis; while the practical part or the main problem will be approached by legal means, basically analyzing NAFTA and some domestic laws in North American countries. This thesis consists of four chapters. The theoretical approach of the thesis will be developed in the first two, where an overview of the theories of free trade and dependency will be presented. The problem of how to regulate divergent economies under an international agreement will be approached in the last two chapters by making (in Chapter Three) a legal comparison between NAFTA and the European Economic Community; and by addressing (in Chapter Four) particular legal disparities among North American nations in the area of intellectual and industrial property, and their treatment under NAFTA.  Chapter One is entitled "Overview of Free Trade in the Late Twentieth Century". Its main objective is to give a general overview on the international economic situation in the late twentieth century and establish the theoretical grounds  5 (basically David Ricardo's 'Law of Comparative Advantage') which have encouraged many nations for embarking into free trade. Additionaly, this Chapter will also talk about the main benefits free trade can bring to the community, as well as discuss arguments opposing free trade.  Chapter Two, entitled "Dependency and NAFTA", will be dedicated to the study of the Dependency Theory and its influence on Latin America's (particularly Mexico's) underdevelopment. Dependency focuses on the coexistence of developing and developed countries within the world economy. Under these circumstances, its advocates sustain that "those with an autonomous capacity for change and growth became the developed sector and those who lacked this capacity were dependent upon that sector."3 Therefore, less developed nations occupy a subordinate position within an international system of production and distribution. This idea has been used by those opposing free trade among asymmetrical economies, as it is sustained that the recent shift in Latin America's economic policies from regulated markets and import-substitution ideologies into completely different policies which embrace extensive deregulation, foreign investment promotion and free trade, only help to maintain a dependent relationship of the developing countries with the developed world. Therefore, in this Chapter, I will try to find out if free trade equals dependency.  3 R.J. Radway, "The next decade in Latin America: anticipating the future from the past" (1991) 13 Case Western Res.J.Int.L. 1 at 17.  6 Chapter Three, entitled "The European Economic Community and NAFTA", aims at making a comparative study of international trade, by examining another trading bloc formation in Europe. The main purpose of this Chapter is to find out if such bloc formation (EEC) is comparable with NAFTA, and discuss the less developed nations' situation under the EEC to foresee if their asymmetrical experiences might be taken into consideration by Mexico under NAFTA.  Finally, Chapter Four, entitled "NAFTA and Intellectual Property", will explore the existing legal asymmetries in the area of intellectual and industrial property law, amongst Canada, the United States and Mexico. I chose to focus specifically on this branch of law because it contains tangible examples of legal differences amongst the North American Parties. Additionaly, industrial and intellectual property are already regulated by several international agreements; therefore, the existence of universally accepted rules and principles in this area may simplify the homogeneization of laws affecting this type of property in North America. The object of this Chapter is to point out the national legal differences and find out if they have been ovecome and, assuming they were, search for the means which were used to reach such accomplishment.  7  CHAPTER I. OVERVIEW OF FREE TRADE IN THE LATE TWENTIETH CENTURY A. The New World Order  On September 11, 1990, the President of the United States of America, George Bush, used, for the first time in the last forty years, the phrase "New World Order".1 Since that date, these three words have been used by many when referring to the postCold War era, probably marked in time by the Helsinki Summit. However, a specific meaning of this phrase has not yet been determined. In other words, the indiscriminate use by politicians of this concept for justifying completely opposing purposes such as halting an aggressor who has broken the law while, at the same time, referring to the creation of international human rights laws, create confusion in relation to its meaning. Although this concept may be characterised for its vagueness, the majority of the world's population relate this term to a new era full of hope and change. In relation to this topic, the Director of the Center for International Studies at New York University School of Law, stated the following: The world will certainly miss the boat if it does not use the end of the cold war to create a global system for the new millenium, one which preserves peace, fosters economic growth, and prevents the deterioration of the human physical and environmental condition.2 As we can see, this proponent of a New World Order, has a rather broad view of what this term embraces. On the other hand, several 1 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.  8 scholars aim at a less ambitious description of the world's present and near future. In other words, they "associate the concept with the ultimate goal of abolishing war, but only through a deterrence model firmly cemented upon the Rule of Law". 3 It is obvious, that this is mainly a political ambition which does not contemplate all the changes the world is experiencing today; for that reason, we coincide with the former definition which is broader. What seems to be evident is that the desintegration of the "Second World" or communist bloc, translates into a substitution of armed confrontation for economic, societal and environmental issues. This means that a post-Cold War world may be characterized by a different distribution of power with less ideological rivalry among nations. Barry Buzan, refers to this issue by saying that: Because the great powers are spread across several regions and do not include a dominating ideological or power rivalry within their ranks, they will project their own conflicts into the periphery much less forcefully and systematically than under the zero sum regime of the "Cold War". 4 By stating the above, Buzan is considering the creation of a multipolar world with several 'new powers' which will be spreading their influences in specific zones around the globe. This emergent world with different poles of power could be characterized by an increasing global interdependence among countries, combined with a regional integration of nations attracted to a particular pole. In other words, what we have known as the Nation-state has lost its capacity to control events 3 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.  9 and phenomena which transcend frontiers such as financial, commercial, environmental, and technological issues, among others.5^A successful coexistence between the world's nations may depend on the following: The fate of this new world would depend on the ability of the "poles" to cooperate enough in order to prevent or moderate conflicts, including regional ones, and to correct those imbalances likely to develop in the world economy.6 This phenomena creates a necessity for the 'new powers' to develop their own areas of influence and maintain, at the same time, a harmonious relationship with the rest of the world. The first tangible examples are beginning to rise with the creation of multinational economic blocs. However, before getting into these new world's economic changes, we would like to briefly address the political and ideological changes the world is suffering today.  a) Political Change  Perhaps the most evident change in the international scene has occured within the political arena. The vanishing of the Soviet Union has transformed a bipolar into a multipolar world. Nevertheless, some authors do not seem to recognize this multipolarity but emphasize on the existence of a unipolar world leaded by the United States. An example, of the above is given in the following paragraph, written by Jeffrey F. Addicott:  5 G. Arevalo & F.R. Sagasti, "America Latina en et nuevo orden mundial fracturado: perspectives y estrategias" (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.  10  For the next several years, one characteristic of the postCold War era is undeniable; the United States stands alone as the world's bastion of stability and as the foremost sphere of power and influence. 7 This comment may be relying in the assumption that the United Nations does not have the capacity to guarantee the security of its members without the help of the United States. Although Addicott may not be completely wrong, the world could face a risk by believing that a new world is being born in "direct emulation of America". 8^This could translate in delegating in the United States a world's 'justice' enforcer role. 9^Richard Ullman, contemplates this hypothesis by analyzing the recent happenings in the Gulf War; he states that: The imbalance between the U.S. contribution to the antiSaddam coalition and what other governments were willing or able to send even prompted the suggestion that America's role in the post-Cold War world order should be the 'explicitly mercenary' one of global policeman, to be subsidized by states like Saudi Arabia, Japan, and Germany, whose stake in international stability is large but whose past history or current circumstances lead them not to acquire strong or interventionary forces of their own." This malinterpretation would lead to a regression of the international community into the United States military power dependence. However, from my particular point of view, this is not the case. Although it seems that with the military, economic and ideoligical decline of the former Soviet Union, the United States stands alone as a 'superpower', ironically, its leading role in 7 Addicott, supra note 3 at 64-65. 8 K. Elliot, "The Nineties and Beyond: For all its difficulties, U.S. stands to retain its global leadership" (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 worldwide expectation 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.  11 today's world is diminishing. With the absence of a 'Cold War', the world's needs for security and protection supplied by the United States have decreased. It is evident that security issues are being relegated by global economic interests. Ted Hopf, gives an example of the above, by stating: The international political economic system in general is structured in such a way that it is virtually always cheaper to gain access to necessary raw materials and goods through international trade than through direct military intervention and occupation." This example shows that, in order to obtain power in today's world, economic measures might be more appropriate as they are cheaper than military means. As a result, countries may have to replace conflict for interdependence in order to gain a global economic position. As a matter of conclusion in the political arena, and basically in relation to military needs, it could be said that a unipolar world prevails. However, political issues have lost significance against the economic realm. In relation to the latter, a multipolar world rises and turns the late twentieth century into an era of uncertainty and expectation regarding this New World's organization and distribution of powers.  b) Ideological Change  Under the ideological arena, some critics seem to be assuming an unrealistic situation. With the vanishing of communism 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.  12 authors as Francis Fukuyama are beginning to assert that a lack of clashing ideologies prevail in today's world. 12 However, this situation should not be seen as an ideological vacuum in our society but as a shift in the type of ideological clash. In other words, the contemporary ideological battle is no longer viewed as capitalism against socialism but as liberalism against democracy within a capitalist society. Jonathan R. Macey and Geoffrey P. Miller clarify this point by stating that: A basic tension exists between liberalism and democracy because the liberal conception of the primacy of rights inevitably comes into conflict with the democratic conception that majorities be able to control policy. 13 I agree with this point of view and consider it a major controversy which has an immediate effect on free trade, as one of the defining characteristics of the 'New World Order' is, apparently, a new tendency of most countries to favor market capitalism, rather than accepting a non-liberal capitalist regime; as the latter, is committed to the interests of the totality 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, in order to focus on supporting the individual's search for selfimprovement in a free market economy. Free trade relies on liberal principles and can easily clash with democratic or populist values. This point is mentioned by Macey and Miller when 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 the competition between liberalism and democracy" (1992) 25 Cornell Int.L.J. at 279. 13 Ibid. at 281.  13 Focuses on how to preserve markets, rather than on how charismatic national leaders can impose their wills on less forceful or assertive rivals and instill in the nation's citizens a sense of pride and purpose.14 In other words, what these authors mean to say is that nationalistic tendencies might be outweighed by free market principles. The post-Cold War era aims at a new way of thinking that goes beyond national boundaries.  c) Economic Change  The international economic arena is suffering a radical change. It is evident that in the last fifty years, developing countries have become increasingly dissatisfied with an international system, established by Western Europe and the United States after the Second World War, in which, three basic institutions (the International Monetary Fund, the International Bank of Reconstruction and Development, and the General Agreement on Tariffs and Trade) "shaped their economies but excluded them from management."15 In other words, Third World countries were not allowed to take part in the distribution of resources. Several measures were taken. These, basically involved unilateral aid from developed to developing nations; however, this type of help turned out to be ineffective as it is evident that there is not much encouragement for developed countries to embark in a project 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.  ^ 14 The fact is that in the nineties, Latin America, for example, is facing a new world order where comercial, political, financial, environmental, technological, and cultural globalizations are taking place and, in which, these less developed nations will have to overcome the double task of recuperating economic growth and improving its nationals' living conditions. As stated above, the end of the Cold War has brought into the international arena a new brand of global issues such as the environment, public health, human rights, and trade. In relation to international trade, it is important to say that this area has suffered important changes. Among other issues, the North Atlantic region has been replaced by the North Pacific region as the most important comercial area of the world; there has been an increase in the trade flow of services; the participation of raw materials in international trade has decreased and; recent industrialized countries have emerged as export manufacturing nations.16 It is obvious that as most nations are achieving military independence from the United States, economic patterns continue to emerge, permitting other developed as well as underdeveloped countries to gain significance. The first manifestations of this phenomena are beginning to rise with the intention of several nations in finding new alternative institutions, which include the constitution of multinational economic blocs. The most recent example on economic bloc formation is the North American Free Trade Agreement (NAFTA).^In relation to  16  G. Arevalo & F.R. Sagasti, supra note 5 at 1103.  15 NAFTA, 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 the world, Mexico, the United States and Canada are working to ensure that the future will bring increased prosperity, trade, and new jobs for the citizens of each of our countries." This statement reflects the fact that countries may need to rely on their interdependence in order to gain an important international economic position. The 'New World Order' includes different types of problems without a unique or common solution. However, a viable possibility is that the end of the Cold War may cause the replacement of some of today's international agreements with the creation of newer mechanisms that will be able to confront, efficiently, the world's economic necessities. The General Agreement on Tariffs and Trade (GATT), is a good example of the above. With the integration of the European Community on 1992 and the signing of NAFTA on the same year, some suggest that GATT could become an obsolete system to manage world trade. Lester C. Thurow, states that: While common markets are permitted under GATT rules, they fundamentally violate the spirit of the agreement. The EC is talking about offering associate memberships to neutral Western European countries such as Switzerland and to the countries of Eastern Europe that are now emerging from communism. There is no provision for such arrangements in GATT. 18 In other words, the formation of a European economic bloc or the North American economic bloc could marginalize old international 17 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.  16 agreements which excluded certain countries from participating under their particular rules. However, at the same time, it must be considered that economic blocs can also be more restrictive to outsiders. Restrictiveness is not the only risk we could face in this regionalization process. Francisco R. Sagasti and Gregorio Arevalo talk about the negative consequences a "fractured new global order" can bring. In this regard, they assert the following: We are witnessing the emergence of a fractured global order: one which is global but not integrated; one which keeps us in contact with each other but, at the same time, maintains a deep abyss between individuals and groups; one which generates enormous progress opportunities while, at the same time, segregates a considerable bulk of humanity by not allowing any access to the benefits:9 Thus, regionalization has necessarily its advantages as well as its risks.  As we said before, economic international change has  been  one of the main issues characterizing the last decade. In Latin America's case, new theoretical currents have replaced old ideologies. New perspectives about economic policies have arised; today, the main goal is to achieve a more reasonable equilibrium between market forces and state intervention.20 At the same time, the rising growth of the population in the past decades is demanding a high level of employment which forces an expansion of the modern sector of these countries' economies. Thus, Latin America is finding out today that some form of regional organization is necessary for technological advances and 19 G. Arevalo & F.R. Sagasti, supra note 5 at 1103. 20 Ibid. at 1105.  17 industrial growth to proceed. There is an international need for unifying interests and views in the economic sphere. In relation to this point, we would like to reproduce Mario Ojeda's point of view on today's international panorama: In a near future, countries which choose not to adjust to the economic liberalism's orthodoxy and free trade, can be sure not to receive the world powers' and international organizations' support. Thus, in the case of developing nations, its isolationism or lack of liberal orthodoxy in economic matters will accelerate their collapse into backwardness and poverty. 21 This means that the new international political, ideological, and economic orders will have a great influence over developing countries' destinies. There is a need for a new concept of development for Latin America which could integrate economic issues with societal, political, environmental, and technological aspects. In other words, many of these countries will have to engage in a strong and consistent state reform which will include a shift in their current economic ideologies in order to achieve their new objectives.  B. Free Trade, A Theoretical Approach  It was generally understood by classical economists that, within an specific region or country, the value of a commodity was determined by the amount of labor assigned to produce a certain good. 22 Regional trade in such cases, was explained by  21 M. Ojeda, "El cambiante contexto internacional a finales del segundo milenio" Hacia un tratado de libre comercio en America del Norte (Mexico: Porrua,1991) at 18. 22 This idea is commonly known as the "Labor Theory of Value".  18 using the theory of absolute advantage, which states the following: After labor has spread itself among several regions to equalize wages, these regions will produce and sell to each other what each region can make the cheapest. Its advantage in such commodities over other regions will be absolute.23  Although valid at a domestic level, the 'Absolute Advantage Theory', together with the 'Labor Theory of Value'24, are not able to justify international trade. In relation to the 'Labor Theory of Value', the fact that goods are produced by variable proportions of two other factors of production (land and capital), besides labor, make this theory's principles obsolete, as labor cannot be a single standing 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; and different countries have different factor endowments."25 A country's productivity, for example, may be more dependant on its land's quality rather than on its labor strength. In the case of the 'Absolute Advantage Theory', two circumstances obstruct this theory's application at an international level. In first place, it is evident that, in relation to productivity, some countries have an absolute superiority over others; this situation would make this theory's application impossible, as not every country in a trading deal would be able to obtain an absolute advantage over the other 23 C.P. Kindleberger, at 17. 24 Ibid. 25 Ibid. at 20.  International Economics,  Fifth Edition (Homewood, IL: Richard D. Irwin, Inc., 1976)  19 party.^Secondly, this theory lacks validity at a global level because of the fact that^migration cannot take place internationally as easy as it does domestically, in order to equalize wages.^  -  As a response to these problems, David Ricardo developed the 'Law of Comparative Advantages' 26 , which justifies the possibility of trade among different nations. Such theory is summarized as follows: A country would export the product in which it had the greater advantage, or a comparative advantage, and import the commodity in which its advantage was less, or in which it had a comparative disadvantage. v  This theory suggests that trade among nations can happen, even if a country has an absolute economic advantage or superior productivity over another nation. The fact that a country can obtain a higher quantity of goods by international trade, instead of receiving a smaller amount of the same goods, even if such commodities are produced more efficiently at a domestic level, makes of this comparative advantage, at an international level, a choice worth of consideration. Besides, the fact that each nation could specialize in producing commodities which would coincide with their strongest factors of production, allows the possibility of trade, as each nation can produce one good cheaper than the other. In other words, "free international trade is beneficial to a nation because when each nation specializes in making the products that it can make most efficiently and trades  26 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.  20 for the other products it needs, overall welfare is increased in each nation."m Another positive view on international trade, which generally describes free trade's main characteristics and advantages, is summarily given by Paul Samuelson in the following terms: Free trade promotes a mutually profitable division of labor, greatly enhances the potential real national product of all nations, and makes possible higher standards of living all over the globe.29  Even though, the validity of these characteristics may be controversial, as it is clear that it limits a theory which is not evident; before addressing them, we would like to briefly talk about the statutory recognition free trade has among the international community.  a) International Statutory Recognition of Free Trade  Although the concept of free trade is not new, before the creation of GATT, it was difficult to find any international statute which explicitely alluded such issue. GATT's Article XXIV (8)(b), defines a free trade area in the following terms: A free-trade area shall be understood to mean a group of two or more customs territories313 in which the duties and other restrictive regulations of commerce (except, where necessary, 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 separate tariffs or other regulations of commerce are maintained for a substantial part of the trade of such territory with other territories."  21 XIV, XV and XX) are eliminated on substantially all the trade between the constituent territories in products originating in such territories. 31  This definition gives a short and clear description of what should be understood as a free trade area. However, we would like to point out that a main controversy has been brought up by some scholars, regarding the fact that GATT only contemplates 100 percent preferences within a free trade area and does not allow preferential arrangements at a lower percentage, even if, "economic theory suggests that preferential arrangements can be welfare enhancing for member countries and for others...  1,32  Jagdish Bhagwati, gives a possible explanation on why the United States, according to its prior trading policy, accepted this disposition which rejected regionalism. Bhagwati, asserts the following: Politically, the U.S. tolerance of 100 percent preferences seems to have been motivated by a presumption that European stability would be aided by economic integration and therefore the latter must be supported. There was perhaps also an inchoate, if strong, feeling that integration with 100 percent preferences somehow was special and consonant with the objective of multilateralism. 33  Whatever reasons might have led the United States and other contracting countries to allow this 100 percent preferences exception in 1948, which opposes GATT's main views on multilateralism 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.  22 Even though on GATT's early years, the United States restrained itself, from resorting to Article XXIV; today, it is not only accepting discriminatory trade arrangements, but it is exercising its member's right by constituting a 100 percent preference free trade area, commonly known as NAFTA. An issue which must be clarified is the fact that GATT principles and regional trade agreements do not clash. I agree with Bhagwati in the fact that "regionalism an the GATT are not incompatible...", rather, "GATT remains the central institution overseeing issues of world trade policy, despite regional blocs."34 This statement can be ratified by looking at the main reasons for including free-trade areas under GATT's agreement. In relation to the purpose for establishing free trade areas, GATT's main document expressly asserts in its Article XXIV (4), that: The contracting parties recognize the desirability of increasing freedom of trade by the development, through voluntary agreements, of closer integration between the economies of the countries parties to such agreements. They also recognize that the purpose of a customs union or of a free-trade area should be to facilitate trade between the constituent territories and not to raise barriers to the trade of other contracting parties with such territories.m  In other words, besides instructing nations to avoid regionalism when embarking into free trade, GATT aimed, by including this section, at full integration and freedom of trade among its members. Article XXIV, meant the establishment of a supplemental practical route to one of GATT's ultimate goals: universal free trade. 34 Ibid. at 74. 35 GATT, supra note 31 at 41.  23  b) Main Arguments Against Free Trade  Free trade has received different types of criticism, which include critics on the formal or procedural aspects of free trade at a global level, such as the idea that international trade must be symmetrical because if not, "the efficient allocation of activity among trading nations that the regime must reflect will be compromised by the license taken by those who stray" 36 ; or, the assertion that free trade cannot be sustained when there is unfair trade because, among other things, "the use of muscle to impose one's views and to extract one-way trade concessions will poison the ethos of fairness in trade relations, without which open markets are hard to sustain." 37 Even though this type of procedural criticism is important, and we will talk about it, later, on this thesis; there is another sort of critic on free trade which focuses on the substantial effects free trade has at a domestic level. We are referring, specifically, to the arguments brought up against free trade by protectionism. In the following paragraphs, we will address some of the main arguments. In a broad sense, protectionists may use against free trade the argument that they do not want any foreign interferance in their domestic market because it hinders its country's internal growth and downgrades its nationals way of living. Some authors assert, that the main cause of protectionism might be attributable to political pressures which are exerted by domestic power groups. Among other things, it is said that: 36 Bhagwati, supra note 32 at 13. 37 Ibid. at 56.  24 Within a national economy certain sectors, particularly those that produce goods made more efficiently abroad and that may be expected by economic theorists to shift from their present activities because of import competition, are likely to pressure their governments to interfere with free trade in order to afford them protection from such competition. 38  The most efficient instrument used by such countries against foreign exports is the Tariff. A Tariff is generally defined as a "tax levied on imports at the time of importation, which usually has the effect of increasing the prices at which the imports are sold.  " 39  By the means of tariff policies,  protectionists present the following arguments against free trade.  1. Prior to David Ricardo's time, a common mercantilist argument undermining free trade was the notion that "the wealth of a nation is increased by promoting exports and restricting imports.  110  This argument derived from the general idea that money had value only to the extent it could be exchanged for goods. In today's world, this idea has lost force. In relation to international trade, imports play a very important role in a nation's development. It is well known, that in our society, a country is able to exchange with another country not only goods for money, but can also obtain from others, services and technology, for example. It would be a valid counter-argument 38 Jackson & Davey, supra note 28 at 15. 39 Ibid. 40 See Jackson & Davey, supra note 28 at 16.  25 that if, in our days, a country exports more than it imports, its consumers, in comparison with other trading nations, will have a lower quantity and quality of goods and services.  2. A common argument favoring isolationism is the one contending that "tariff protection will give domestic producers a larger market share, thereby creating more jobs in the domestic economy.  "  41  First of all, as we said before, the imposition of tariffs on products, reduces the quantity of goods available to the public; so, even if people can afford to buy goods they may not have a diversity to choose from. Secondly, some critics argue that "this is a policy that tries to 'export' unemployment to the country whose imports are reduced,  u42  subsequently, that country  may retaliate by imposing tariffs itself, leading to a chain of retaliatory schemes that would decrease the volume of world trade.  3. A very common argument, which has been used lately, mainly by developed nations, against free trade is that "interference is necessary to protect workers in a high-wage nation from 'pauper labor' in developing countries." 43  This is a strong argument, which has been recently used by those opposing NAFTA. However, in order to raise this argument, 41 Ibid. at 16. 42 Ibid. 43 Ibid.  26  a country's production should be competitive worldwide. If not, industries in a non-competitive nation tend to migrate to more lucrative grounds, taking along with them, its corresponding labor force. On the other hand, if a country maintains a healthy trade relationship with other nations, exports motivate more domestic production; creating wealth and jobs. It is accurately stated, that "a highly productive labor force using advanced production machinery and techniques may well produce goods that can be sold at a lower price than those produced by pauper labor.  "4  4.  Those who oppose free trade, argue that  "tariffs should be imposed to equalize costs in the importing and exporting nations."45  Equalizing costs would not allow any type of trade, since, as we studied before46 , trade depends on comparative costs differences. Complete isolation is, definitely, not the answer for a contemporary nation's economic needs.  5. It is often argued in particular countries, basically less developed nations, that trade restrictions should be applied in order to satisfy peculiar national interests.  Even though this might be a valid argument, as some nations may have the need to 'protect' certain industries which 44 Ibid. 45 Ibid. 46 See page 19.  27 are necessary for achieving specific national goals 47 , there is the possibility to look for alternative economic policies that would probably be better suited. In relation to this point, each case must be studied differently as countries policies may shift, according to their changing priorities. Thus, even if a priority industry might have been an obstacle for free trade before, it may not represent any problem today.  c) Main Arguments Favoring Free Trade  Once we have stated some arguments which downgrade free trade, it is necessary to discuss several reasonings favoring trade liberalization. A 1977, GATT document 48 , establishes five of the most common benefits brought by trade liberalization. The first three, are said to be direct benefits from free trade, while the last two are considered additional or fringe benefits.  1. In the domestic arena, consumption gains are a primary benefit nations receive from free trade.  As we said before, an important beneficiary from trade liberalization is the consumer, as he has the possibility of acquiring more goods at lower prices. It is well known that high prices caused by tariff imposition, bring as a consequence the fall of domestic consumption. In other words, in a high tariff 47 An example of such industry is evident in the protection given by the mexican Constitution to this country's natural resources, specifically its oil. The Constitution, in its Article 27, prohibits the production and exploitation of oil by any other person different of the State. Thus, such industry in Mexico can only be managed by a unique state oil monopoly: PEMEX. 48 GATT, Studies in International Trade, Number Five (Geneva: 1977).  28 regime, consumers pay more for a product and have less money to spend 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 to food importation and its influence over prices in that country. Dunckley stated the following: There is hardly an article of common consumption which is not purchaseable at a much lower rate than formerlyt and in some the difference is as much as 40 or 50 per cent.49  This results, based on facts and statistics of that time, reflected amazing advantages for consumers.  2. Free Trade may also bring benefits to the suppliers of services, capital and land, which translate into 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 and capital away from low productivity industries and into a more productive employment in those  industries in which the country  has a comparative advantage.""  This situation also raises the  necessity for several nations to specialize in producing certain commodities in order to exchange them for others on which their comparative 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.  29 The creation of internal wealth may have as one of its many advantages the effective diminish of pauperism. Statistics in the United Kingdom showed, in the past century, an outstanding improvement in this matter as a consequence of free trade implementation. In relation to this issue, Dunckley narrates the following: The highest point of pauper expenditure since the commencement of our Free Trade policy, was reached in 1848, when it amounted to 6,180,764 pounds. Since that year it has continued to decline till, in 1851, it amounted to only 4,962,704 pounds."  It is evident that there are rather old statistics; however, the positive results free trade might have in diminishing pauperism may still be applicable today. It will be interesting to observe, in the long run, if this phenomena is solved by NAFTA, particularly in the case of Mexico, which has more problems of poverty than its partners.  3. Economies of scale gains are revealed by free trade implementation, as this practice enlarges the market in which each country's tradeable-goods industries compete. 52  The main benefit obtained from a market expansion is that by having a larger scale of operations, a country diminishes its costs. 53 Another advantage which derives from having a bigger  51 Dunckley, supra note 49 at 307-08. 52 With NAFTA, for example, the United States and Canada are gaining an eighty million people, mexican market. 53 An early bilateral example of such is the 1965 "Autopact", signed between the United States and Canada.  30 market is that a highly productive nation will have a demand which is able to match its supply.  4.  In relation to market's expansion, it is  sustained that a fringe benefit arises from the fact that free trade creates a more competitive domestic economy.  In other words, the fact that the market is enlarged, brings foreign and domestic firms to compete in the domestic arena. A natural consequence of the above, is that production tends to become more efficient.  5. Free trade can also contribute to domestic price stability by being an aid in combating inflation.  Trade liberalization is said to have two main effects which help countries achieve this goal. ^First, free trade reduces prices of goods as their availability increases. ^Secondly, effective competition and the existence of a credible governmental commitment in not returning to protectionist policies, brings a parallel restraint on both prices and wages.54  In short, when trying to balance free trade's disadvantages with its benefits, the latter seem to surpass the former.  d) Free Trade and Globalization in Today's International Arena  54  See R. Blackhurst, supra note  50  at 29.  31 A free trade policy has not always been a nation's first choice when dealing with economic problems. It is obvious that the application of trade liberalization will depend on the evaluation of different circumstances, domestic and international, which could lead countries to follow such path. The contemporary economic international panorama faces several difficulties. The improvement of communication systems, among other things, has transformed our world into a unitary arena, where different competing interests are involved. Jagdish Bhagwati describes this situation, in relation to trade, with the following words: The change in the world economy that propels more forcefully the unfair trade crusade is the increased crisscrossing of foreign investments, with associated dramatic increases in trade-to-GNP ratios of many countries, which is turning the globalized world economy into a veritable spider's web... This 'spiders web' phenomenon has meant increasingly that everyone tends now to be in everyone else's backyard, making import competition in one's own market, and export competition in the other's market and in third markets, even more fierce. 55  Thus, if Bhagwati is right, the globalization process the world is experiencing today, is definitely being detrimental on nations. It could be stated that free trade might be a viable option for groups of nations to take, in order to regionalize their economy and avoid loosing control over it. But, what are the main manifestations of this globalization process? Opinions are divided, however, in the following paragraphs we will refer to the most common. First of all, it is said that one of the main issues indicating that the economy is becoming global resides in the 55  Bhagwati, supra note 32 at 16-17.  32  fact that there has been a commoditization or an industrial conversion which aims at producing merchandise rather than finished products. 56^This production shift was said to be caused by the sudden raise on raw materials prices, which obviously diminished their consumption by the public. The new merchandise, defined as low cost but high quality products, is now responding to the novel world market demands. Thus, a country's economic success at a global level will not depend anymore on its raw material possesion but in its manufacturing capacity. Another aspect of the world economy which shows a general tendency towards globalization is the fact that market competition is no longer taking place only at domestic levels. Instead, market competition is now a worldwide phenomena in which, the highest technology is combined with competitively priced labor, low capital cost, preferential financing for exports, lower taxes, and a gradual dissapearance of national markets. 57 Although the already mentioned characteristics could be generally found in a global economy, many of them are also manifested at a regional level. A third example of today's economic globalization could be found on the international financial system. Many assert this system has suffered a radical revolution. In other words, it is said that the former national financial markets have been transformed into a huge international market, in which, any minimal political or economic change, at a national level, could  56 See L. Rubio, "La Globalizacion de la Economia" in Norte (Mexico: Porrua, 1991) at 93. 57 Ibid. at 96.  Hacia un tratado de Libre comercio en America del  33  have worldwide repercussions." Thus, foreign debt renegotiation with less developed nations, for example, is an issue which should not be forgotten by developed countries, if they intend to facilitate the former's incorporation into international trade. Speaking about less developed nations, it is necessary to remember that in the last three decades, the increase of their exports have allowed many of these nations' to actively participate in the international market. This paticipation constitutes a new challenge for world trade as a new element is included in its high competitive system: sophisticated labor with relatively low wages.59 This element creates an additional interest on behalf of industrialized nations to obtain less developed nations services in order to reduce their costs and increase their competitiveness." At the same time, less developed nations growth rate makes them natural markets for acquiring goods and services offered by developed nations. All of these factors, have great influence in the globalization and regionalization of the economy.  These developments show that, today, countries have a viable development option which relies, basically, on regional interdependence. Even though events have developed in such a way which appear to lead world's economy towards globalization, to effectively achieve this is structurally rather difficult. Regionalization in the form of free trading economic blocs, on the other hand, might be a more tangible option as its goals 58 Ibid. at 110. 59 Ibid. at 97. 60 A tangible example of such, is the high interest developed by industrialized nations over several manufacturing countries in East Asia such as Taiwan and Hong Kong. Another example is the "maquiladoran industry established in Mexico by United States' bussinesmen.  34 could be achieved easier, by aiming at a smaller number of subjects which could receive the benefits offered by free trade.  35  CHAPTER II. DEPENDENCY AND NAFTA  A. Dependency: A Definition  Globalism studies the interactions of States and other international entities l within a global context. It places extreme importance on the historical analysis of capitalism, in which, it subsequently argues for the existence of mechanisms of domination that keep less developed nations from developing. Under this ideology, the theory of dependence tries to give a theoretical explanation of the Third World's, basically Latin America's, underdevelopment. The simplest economic definition of dependency, states that "a system is dependent when the accumulation and expansion of capital cannot find its essential dynamic component inside the system." 2 Although accurate, this definition does not sufficiently explain what the dependency theorists are really preaching. A broader and clearer definition of dependency is the following: By dependence we mean a situation in which the economy of certain countries is conditioned by the development and expansion of another economy to which the former is subjected. The relation of interdependence between two or more economies, and between these and world trade, assumes the form of dependence when some countries (the dominant ones) can expand and can be self-sustaining, while other 1 These international entities are created by means of an international agreement constituted by sovereign states in order to accomplish common goals. The most evident example is the United Nations, created by agreement after the Second World War. A financial institution, such as the GATT (General Agreement on Tariffs and Trade), is also considered an international entity, as it was created by international agreement on 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.  36 countries (the dependent ones) can do this only as a reflection of that expansion, which can have either a positive or a negative effect on their immediate development.3  Authors which use this theory to explain Latin America's underdevelopment, sustain that Western Europe and the United States drain less developed nation's capital through different sources, such as repatriated profits, fees for royalties and interest payments on loans, among other things.4 This dependent status impedes less developed nations from achieving an autonomous economic infrastructure.5 To explain State's interactions under dependence, scholars usually use the 'center-periphery' argument°. They sustain that: Peripheral economies remain dependent in a very specific form: their capital-goods production sectors are not strong enough to ensure the continuous advance of the system, in financial as well as in technological and organizational terms. So, in order to go ahead with economic expansion, a dependent country has to play the "interdependency" game, but in a position similar to the client who approaches a banker.7  This is one of the strongest arguments used by opposers of free trade among developed and underdeveloped nations, as it is asserted that the latter are not able to sustain an effective bargaining 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 payments in order to bring net external transfers down to a level where the investment and growth rates were manageable. This measure was of great importance because Mexico may now focus on achieving internal economic growth, without destining all of its income into foreign debt payment.  The Modern World-System I: Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century (New York: Academic Press, 1974). 6 See I. Wallerstein,  7 Cardoso, supra note 2 at xxi-xxii.  37  B. Dependency in Mexico and the Rest of Latin America  Once the meaning of Dependency has been discussed; I will discuss some of the most important historical developments, which ocurred in Latin America (especially Mexico) in order to explain this region's underdevelopment from the dependence theorists perspective.  a) Historical Background  According to authors following the dependency theory, the colonial past, which identifies most Latin American countries, explains several outcomes in these nations' economic evolution. The main argument is that, throughout history, these nations were incorporated into the capitalist system as colonies and later as national states (neo-colonies); remaining today as peripheral economies to the 'center' or industrialized nations. In other words, even after these countries achieved their independence, the dependent relation continued as "European investments were directed mainly toward the sectors that local economies were not competent to develop, for example, transport." 8 In this way, the center controlled the output marketing of the periphery, supporting, at the same time, the local economic class that inherited its production base from the colony. In the case of Mexico, it was established that, from a trading perspective, "Mexico's gold and silver fed the coffers of Spanish mercantilism; Mexico's ports connected the trade routes of Asia 8 Ibid. at 66.  38 and Europe; and Mexico's internal class structure was shaped by this dependent relationship vis-a-vis Spain."9 This situation led the colonized nations of America to rely only on a raw material dependent economy. In relation to this issue, Ronald Chilcote explains: Because the New World was from the outset intended to be a source of valuable mineral wealth and raw materials from the homeland (Europe) and not a primary producer in its own right, Spain set restrictions upon the development of manufacturing in Mexico." An example of the above is that Spain periodically outlawed production of olive, oil, wine, silken goods and textiles in the colonies.  After independence, political power remained in the domestic land-holding class, which was relieved from the responsability of maintaining the welfare of the working class and obtained, this way, the gains of the monetary market, while leaving the rest of the population in a lamentable economic position. However, for this dominating class, there was an organizational problem consisting "in keeping local control of an export-oriented production system while creating a system of internal political alliance that would permit the group that maintained relations with the outside (the world market and the national states of the central countries) a minimum of internal power to preserve stability and represent the economic domination of the exportoriented production sector.""  9  Chilcote, supra note 3 at 228.  10 Ibid. at 231. 11 Cardoso, supra note 2 at 35.  39 During the nineteenth century, Mexico suffered other problems such as foreign debt and budgetary deficit which worsened this new independent nation's position. It is argued that by turning into free trade in order to solve these issues, it became an easy matter for foreigners to 'finance' Mexican development. Thus, economy was passed into the hands of foreigners with the encouragement of the Mexican dominating class. It is often stated that "because of the weakness of their bourgeois sector, countries dominated by an enclave economy had a rudimentary domestic market."  12  Under these circumstances,  Mexico and other pre-colonized nations were not able to achieve an autonomous internal growth.  In the early twentieth century a number of armed revolutions took place, as a response to the high levels of poverty and unequity suffered in most of Latin America.  13  The post-revolutionary era gave birth to a type of modern paternalism in which the state assumed the responsability for progress, development, and economic recovery. Fernando Henrique Cardoso describes how this phenomena began in countries such as Mexico and Venezuela, in the following terms: By revolution the middle sectors entered the state apparatus and used it to create a national economy. In all cases, the domestic economy developed through pressure from the middle groups allied with the existing burgeois capitalist sector, or with the worker-peasant sector, or with both. 14 12 Ibid. at 124. 13 For example, Mexico's 1910 Revolution took place as a response to the low standards of living suffered by the "campesino" class (peasants). Porfirio Diaz' dictatorship was not able to sustain a system characterized by favoring a rich minority and forgetting a poor majority. 14 Cardoso, supra note 2 at 125.  40  According to Cardoso, this fact was beneficial for such countries because it helped them achieve certain degree of industrialization. By 1940, the industrialization achieved by means of modern paternalism depended on high protective barriers which would, supposedly, "assist infant industries and optimize allocation of resources."15 This pattern shifted in Mexico, during Miguel Aleman's administration, in which industrialization was achieved via foreign investment. However, the strong influence of nationalism made of this shift in policy only a temporary measure, which dissapeared after this administration, returning to more protectionist policies.  By 1960, import-substitution industrialization had been carried out indiscriminately, giving rise to high cost industries with limited capital and unskilled manpower.16 It is at this point, when dependency theory emerged in an effort to explain why Latin America was not developing as anticipated. In response to the negative effects dependency brought over less developed nations, Latin American countries proceeded to implement different types of policies in order to break these links of dependency. We can cite as an example, the wave of expropriations in the 1960's and 1970's, directed to assert sovereignty over dependent countries' natural resources.17 A latter measure to fight dependency, mainly employed in the 15 R.J. Radway, "The next decade in Latin America: anticipating the future from the past" (1991) 13 Case Western Res. J.Int.L. at 7. 16 Technological-related industries are a good example of this phenomena. Particularly in the area of electronics, 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 oil expropriation in 1938.  41 1980's, was the nationalization of several economic activities such as the telephone, airline, and banking services, in order to create a strong state infrastructure. However, these type of measures brought negative results as the State showed tremendous incapacity in the management of such activities.  18  International measures against underdevelopment were also taken in the 1960's by less developed nations, when demanding the United Nations (U.N.) for the establishment of a 'New International Economic Order'. As a response, the U.N.'s General Assembly unanimously declared a 'Development Decade', which was to have the following characteristics: Less developed countries were to be assisted in achieving 5 per cent annual growth in aggregate national income through expanded international trade and an annual flow of international assistance and capital to the tune of 1 per cent of the national income of the developed countries."  Whatever positive the intentions of these measures might have been, this statutory provision was not able to have, in practice, the desired effect of creating internal and autonomous growth of these nations' economies. Nevertheless, exceptions to the rule could be found in specific cases. A domestic phenomenon took place in the industrialized countries of Latin America such as Brazil and 18 An example of these measures was the 1982 banking system nationalization in Mexico. This was a mainly political decision, taken by former President Jose Lopez Portillo, which turned the Mexican banking system into a highly inefficient service. However, not all of these measures were completely negative. In Mexico's case, for example, the 1938 oil expropriation helped it become the fourth-largest nation in the world, regarding oil reserves; thus oil represented the most important income for the nation. Nevertheless, in the long run, Mexico was affected by such fact as it relied its whole economy on a fragile oil exporting policy. In other words, in 1985, oil represented 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.  42 Mexico, which permitted a great measure of autonomy of internal decisions to be attained. In these nations, the public sector participated in both, the economic regulation and formation of new capital. As stated in the former paragraph, Brazil and Mexico had policy variants which allowed them to obtain a minimal level of industrialization. However, their general ideology did not vary much from other less developed nations' ideological standards, in the sense that they were basically biased against primary production, had a high degree of state interventionism, as well as a high degree of tolerance for inflation n and imbalanced growth .21 Besides these ideological barriers, there were other political pressures which obstructed a closer relationship with the developed world, particularly with the United States. Roberto de Oliveira, classifies some of these tensions 22 in the following manner: 1. Reactive tensions, such as the geographic mutilation imposed by the United States on Mexico, by the annexation of California and Texas in 1838. 2. Economic domination, in the form of an overwhelming influence not exercised by the United States Government but by its private individuals. Examples are given, such as the oil companies which were established in Venezuela and the United Fruit Company in Central America. 3. Institutional-Reform tensions are described by de Oliveira as "attempts by the United States to influence the 20 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.  43  political systems and/or to promote or stimulate reforms in the institutions of its neighbors from the south."23 In relation to this topic, two recent examples come to my mind. In first place, the recent invasion of Panama by the United States in order to capture Panama's President, General Manuel Noriega, so he could be judged for a crime punishable in the United States; shows an open violation to international law, justified by the Americans in order to bring a change on the political system of that country. 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 related crimes according to American laws; shows an open intention on behalf of the U.S. to change the Mexican legal system even if they have to violate every international law concerning State's jurisdiction.  b) Today's Situation  The fact that these tensions exist, has been an impediment for a closer relationship between less developed nations and the developed world. Latin America's policy- makers often turn to the Dependency theory in order to justify its separation from the industrialized world. Arguments about mercantile differences, such as "Latin America must avoid the preocupation with unnecessary goods and unnecessarily sophisticated products if dependence is to overcome, are common between opposers of consumerism and free trade. 23 24  Ibid. at  29.  Chilcote, supra note  3  at 86.  44 Foreign investment is often rejected, reasoning that "investment decisions continue to be based on plans for improved profitability and balanced development of multinational corporations rather than domestic employment and production needs..." 25 For example, Mexico's, 1982, "Ley sobre el Control y Registro de la Transferencia de Tecnologia y el Uso y Explotacion de Patentes y Marcas" (Law for the Control and Registration of the Transfer of Technology and the Use and Exploitation of Patents and Trademarks)  26 ,  shows an outstanding level of State  interventionism by regulating private contracts, regarding any intellectual property investments or transmission of technological knowledge, with the registration of such contracts on a National Registration System. Even though this pattern has lasted for many decades, today's leaders seem to be approaching the problem of Latin America's underdevelopment from another perspective. In his fourth address to the nation, President, Carlos Salinas de Gortari, in relation to Mexico's international policy, stated the following: Yesterday's great capital exporters are today's great resource importers. Under these circumstances, we need to be more efficient in order to export more dynamic markets. There will be more competition, however, by the internal reinforcement of our discipline in public finances, productivity encouragements, and the consolidation of clear and permanent trade rules, we will be able to get ahead of other economies and attract resources for our growth. 27  25 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.  45 This statement shows a new policy which implicitely rejects dependency. Taking into account new and domestic circumstances under which Mexico is located today, a different approach to end underdevelopment is taken by rejecting a protectionist policy and opening its economy to other world markets.  C. Dependency and Free Trade: Myths and Realities  President Salinas' statement is a good example of the new goals less developed nations are aiming at in order to overcome the effects of decades characterized by depressed economic growth. In today's world, Latin America's economic policies are shifting from having regulated markets and following importsubstitution strategies into completely different policies which embrace extensive deregulation, foreign investment promotion, and free trade.  a) Domestic and International Domination  Even though these trade liberalization measures have a strong support from many members of the community, such issues tend to be really controversial. Those who oppose a dependent status, usually are against free trade because, from their point of view, an open market will sustain a dependent situation of less developed nations with the industrialized world. However, the government is not the only one who receives blame for implementing such policies. Internal factors are often  46 implicated as sources of dependency. For example, the following statement argues that: The inability to break out of a dependent situation is often strengthened by citizens of a Latin American country who accrue selfish benefits at the expense of a country as a whole. m  In the case of free trade, many critics assert that an open market mainly benefits the burgeoisie, representing such class in this particular case, the strong businessmen of a less developed nation, which obtain great economic gains at the expense of the rest of the population. This situation, is more explicitely explained 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 classes which try to enforce foreign interests, not precisely because they are foreign, but because they may coincide with values and interests that these groups pretend are their own. 29  Although it is true that under a free trade agreement, entreprenuers are able to obtain high economic benefits, they are not the only ones who benefit from it. As I stated before m , consumers might be receiving the highest advantages from free trade. Thus, free trade does not necessarily involve a particular class trying to obtain personal gain.  Another strong argument against the possibility of having free trade between underdeveloped and industrialized nations 28 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.  47 relies on the asymmetrical relations between them caused by dependency. In other words, it is argued that the unequity on the levels of development in their economies, cause a dependent relationship enforced by developed over less developed nations. Cardoso, explains: There exists among the developed and underdeveloped economies a difference not only of the stage or the state of the production system, but also of function or position within the international economic structure of production and distribution: some produce industrial goods; others, raw material. This requires a definite structure of relations of domination to assure an international trade based on merchandise produced at unequal levels of technology and cost of labor force. 31  There is no doubt about marked differences among developed and underdeveloped nations. However, several circumstances have to be taken into account in order to conclude a mandatory dependent relationship in trade. In first place, the level of underdevelopment among less developed nations has to be considered, as it varies among each other. Not all of the less developed countries have the same level of development or economic potential. Thus, Mexico, for example, might be in a better bargaining position than Nicaragua, when dealing with industrialized trade partners. Secondly, a detailed agreement, such as NAFTA, has to be elaborated in order to help reconcile as much differences as possible. Finally, our economic era faces a new phenomena, in which, less developed nations are not exporting as much raw materials as before 32 ; therefore, these countries might have a valid bargaining position with industrialized nations by being able to offer other goods and services. All of 31 32  Cardoso, supra note See pages  31-32.  2  at 17.  48 these examples show that a 'relation of domination' might be avoided in free trade.  b) Unilateralism  Some efforts have already been made at an international level in order to end with economic 'unjustice' against the less developed world. In 1974, the U.N. proclaimed the 'Declaration and Programme of Action on the Establishment of a New International Economic Order', in which, some of the basic principles were the following: The need to secure progress towards equality of the nations through an equitable sharing of world resources, transfer of technology, a just and equitable relationship between the prices of raw materials exported from and the manufactured goods imported by the developing countries and full exercise of sovereignty over natural resources and other economic activities, including the control of transnational corporations  Even though this is a valid effort which aimed at improving less developed nations' economies, it looks mainly as a one way deal which has a lot of nationalist characteristics. This might have been an important factor which kept developed nations uninterested and therefore doomed the project. Following this general idea regarding unilateralism in international economic relations, some scholars which defend the theory of dependence, recognize the possibility of having an industrialized economy under a dependent regime. However, they excluded any chance for less developed nations from embarking into international trade, where a two-way deal is involved. 33 Akinsanya, supra note 19 at 212.  49 Cardoso and Faletto, for example, assert this hypothesis by stating that: The basic economic conditions of development are an open market, the exclusion of the dependent economies from the markets of the most developed countries, and the continuous transfer of new units of external capital in the form of advanced technology, which are more appropriate to the intrinsic needs of the mature economies than to those of the relatively backward economies. The combination of these conditions with the ideologies and legal relations among social groups makes possible "industrial economies in dependent societies".34  In other words, they recognize the existence of international trade and its link with development, but only with the exclusion of less developed economies, which basically work as recipients of the industrialized world. In my view, this statement is not accurate. The fact that a less developed nation is participating in international trade, does not mean that it is working at the service of the more developed nations. Asymmetrical participation is always obtained from a free trade agreement. In NAFTA, for example, while Canada may participate by exporting its technology, Mexico participates by manufacturing North American products at a low cost. Nevertheless, these asymmetrical actions translate into common benefits, as the three nations which participate, aim at fostering economic growth, creating jobs, and, in general, allowing North America answer the competive challenge coming from other economic blocs.  c) Nationalism  34 Cardoso, supra note 2 at 175.  50 What all of these ideas show is a radical nationalist way of thinking which basically gives less developed countries an irrational excuse for isolation. Roberto de Oliveira clearly explains this phenomena, in the following terms: Emotional nationalism may create a distorted sense of pride in traditional behavior and may inhibit economic change and the absorption of foreign technology. It may lead to irrational decisions preventing a faster development of natural resources and condemning countries to a lower rate of development than might otherwise be achieved. It may be used as a device to close the door to more productive and efficient enterprises, perpetuating local monopolies...35  Thus, countries might be paying, in the long run, a higher price for sustaining their nationalist ideologies and keeping overprotective regimes. The last two decades in Latin America have proven that state paternalism has not worked; as this policy usually "leads to premature attempts to redistribute income where it does not really exist.  "36  Having this thought in mind, Mexico, for  example, has engaged in a privatization process which includes some of the most important services, formerly and deficiently managed by the State, such as the telephone and banking systems.37 The object of this new policy is to create domestically efficient services which can, in the long run, compete at international levels.  d) Trade as Dependency's Instrument  35 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 a total of U.S. $4.5 billion in 1990-91.  51 Writers which favor the dependency argument, usually blame the dominating pattern of dependency as the mayor cause of economic and social backwardness in less developed countries. From their point of view, free trade might be a proper instrument to impose this domination and sustain underdeveloped nation's impoverishment. This idea has a strong counter-argument, which resides in the fact that there is no agreement on causality in relation to dependency. In other words, "some critics question whether dependency creates economic and social backwardness (as globalist claim), or whether it is economic and social backwardness that leads to a situation of dependency."  38  If  this statement is true, such theorists might have a difficult time blaming free trade as a dependency instrument when, in my opinion, it could really be used as a tool for overcoming backwardness by improving domestic economies and, therefore, eliminating dependency. 39  e) Trade and Aid  In many ocassions, the words trade and aid have been confused by scholars and politicians. Sidney Dell, in his book "Trade Blocs and Common Markets", establishes the important difference between these two terms. Dell, states that: The basic economic issue between the developed and underdeveloped countries is trade not aid. It involves the entire role of the underdeveloped countries in the world economy and not simply the crumbs that may fall to them from the tables of the rich. It concerns the earned income that 38 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 or imposition. In other words, NAFTA is not transforming Mexico; but Mexico is transforming itself by becoming, before NAFTA, a more dynamic and competitive nation.  52  should belong to the underdeveloped countries as of right, and not the charity which is theirs only at the discretion of, and subject to, the passing whims and predilections of others.°  Just recently, in their first meeting as leaders of state, President Carlos Salinas of Mexico, had to clarify President William Clinton of the U.S., that what Mexico intended under NAFTA was trade not aid. Aid usually translates into a dependent relationship, as the donating country usually sets the 'rules of the game'. Trade on the other hand, presupposes a deal between two parties which are equally obliged and acquire the same rights. In relation to economic results, "trade plays a vastly larger role than aid in providing the developing countries with the wherewithal needed for financing the imporation of developmental goods and services."" Statistics show that in the 1960's, the combined exports resulting from trade of developing countries resulted in over thirty billion dollars; while the income obtained from foreign aid and investment total eight billion dollars. Aid might lead to dependency, trade leads to interdependency.  D. Conclusion  Latin America faces a new era in which competition is strongly involved. The historical and international circumstances which guided less developed nations into dependency 40 S. Dell, Trade Blocs and Common Markets (London: Constable, 1963) at 134. 41 de Oliveira, supra note 21 at 101.  53  are changing; among others, raw materials are no longer the main interest industrialized nations have in Latin America. Besides, experience has shown that "the economies of scale in modern industrial production require that the industrialization of Latin America be based on larger markets than those afforded by the individual national unit." 42 Therefore, Latin America may need to start developing less protectionist policies in order to be able to grow.  Unilateralism is another international practice which has lost force today; as developed nations are no longer eager to get involved on one-way deals. At the same time, some less developed nations are ready to face international competition as well as other international obligations, which will lead them to embrace interdependent relations with the developed world. In other words, some Latin American economies are now able to choose trade and not aid.  Nationalism does not mix with today's, international, economic liberalization process. In the past, most Latin American nations used nationalistic arguments in order to irrationally justify their isolationism. A distorted sense of pride led these nations to follow policies which inhibited economic change by rejecting any form of foreign intervention, even if such was for the purpose of providing technological transfer or for creating productive enterprises. However, state paternalism has proven not to work, as its followers are being kept on a state of backwardness. 42 Ibid. at 6.  54  A 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, are working at the expense of their developed counterparts. On the contrary, such an agreement helps developing nations in breaking a dependent status, by domestically creating more jobs; increasing investment opportunities; and improving internal competitiveness. All of these issues, help foster economic growth and, therefore, eliminate dependence. Some Latin American nations might not be ready yet for this transition. However, the more developed nations of the Third World 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 we are embracing its vanishing... It is not possible to sustain the thesis in which the state must expect individuals to do everything; without a doubt, the reformed state must encourage private investment; nevertheless, at the same time, it is obliged to accomplish public investment destined to infrastructure and social development, in addition to its productive participation on strategic areas or encouraging proyects and sectors.°  President Salinas' words show that the fact that some nations, such as Mexico, might be embarking into international competition does not mean the State is going to lose sovereignty or free itself 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. For example, since 1983, with President De la Madrid's 43 Salinas, supra note 27 at 43.  55  administration, Mexico has experienced a profound transformation resulting from fundamental changes in its economic strategy. It's major goals have been stabilization and structural reform. President Salinas has reinforced the policies undertaken between 1983 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 of foreign investment; f) modernization of the financial system; g) restructuring of the external debt; and, h) improvement of social services."  Therefore, this example shows that a developing nation may not embark into free trade without a proper economic infrastructure, which Mexico does have. By aiming at free trade, Mexico has taken the first step out of dependency and the first step inside an interdependent world.  44 SECOFI (Mexico), Mexico and Canada: A Partnership for Prosperity, (Ottawa: Representative Office to Canada, 1993) at 6.  56  CHAPTER III. THE EUROPEAN ECONOMIC COMMUNITY AND NAFTA  There is no doubt that the global movement towards regional economic integration, has found its latest manifestation in NAFTA. However, there is uncertainty regarding the origins of this bloc formation phenomena. As I stated before, GATT's, Article XXIV, promotes multilateral trade liberalization by allowing regional economic integration.1 Therefore, as soon as the GATT was established, economic bloc formations, such as the Benelux Union (customs union formed by Luxemburg, Belgium and the Netherlands), began to emerge in Western Europe. Since then, stronger multinational associations such as the European Free Trade Association and the European Community 2 have appeared, and motivated the rapid expansion of both intraregional and external trade.3 NAFTA 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 a positive example for NAFTA because it embraces a Common Market, which includes the participation of both developed and developing nations. However, it is not wise to assume that both international associations have the same goals and means. In my view, some questions need to be answered before any parallel can be drawn between these two institutions. Among these questions, the following come to my mind: can european bloc formations 1 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 University Press, 1992) at x-xiii.  57 constitute a realistic precedent for NAFTA?; should study their deficiencies in order to avoid commiting similar mistakes in North America? Is it possible to compare the accession of less developed nations into the European Economic Community with Mexico's participation in NAFTA? In the following Chapter, I will try to answer these questions as briefly as possible. Therefore, I will divide Chapter III into three parts. In the first part, I will broadly address what is understood by EEC and its main functions; the second part will be dedicated to less developed nation's situation under this bloc formation; finally, in the third section of this Chapter a general comparison between the EEC and NAFTA will be made.  A. Concept  a) Definition  The European Economic Community (EEC) may be defined as a regional international organization created by the Treaty of Rome on March 25, 1957 "with the broad object of furthering economic development within the Community by the establishment of a Common Market and the approximation of the economic policies of member states." 4 The treaty came into force on January 1, 1958, for six original member states which were Belgium, France, the Federal Republic of Germany, Italy, Luxembourg, and the 4 Oxford Reference, 142.  A Concise Dictionary of Law, Second Edition (Oxford: Oxford University Press, 1990) at  58 Netherlands. Later, other nations such as Denmark, Ireland, the United Kingdom, Greece, Spain, and Portugal acceeded the agreement. Although the main objective has already been stated, other important goals are clearly set under Article 2. These basically are to promote throughout the Community harmonious development of economic activities, a continuous and balanced expansion, an increase in stability (basically monetary), an accelerated raising of the standard of living, and closer relations between the Member States.5 Once a definition has been given, I will describe in the following paragraphs, some of the most important historical facts which preceded the formation of the EEC.  b) Historical Background  On May 9, 1950, Robert Schuman, French Foreign Minister, declared that "a united Europe was essential for world peace and that a gathering of the European nations required the elimination of the century-old opposition between France and Germany." Therefore, by mainly taking into account political reasons, he proposed to unify France and Germany's coal and steel production under a joint authority. However, this organization was open to the participation of other European nations. Germany, the Netherlands, 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,  English language text), 298  6 P.S.R.F. 7.  Mathijsen,  A  U.N.T.S. 11,  U.K.T.S.  15 (1979) (with authoritative  art.2 (hereinafter EEC).  Guide to European Community Law, Fourth Edition (London: Sweet & Maxwell, 1985) at  59  the 'European Coal and Steel Community' (ECSC) was created, entering into force July 25, 1952. This agreement was the first step taken by a group of nations regarding the formation of what seemed to look as a European Federation. Following this agreement, in 1955, the Benelux countries proposed their ECSC counterparts the setting up of a common market and jointly developing specific areas such as transportation, classical and atomic energy. This idea was strongly taken into consideration and in 1956, a decision was reached to "start negotiations for drafting treaties that would establish a 'common market' and an Atomic Energy Community."  7  To  that effect, two important treaties became a reality. On March 25, 1957, Rome, Italy became the geographical site for the signature of the European Economic Community (EEC) and the Atomic Energy Community (EURATOM). Both treaties came into force on January 1, 1958. The autonomy of these two treaties did not last long, as on April 8, 1965, both agreements were merged, simplifying the institutional set up of the Communities by establishing a single Council, a single European Commision, a single Court, and one Assembly. 8 On July 1, 1968, a Customs Union was fully operative. This important step meant that "tariff and quota restrictions between Member States had by then been completely abolished and that the replacement of the national external tariff by the common external tariff had been completed." 9 Such accomplisment gave credibility to the common market deal. Therefore, on January 22, 7 Ibid. 8 See Ibid. at 8. 9 Ibid.  60 1972, the United Kingdom, Ireland, Norway", and Denmark acceded to the community by signing the Treaty of Brussels. This accession was followed by Greece's integration on May 28, 1979; and Portugal and Spain's application on March 28, 1977, and July 28, 1977, respectively. II Today, the Community has a total of twelve Member States.  c) Main Objectives  Trade liberalization in Europe was motivated by a number of different hypotheses which basically promised to improve domestic productivity while increasing international competition. Elisabeth De Ghellinck, talks about these expectations in the following statement: Access to an enlarged market would enable the firms to achieve economies of scale and hence increase their productivity, whilst at the same time confrontation with producers from other countries would increase competition, drive prices down and favour innovation. In this way the process of industrial adjustment is automatically and continuously realized by a decentralized competitive system. The main instruments of such an implicit market-oriented industrial policy, following the abolition of internal tariffs, were those designed to assure the Common Market, namely competition policy, a common external policy and authority to favour harmonization of member state laws.12  Thus, a regionalization of the European Economies seemed like a viable 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., 103.  The EEC and Mexico  (Dordrecht: Martinus Nijhoff Publishers, 1987) 103 at  61 In order to achieve all of the above, the European Nations facing this task, devoted their time to the creation of an Agreement (Treaty of Rome) which could establish substantive rules, define a common market, and allow for a number of freedoms and common economic policies. Specific objectives" were defined. However, in order to achieve such goals, the Community established two basic means, which, in my view, constitute an essential part of the EEC: 1) a Common Market and 2) a progressive approximation of the economic policies of the Member States.  According to Professor Mathijsen, the creation of a Common Market entails the following: The abolition of all obstacles to free movement of goods, persons, services, capital and payments, although the phase is also characterised by the adoption of a common policy in the sphere of agriculture and of transport, the institution of a system ensuring that competition is not distorted and the establishment of special relations with the overseas countries and territories. 14  The guidelines a Common Market must follow and respect are clearly stated in the Treaty. In other words, the Treaty of Rome establishes, in its Part 2, what it calls the basic freedoms which include the freedom to move goods within the Community; for workers, the freedom to move from one Member State to another; the freedom of establishment; the freedom to provide services throughout the Community; and the freedom to transfer capital and payments within the EEC. Later on, when comparing the EEC with NAFTA, I will discuss these freedoms. 13 See page 75. 14 Mathijsen, supra note 6 at 109.  62  The second instrument established in order to accomplish the EEC's objectives consists in the progressive convergence of the economic policies of the Member States. It is clear that this second stage "concerns policy rather than law-making"15. In other words, the successful integration of European economic policies depend on the development of specific economic and political circumstances rather than on mere statements of law; and therefore, such actions cannot be limited by a term or preestablished on a written agreement. Thus, the EEC Treaty is broad and vague when it comes to establishing an outline of this latter stage. Nevertheless, the agreement's effort consists in the establishment (either in the form of an specific provision or indirectly, by means of several provisions, protocols or reports) of common policies in most fields of the economy. These policies include common actions in areas such as agriculture (including fisheries)16; transport"; competition  18  ; regional 19; industryn; tax provisions21; economic  and monetary policyn; socia123; energy; environment and  15 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 it  guarantees freedom of action.  19 20  Such regional policies include actions to develop less developed nations economies. The  EEC  decided to focus on specific fields of industry such as information technology, steel, and  automobile 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 and products originating within a Member State".  22  Regarding this issue, among others, Article 3(g), calls for "the application of procedures by which the  economic policies of Member States can be co-ordinated and disequilibria in their balances of payments remedied".  23  Social policies, established under articles  117  through 128, include close cooperation in employment,  Labor law, working conditions and social security, among others.  63 consumers 24 ; industrial and intellectual property 25 ; and the approximation of laws 26 .  Finally, it is important to state another relevant task which the EEC has accomplished during its 35 years of existence; mainly, that it has generated "the most developed form of international economic law" 27 , primarily created in the form of rules and regulations by the Council and the Commission, and enforced by the European Court of Justice. But, I will get back to this issue when discussing the EEC's Institutions.  B. Less Developed Nations Situation in the EEC  a) Integration  Mexico's participation in NAFTA vis-a-vis with two industrialized nations has brought high controversy regarding the viability of less develop nations' participation in international trade with developed nations. This relationship contains a considerable number of asymmetries evolving from the different levels of development. Those favoring free trade among develop and developing countries have been able to give theoretical explanations on the  24 Regarding the environment, a programme proposed by the Commision was adopted by the Member States on November 22, 1973, in which eleven principles were established basically regarding preventive action and resposability of the polluter. Consumer policy on the other hand, mainly consists in providing the individual with protection, consultation and representation. 25 In this area, article 36, basically clarifies that industrial and commercial property can be justified as a 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.  64 viability of such partnership. Among other things, it is asserted that: The theory of trade liberalization brings gains to all parties even when trade liberalization is between partners with significantly different living standards and wages. This is primarily due to the access which the less developed partner gains to the markets of the more developed countries in the trade arrangement. It is also due to the strong demand in the less developed country for new and improved technologies and consumer goods, which in turn are imported from the more developed partners. m  Even though this statement contains accurate remarks, it is rather broad and hypothetical. Therefore, in my opinion, it would be wise to observe the concrete cases of Portugal, Greece and Spain in the EEC in order to find out if this theory has really 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 today in North America. Like Mexico, Spain and Portugal used to have highly regulated economies with significant industrial state ownership and regulation of international trade. Therefore, the three economies (Mexico, Spain and Portugal) have as a common denominator their involvement in privatization programs and industrial restructuring, just before entering an major trade deal. In the following paragraphs, I will briefly discuss the degree of participation less developed nations have achieved after thier accession to the EEC, and talk about the benefits, if any, this integration has brought them. 28 SECOFI, Canada and Mexico: Forging a New Friendship (Ottawa: Townsend Trade Strategies Inc., 1993) at 25.  65  b) Participation and Benefits  Since entering the EEC in 1986, Spain and Portugal have obtained relevant and diverse benefits. Among them, an increase on their productivity and investment rates stand out. At the same time, one of the biggest fears related to free trade and low wage nations has been overcome, as migration of labour from develop to developing countries has not occured as expected. In this regard, Joseph McKinney, asserts that: Spain and Portugal experienced dramatic increases in their growth rates, with no apparent adverse effect on the European Community economies. While the investment rate in Spain and Portugal increased, firms did not migrate on a wide scale to these countries to take advantage of their lower wage rates. Neither did labor migrate in large numbers from these countries into the other European Community countries. Increased specialization in production has been accomplished primarily through intra-industry specialization as opposed to the displacement of entire industries, thus minimizing adjustment costs. 29  Therefore, in the short run, some myths regarding free trade such as the loss of jobs have been proven wrong in Europe.  After some of the important benefits favouring less developed nations by economic regionalization have been stated, it is necessary to review the concrete actions taken to promote this positive regionalization. It is important to point out that economic integration did not take place from one day to another, rather, developing nations had to prepare themselves by using a variety of means which included domestic reform, and joining 29 McKinney, supra note 3 at xiii.  66 prior international trade agreements which set the pace for future Common Market negotiations. In the case of Spain, for instance, even though its accession to the Community goes back to June 12, 1985, progressive actions were established in order to avoid a drastic change in its domestic economy and provide a favorable adaptation into the Common Market. Thus, the European Community (EC) Accession Treaty established that free trade in industrial products between Spain and the EC was to be fully implemented on January 1, 1993.30 Therefore,  Spain had an eight-year term to  accomplish total free trade in industrial products. Also, by acceding the Treaty of Rome, Spain is to implement by January 1, 1996, free trade for most goods in agricultural products. It is evident that agriculture is an area of the Spanish economy, which may need a longer term to be liberalized, therefore, it has been given almost an eleven-year term. Aside from these adjustment terms, Spain had already began a trade liberalization process by signing a partial Preferential Agreement in 1970, which included several concessions regarding industrial products.31 Spain had also been preparing itself for free trade in agricultural products by signing the 1970 Preferential Agreement.32  30 See A. Tovias, "The Impact of the Second Enlargement of the European Community on Latin American Economies" 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 other things, it favored a 60% reduction of the Common External Tariff (CET) on most industrial imports originating in Spain; established preferential tariff quotas on Spanish refined petroleum products; and provided 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 Spanish agricultural exports (including food products) comprising a 30% to 50% reduction of the CET, but none at all on other agricultural products.  67 Portugal's case does not vary much from Spain. After its EEC's accession on June 12, 1985, Portugal acceded to the elimination of the remaining preferential tariffs on the EC and the EFTA's industrial exports. 33 As it is clear, Portugal had established closer institutional links with the EC 34 which made the transition to an open market easier. Greece, on the other hand, joined the Community in 1979. However, full implementation was attained until 1988. Unlike its less developed counterparts, Greece had been developing strong institutional links with the EC since 1961, when the 'Greece-EC Association Agreement' was signed 35 . Its definite integration to the EEC allowed for the elimination of remaining Greekpreferential tariffs on EC's industrial exports.  36  I have already stated some of the particular actions and benefits less developed European nations got from joining the EEC. I will now mention some of the general consequences drawn upon developing nations' integration to the EEC. In the first place, it is important to notice that the Community now has free access into Spanish, Greek and Portuguese agricultural markets. 37 This measure is an important aid for the complementation of European economies, as agriculture plays a primary role in Europe's economic integration. In second place, and also related to the primordial role agriculture has under the EEC deal, is the fact that the three 33 See Tovias, supra note 30 at 172. 34 In 1972, Portugal signed and agreement with the EC which established, among other things, free trade in industrial 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 on agricultural products. 36 See Tovias, supra note 30 at 172. 37 Ibid. at 173.  68 developing nations joined, upon accesion, the Common Agricultural Policy (CAP) which entails benefits as well as obligations.38 In third place, less developed nations had to agree upon accession that they would "withdraw from a scheme of trade preferences among developing countries, which includes six Latin American countries."39 From my point of view, this action is a good example of how regional economic bloc formation might lead to the segregation of non-participating nations.°  c) Conclusion  Greece, Spain and Portugal's accession to the EEC not only has proven asymmetrical economies can be harmonized under a Common Market, but it has showed that overall productivity can be achieved. Statistics show that the average annual growth of per capita GDP accelerated in the EC, in Portugal and in Spain; gross fixed capital formation strenghthened on all sides; and import demand rose dramatically. 0 Not all of the less developed nations have received the same benefits and treatment under the Community. For instance, changes in the industrial field are much more significant for Spain than for Greece and Portugal, as the latter were already receiving several benefits in that area even before acceding the Community. Nevertheless, common policies had to be taken by these nations in order to afford economic integration in a Common Market. In other 38 The benefits include overall advantages such as export refunds and guaranteed prices; while the obligations mainly consist in respecting, after a while, certain common disciplines such as production restraints 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.  69 words, domestic economic reform and previous trade links with their EC counterparts were necessary for the deal to take place. Even though Mexico's case under NAFTA has to be analized independently, it is useful to take into account the European experience in order to find out if the deal is going to work for Mexico. It has to be considered as positive, the fact that Mexico has already accomplished two goals which were prerequisites for its European counterparts to join the Community: economic domestic reform 42 and previous trading relations with its counterparts 43 . However, as I stated before, Mexico's situation in NAFTA has to be analyzed separately. In other words, even though, both, NAFTA and the EEC constitute multinational economic blocs, their  structure and functions differ, thus, it is not easy to state a paralel between them.  C. Comparison Between the EEC and NAFTA  The EEC has often been offered as an example of what should be understood by economic regionalization. With the creation of NAFTA, several comparisons have been drawn between the two  international agreements. Even though it is always wise to compare common past experiences, one should be careful to distinguish the differences. Severe differences exist between the EEC and NAFTA. The incentives which could have motivated the 42 Mexico's commitment to economic reform, which started in 1983, include the restructuring of the external debt; a strict control of public finances to control inflation; tax reform; liberalization of foreign trade policy; deregulation, privatization, or divestiture of non-strategic public enterprises; deregulation of foreign 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 which amounted to $3.5 billion in 1992.  70 formation of the EEC, vary from those NAFTA drafters experienced. At the same time, the functions and objectives may also differ between the two treaties. In this section, I will focus my study on differing points between the two agreements such as the incentives, means, objectives and institutions which separate them.  a) Incentives and Means  Apart from economic well-being, some of the main incentives EEC founders had in order to achieve European integration, relied on political and military matters. They basically hypothesized that if economic integration could be achieved, political and military union would follow. On the other hand, economic motivations were clear, the goal to achieve was to constitute a "more efficient European-wide market for goods and services, labor and capital."" However, political considerations such as ending decades of "bloody antagonism between France and Germany"45, and providing a common front against Soviet expansion in Europe, transformed an originally-mented economic treaty into a rather complex and broad agreement. Unlike EEC's drafters, NAFTA's creators were motivated by economic factors, basically trade liberalization. In other words, NAFTA's main incentive is to establish a free trade area not a fully integrated (political and military) and complex North American Community. 44 Janis, supra note 27 at 218. 45 ibid.  71  Explicit means were established in order to accomplish the Treaty of Rome's main objectives. These means basically constitute the different freedoms molded in the Agreement: free movement of goods; free movement of workers; freedom of establishment; freedom of services; free movement of capital; and the free movement of payments. I will briefly address the meaning of each of these guarantees.  The free movement of goods is made possible by the establishment of a customs union and the elimination of quantitative restrictions on imports and exports." I must point out that a customs union 47  ,  in this case, covers all trade in  goods (including industrial and agricultural products) and involves the prohibition between Member States of customs duties and exports and of all charges having an equivalent effect. It also entails the adoption of a common customs tariff in the relations with third countries.  The free movement of workers is directed to eliminate any type of discrimination based on nationality between workers of the Member States. 48 Administrative procedures and practices which also formed an obstacle to the free movement of workers have also been abolished. A noticeable difference is found in NAFTA, regarding the free movement of workers. Under NAFTA, such freedom does not 46 See EEC, supra note 5 at art.30. 47 Ibid. at art.9(1). 48 Ibid. at art.48(2).  72 exist. Instead, there are provisions, such as Article 1601, which allow a partial movement of workers by permitting the temporary entry for business persons. This provision's objective is expressed in the following terms:  This Chapter reflects the preferential trading relationship between the Parties, the desirability of facilitating temporary entry on a reciprocal basis and of establishing transparent criteria and procedures for temporary entry, and the need to ensure border security and to protect the domestic labor force and permanent employment in their respective territories .49  Therefore, it is evident that NAFTA's drafters avoided protecting every non-commercial issue by excluding political matters such as transnational migration. NAFTA even maintains that the existing immigration measures in each country will prevail."  Freedom of establishment implicitely includes the liberty to move from one place to another. The Treaty of Rome describes it as "the right to take up and pursue activities as self-employed persons and to set up and manage undertakings, agencies, branches or subsidiaries."" NAFTA's Article 1601, which allows the temporary entry of business persons, is not comparable with the freedom of establishment as the latter requires a more or less permanent settlement.  The freedom to provide services52 also assumes freedom of movement, as it "concerns nationals of a Member State who are 49 The North American Free Trade Agreement, No.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.  17  December 1992, United States-Mexico-Canada,  CCH  International  73  established in a state other than the one of the person for whom the services are intended."" Therefore, the freedom consists in the right to temporarily pursue activities in the state where the services are provided. It must be noted that this freedom also implies a right for the beneficiary of a service to move into another 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 following acts: a) the production, distribution, marketing, sale and delivery of a service; b) the purchase or use of, or payment for, a service; c) the access to and use of distribution and transportation systems in connection with the provision of a service; d) the presence in its territory of a service provider of another Party; and e) the provision of a bond or other form of financial security as a condition for the provision of a service. 54 The object of this provision is to award national treatment to services providers of other Member States. Therefore, Article 1202(1), asserts that "each Party shall accord to service providers of another Party treatment no less favorable than that it accords, in like circumstances, to its own service providers."" Even though the rights awarded by this provision are similar to what is understood as freedom of services in the EEC, NAFTA only protects the right to provide a service and does not imply the right of the beneficiary to move into another Member 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).  74 Free movement of capital% translates into the progressive abolishment of "all restrictions on the movement of capital belonging to persons resident in Member States and any discrimination based on the nationality or on the place of residence of the parties or on the place where such capital is invested...57 Even though the Treaty talks about abolishing "all restrictions"; there is a limit: the elimination is only required "to the extent necessary to ensure the proper functioning of the common market." This undetermined limit and the complexity of the provision itself, makes implementation difficult. In relation to this provision, the Court of Justice accurately stated the following: The scope of that restriction..., varies in time and depends on an assessment of the requirements of the common market and on an appraisal of both the advantages and risks which liberalization might entail for the latter, having regard to the stage it has reached and, in particular, to the level of integration attained in matters in respect of which capital movements are particularly significant.8  Therefore, even though this freedom is explicitely included in the Treaty, it constitutes an ideal goal but not a reality. NAFTA does not go that far regarding free movement of capital. However, it does establish an specific provision in which Member States are allowed to own a financial institution in a State other than his/her. Thus, Article 1403(1), provides that "the Parties recognize the principle that an investor of another Party should be permitted to establish a financial institution in the territory of a Party in the juridical form chosen by such 56 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.  75 investor." 59 Even though this provision does not entail an absolute freedom of capital movement, it is clearly expressed and does allow immediate implementation.  Finally, the free movement of payments" provision obliges the Member States to authorise payments from a debtor in one Member State to a creditor or beneficiary residing in another. However, it only applies to payments connected with free movement of goods, services and capital. This provision is necessary in order to obtain legal certainty in a whole region.  b) Objectives  The EEC's main economic objectives reside on the promotion of domestic competition and the creation of a common competitive market. In theory, the acheivement of such goals does not seem to be complicated, "once domestic tariffs are abolished, the measures introduced are designed to guarantee this common market, that is to say, a competitive policy, a common foreign policy and the power to harmonize the laws of the member states."'" However, the means provided by the Treaty of Rome seem to be limited. The Agreement provides in first place for the establishment, functioning and the development of a common market. This primary stage is provided by the Treaty with precise rules and timetables. The second stage, however, which aims at the 59 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.  76 progressive approximation of the economic policies of the Member States, is described in very general terms. This vagueness has not prevented Community activities to penetrate other social and economic spheres, even though they are not explicitely included under the Treaty.  62  This situation gives us a huge and complex  international organization, which lacks of the legal instruments to function properly.  NAFTA's main objectives are explicitely stated under Article 102. These are, to eliminate barriers to trade in, and facilitate the cross-border movement of goods and services; promote conditions of fair competition; increase substantially investment opportunities; provide protection and enforcement of intellectual property rights; create effective procedures for the implementation and application, administration and dispute resolution; establish a framework for further trilateral, regional and multilateral cooperation to expand and enhance the benefits of the Agreement.° These objectives are clear and their content reduces to regulate trade and the main consequences trading relations might bring. In other words, its main objectives do not go beyond the possibility of establishing a common market. Some of the areas aimed at the progressive aproximation of Member States policies, but not explicitely contemplated in the Treaty of Rome, are molded into NAFTA. For example, while common energy policies are considered EEC activities, it is not explicitely provided as such under the Treaty of Rome. NAFTA on 62 Such activities include, among others, energy, regional policy, environment, consumer protection and the European Monetary System. 63 NAFTA, supra note 49 at art.102(1).  77 the other hand, explicitely recognizes that "it is desirable to strengthen the important role that trade in energy and basic petrochemical goods plays in the free trade area and to enhance this role through sustained and gradual liberalization.  11,64  Therefore, NAFTA legitimates Member States on energy matters and liberates them of the necessity to recur into paralel activities which might be surpassing the agreement's jurisdiction.  c) Institutions  The EEC is runned by four main institutions: the Assembly (European Parliament); Council; Commission; and Court of Justice. 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 has 60; the Netherlands 25; Belgium, Greece and Portugal have 24 each; Denmark has 16; Ireland, 15; and Luxembourg, 6 members. The Assembly's main activities relate to budget, external relations and legal affairs. In particular, the Parliament participates in the legislative and budgetary procedures, probably being the latter its most authoritative role as it may reject the EEC budget and send it back to the Council for ref ormation. 66  The Council of the European Communities is constituted by one member, per government, participating at the EEC. Its main 64 Ibid. at art.601(2). 65 See EEC, supra note 5 at art.4(1). 66 See Janis, supra note 27 at 219.  78 objective is to "ensure co-ordination of the general economic policies of the Member States."7 However, its functions also include decision-making powers in the field of legislation, budget and international agreements.68 The Council also has jurisdiction over political co-operation. The Council is considered "the repository of the sovereign powers of the EEC."69 Therefore, it is considered by some more important than the European Parliament.  The Commission is integrated by seventeen commissioners. Two each 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 principal administrative organ70, and having legislative initiative. Some authors such as Mathijsen, point out this institution's relevance, by stating that: The Commission... is responsible for the functioning and development of the Common Market and is the guardian of the Community legislation; it administers the Communities' finances, negotiates the international agreements and represents the Community both within the Community and in the international field; it also has its own powers of decision. In short, it should be seen as the executive branch of the Community.fl  67 EEC, supra note 27 at art.145. 68 For example, the Council may enact legislation through regulations, directives and decisions. Its intervention outside of the community resides in concluding the international agreements negotiated by the Commission. 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.  79 However, in my opinion, if it is considered the executive branch of the Community, it should be more democratically integrated by allowing every State to have two representatives.  72  The European Court of Justice is integrated by thirteen judges m , assisted by five Advocates-General 74 . Its main task is to "ensure that in the interpretation and application of the Treaty the law is observed." 75 It is important to point out that, following the common law tradition, the European Court does not only interpret the Treaty but also is empowered "to state what the law is when the existing legislation does not explicitely provide for it."  76  This attribution allows the  European Court to create common European legal precedents.  The EEC contemplates other important bodies besides the four main Institutions, already mentioned. Among them, the European Investment Bank" projects itself because of its fickleness; as it has capacity to finance Community's development regions as well as industrial projects. This occurs because its basic objective is to "facilitate the economic expansion of the community by opening fresh resources."  78  72 In my opinion, the Community evades the criticism on having an equal)  ,  integrated Commission by stating in  Article 10(1), first paragraph, of the 'Merger Treaty', that members "shall be chosen on the grounds of their general competence" and their "independence" must be "beyond doubt". Therefore, impartiality is pressumed. 73 Accession Treaty, 12 June 1985, concerning the Accession of the Kingdom of Spain and the Portuguese Republic to the European Economic Community and to the European Atomic [Energy] Community, art.17, 28 Official 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.  80 NAFTA is a free trade agreement. Therefore, it is evident that its Institutions will not be as complex and multifunctional as those embraced by the European Community. NAFTA has only two main Institutions: a Free Trade Commission79; and a Secretariatm.  The Commission comprises cabinet-level representatives of the Parties or their designees. Its faculties are the following: a) supervise the implementation of this Agreement; b) oversee its further elaboration; resolve disputes that may arise regarding its c) interpretation or application. d) supervise the work of all committees and working groups established established under this Agreement,...; and e) consider any other matter that may affect the operation of this Agreement.81  Therefore, the Committee basically absorves every faculty regarding implementation, further elaboration, and dispute resolution in the NAFTA agreement itself. The Secretariat functions as an aid to the Commission by providing it with its general assistance; or giving administrative assistance to other panels, committees or groups82, also established by NAFTA. It is obvious that NAFTA does not need such a huge institutional basis as the EEC does to be functional. NAFTA's Free Trade Commission is able to handle some of the activities which are delegated into four different institutions under the EEC. It is true that NAFTA's Institutions cannot, for instance, legislate; but, being basically a free trade agreement and not a 79 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, which participate in the review and dispute settlement in antidumping and countervailing duty matters.  81 multiple-function Community, it does not require to exercise that faculty. Thus, a free trade deal requires a simple institutional apparatus.  D. Conclusion  Although the EEC and NAFTA share some common goals they are not completely alike. It is true that both constitute international agreements embracing the idea of a common market. However, their incentives, functions, means, objectives and institutions differ in many ways. The EEC is more than a free trade agreement. Rather, it embraces a complex agreement, in which, several issues including sovereignty 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 countries before them, merely creating mutual obligations; they were doing much more: they were limiting their own sovereign rights, transferring them to institutions over which they had no direct control and endowing them with powers they did not always possess themselves. Furhtermore, they were not only binding the states they represented to assume new rights and obligations, they were also directly including their citizens, who became subjects of the community. 83  This statement clearly explains what European nations understand as an International Community. For them, sovereignty can be compromised in order to achieve the agreement's objectives. It has been stated that the European Court, for instance, "views 83 Mathijsen, supra note 6 at 1.  82 state sovereignty as divisible and delegable;" therefore, "it is entirely possible for the EEC Member States to give up a portion of their sovereignty to an international institution."84 On the other hand, in the case of a trade agreement such as NAFTA, even if such deal involves some sovereignty issues, these are not open to any bargaining. In other words, NAFTA tries to avoid any cicumstance where a Party's sovereignty might be put in jeopardy.85 Therefore, the EEC has priority against nationstates, national laws, and national courts, while NAFTA should merely enforce mutual obligations regarding trade.  Although the EEC and NAFTA may differ in many issues, this does not mean that the latter should ignore the experiences acquired by the former in common specific areas. Less developed nations experiences in free trade with developed nations, for example, should be taken into account in order to apply favorable results and avoid making the same mistakes. It is clear that Mexico's economic background coincides with that of European developing nations, integrated under the EEC. 86 It is also evident that positive results have been obtained from these nations' participation in free trade.87 Therefore, Spain, Portugal, Greece and the European Community's positive experience would indicate that Mexican participation in NAFTA, will likely lead 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 their Constitutions in relation to Energy and Basic Petrochemicals. These issues embrace a high content of sovereingty 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.  83 Thus, even though the EEC and NAFTA are not analogous, the former's experience with less developed nations should be considered as a positive example of economic integration among asymmetrical economies.  84  CHAPTER IV. NAFTA AND INTELLECTUAL PROPERTY  The aftermath of the 'Cold War' has brought a new international era characterized by hope and change. This 'New World Order' encompasses a global change in the ideological, economic and political spheres. At an international level, a common pattern has emerged registering the creation of different economic poles of power which are causing the regional integration of neighboring nations. This regional integration brings, at the same time, an increasing need for interdependent relations among integrated nations. As a result of the above, financial, commercial, and technological issues, among others, are now transcending frontiers. Simultaneously, at a domestic level, Latin American countries such as Mexico, face a double task: recuperating economic growth; and improving its nationals' living conditions. However, optimism exists as new theoretical currents are replacing old ideologies, and some of these nations are aiming at achieving a reasonable equilibrium between market forces and state intervention. These countries are also beginning to realize that some sort of regional organization is needed for technical advances and industrial growth to proceed. For the above reasons, free trade is considered as a viable option. Free trade relies on David Ricardo's 'theory of comparative advantage', which sustains that a country may export the product in which it has the greatest or comparative advantage and import  85 the commodity in which a comparative disadvantage exists.1 Thus, this theory proves that trade among nations with different levels of development is possible even if an absolute gain or advantage is not obtained. Practical benefits are encouraging nations to embark into free trade. Among these, we can state the fact that in today's world, imports have the same importance as exports because of the former's proneness to promote higher  quality and quantity of  goods and services (tariffs, on the  other hand, reduce the  availability of goods and services).  Therefore, the economic  isolation policies which several nations used to rely on because of the capital gains derived within, are no longer applicable as contemporary nations cannot depend entirely on their exports; imports, consisting of goods and services, are an important element on the level of success of today's domestic economies. Several economic changes have also influenced protectionist economies in their decision for shifting and fitting their policies into a global economy. In the first place, today, countries recognize that market competition is a worldwide phenomena, as high technology is combined with other transnational factors such as competitively priced labor and low capital cost. Secondly, countries are now producing merchandise which is characterised by its low cost but high quality, rather than finished products which strongly relied on raw materials. Finally, less developed nations competitiveness has increased in recent years by combining sophisticated labor with relatively low wages; this action reduces costs on developed nations and 1 See D. Ricardo, The Principles of Political Economy and Taxation, Int. by Donald Winch (London: Dent, 1973) at 88.  86 increases their competitiveness. All of the above, makes of regional economic integration a viable option for developed and developing countries in the late twentieth century.  Economic regionalization and free trade are opposed by those who explain underdevelopment by reference to the dependency theory; which basically interprets Latin America's underdevelopment by asserting that these countries' economies are conditioned by the development and expansion of stronger economies. 2 The 'center-periphery' argument is used to explain how peripheral or less developed economies remain dependent as their production sectors cannot ensure an advance in financial, technological and organizational terms. Therefore, it is sustained that such economies have to remain dependent in order to reach 'economic expansion'. It is said, that Mexico has been in a dependent situation since colonial times. 3 Therefore, in the past decades, protectionist measures, such as an open rejection to foreign investment, have been implemented in order to avoid any sort of foreign dependence. Free trade is said to be detrimental to peripheral nations as, with its implementation, a dependent status from economically stronger nations is accentuated. Even though these ideas prevail over certain regions in Latin America, many of its leaders are rejecting protectionism and beginning to move towards free trade. Regulated markets and import-substitution strategies are giving way to newer ideas 2 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.  87  which include an overall deregulation leading to investment promotion and free trade. Free trade does not mean dependence. Several reasons can be given. In the first place, the situations of domination which formerly kept less developed nations in a dependent status have changed and some developing nations have gained better bargaining positions vis-a-vis its developed counterparts. Secondly, under free trade, interdependence is a must, as one of its main objectives is to impose bilateral rights and obligations, and does not intend allowing any unilateral action which can lead to dependence; in other words, trade and aid must not get confused. In the third place, nationalistic ideologies have lost strength in Latin America and are being replaced by other tendencies which aim at market liberalization. From all of the above, I am able to conclude that free trade does not promote but, rather, eliminates backwardness.  Mexico has decided to play an important part in this economic liberalization era, where it will face new and different international tasks. Trade and interdependence constitute two of its main priorities. The different political, cultural and legal backgrounds, which separate Mexico from nations with a higher level of development (particularly its NAFTA counterparts), constitute a major obstacle for regional integration; such asymmetries must be overcome in order to reach the economic regionalization of North America. Therefore, in the domestic arena, Mexico is undergoing a rapid transformation of its internal markets and business culture. In order to achieve such goals, legal reforms in many areas are needed. The existing  88 legal asymmetries with its NAFTA's counterparts regarding intellectual property, for example, have been a motor force motivating domestic legal reform in this area. In the following chapter, I will analize some of the existing differences between NAFTA Parties domestic intellectual property legislation (Copyright, Trademarks, and Patents). I will also address, NAFTA's effort and effect on correcting such asymmetries, particularly from the Mexican point of view. Finally, I will refer to how Mexico's interest in being part of the new economic order is reflected in the implementation of new and advanced domestic legislation, which regulates industrial property.  A. Intellectual Property in North America  a) Main Asymmetries Within NAFTA, Intellectual Property is one of the topics tending to include several asymmetries, which derive from main trading difference among the Parties. On the one hand, the United States and Canada, commonly considered as technologically creative and innovative nations, are usually producers and exporters of goods, and are in need of intellectual property protection on such items as software, movies, books, and sound recordings. Statistics show that copyright-dependent U.S. exports to Mexico and Canada have drastically increased from $.8 billion dollars in 1985 to nearly $3 billion dollars in 19914. In 4 Office of the U.S. Trade Representative, The North American Free Trade Agreement: Intellectual Property (Washington, D.C.: US Trade Representative, 1992) at 1 (hereinafter U.S. Trade Representative).  Rights  89 relation to high-tech exports such as scientific instruments, computers, and chemicals, among others, an outstanding $5.3 billion dollars was exported from the U.S. to Mexico in 1991.  5  Mexico, on the other hand, could be classified as a country which primarily imports such goods. It is well known that "Mexico relies on imported technology in its efforts to modernize and upgrade its infrastructure and develop a more sophisticated manufacturing capability." Thus, Mexico's demand for industrial machinery and technology such as metalworking equipment, machine tools, and plastics production machinery and equipment, among others, are expected to exceed $6 billion dollars by 1994.  7  b) Linkages  Although these issues are regulated by each country's domestic legislation, it must be acknowledged that on many occasions the topics included under this area of law are intangible and do not respect national boundaries. It is recognized that "the fact that information is intangible also means that it is indivisible: an unlimited number of users can consume it without depleting it." 8 This situation engenders a high priority on behalf of the U.S. and Canada to find a prompt solution with Mexico dealing with transnational problems regarding 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 in intellectual property, by providing uniformity to disparate state practice and, therefore, avoiding ambiguity of concepts.  90 with the implementation of NAFTA, the Parties aim at an homogenization of rules with effective enforcement procedures. NAFTA's, Part Six, Chapter Seventeen, is dedicated to Intellectual Property. Besides being built in accordance with various intellectual property treaties, the provisions included in this Chapter, are similar to those proposed in the GATT Uruguay Round and are consistent mainly with American and Canadian interests. The fact is that "NAFTA provides a higher standard of protection for patents, copyrights, trademarks, and trade secrets than has been established in any other bilateral or international agreement. ilio Article 1701, establishes the nature and scope of the Parties' obligations. Section 1 reads as follows: Each Party shall provide in its territory to the nationals of another Party adequate and effective protection and enforcement of intellectual property rights, while ensuring that measures to enforce intellectual property rights do not themselves become barriers to legitimate trade.11  This disposition establishes a broad obligation on the signing countries regarding foreign intellectual property rights protection. Before NAFTA, there was no compromise that could assure the resolution of a number of specific irritants regarding transnational enforcement of such rights. At the same time, the implementation of this section reduces the threat of piracy of intellectual property rights by allowing every citizen of each nation 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).  91 In order to achieve an efficient implementation of NAFTA, the Parties are required under Article 1701, section 2, to give effect to the substantive provisions of four different international agreements. These are, the 'Geneva Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of their Phonograms', 1971; the 'Berne Convention for the Protection of Literary and Artistic Works', 1971; the 'Paris Convention for the Protection of Industrial Property', 1967; and the 'International Convention for the Protection of New Varieties of Plants' (UPOV), 1978 or 1991. 12 While the U.S. is a signatory to all four Conventions, Mexico has not yet acceeded to UPOV, and Canada is not a Member of the 1971 Geneva Convention. NAFTA perceives this situation and therefore prescribes that if any of the Parties has not yet acceded to any of these treaties, they are encouraged to do so. However, in the case of Mexico, this 'encouragement' becomes obligatory. Annex 1701.3, states that Mexico shall: a) make every effort to comply with the substantive provisions of the 1978 or 1991 UPOV Convention as soon as possible and shall do so no later than two years after the date of signature of this Agreement;... 13  The obligation for Mexico to accede to the UPOV Convention, two years after signing NAFTA, is a clear example of how NAFTA deals with some asymmetries. By not being part of such treaty, Mexico has an advantage over the U.S. and Canada, as it does not have to respect the obligations established in the Convention. With Annex 1701.3, in the short run, Mexico will have to join the UPOV 12 Ibid. 13 Ibid.at annex 1701.3.  92 Convention in order to receive other intellectual property benefits from NAFTA, such as an increase in foreign technology and investment. Although for Canada and the U.S. this obligation might be difficult to implement; for Mexico the task is not as complicated. The Mexican Constitution establishes, in Article 133, that every treaty which is in accord with the Constitution and celebrated by the President with the Senate's approval will automatically be the "Supreme Law of the Nation.  104  Thus, as  soon as the President gets a treaty ratified by a majority of the Senate, it is automatically implemented and becomes part of Mexican law. The strong desire Mexico has for the agreement's success is reflected not only by its acceptance, in the near future, of new international legislation (NAFTA), but is also shown in its prompt reform of domestic legislation in accordance to NAFTA. In exercise of the right embedded in Article 1702, which states that "a party may implement in its domestic law more extensive protection of intellectual property rights than required under this Agreement, provided that such protection is not inconsistent with this Agreement"15, Mexico has already implemented the "Ley de Fomento y Proteccion de la Propiedad Industrial" (Law for the Promotion and Protection of Industrial Property)m. This Law takes into account each and every issue discussed in NAFTA. The main goal of this legislation is to offer legal security to  14  Constitucion Politica de los Estados Unidos Mexicanos 95a. ed. (Porrua, 1992) at "art.133" (hereinafter  Constitucion Politica). 15 NAFTA, supra note 11 at "art.1702". 16 F. Serrano, La propiedad industrial en Editorial Porrua, 1992).  Mexico: Nueva Ley para su fomento y proteccion (Mexico,  D.F.:  93 inventors and foreign investors which would like to contribute with their capital and knowledge in Mexico. Even though Mexico understands that NAFTA will bring high benefits for its industry in the branch of intellectual property, Mexican electronics businessmen have some reservations regarding its application. During NAFTA's negotiations, such businessmen proposed that the Agreement should follow three main principles: gradualism, reciprocity, and selectivity. Gradualism aims at a gradual opening of the mexican market, not all sectors being open to trade at the same time. Reciprocity is understood as furnishing similar participation in the trade flow, recognizing each nation's state of development. Finally, selectivity was proposed so it could be decided which specific sectors were participating in NAFTA in order to establish the strongest trade zone as possible." From all of the above, it is apparent that there are numerous different interests involved in this deal. In the following paragraphs, I will talk about some of the main asymmetries regarding Copyright, Trademark and Patents, and how this problem is dealt with under NAFTA and Mexico's new domestic legislation.  B. Copyright  a) Definition  17 J. Guevara & J. Palacios, "Retos y Oportunidades de la Industria Electronics", El Financiero (Mexico, 28 April 1993) 32A.  94 Copyright can summarily be defined as "the exclusive right of multiplying copies of an original work or composition, and consequently preventing others from so doing. Even though this is an accurate definition, when trying to find out which issues does copyright protect, it is necessary to look into the statutory 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 is the sole right to produce or reproduce any such work or any substantial part thereof in any material form whatsoever.19 The latter definition is broader and more useful when talking about copyright protection at an international level, because it includes the specific works protected by such right.  b) Asymmetries  The fact that a general definition of copyright was given before, does not mean that under an international agreement such as NAFTA, the parties will totally agree on a unified concept of this legal figure. On the contrary, if the domestic legislation of each of the Parties is examined, several differences can be found. In the following paragraphs I will address some of the main differences as well as similarities of Copyright legislation in Canada and the United States on the one hand, and Mexico's legislation 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.  95  aa) Main Differences  In order to find out what are the main asymmetries on Copyright law among these nations, it is necessary to look into the legal nature of such institution in each country. In the case of Canada and the U.S., their common law tradition guides them to understand Copyright as a pragmatic institution which its main objective being to provide an author with 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 the government and later was "transferred to the printers themselves with the formation of the Stationers' Company to prosecute printers who published seditious matter or who infringed others' licensed works." m As years went by, government's censorship declined; thus, the Stationers asked the Parliament for aid. The Parliament then created the "Statute of Anne" in 1709, which is considered the first English Copyright Act, having a great influence over Anglo-Saxon nations. American colonies adopted the 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 no natural property in it and has and enjoys only such rights in respect thereof as the public through the legislature chooses to confer.  1,21  All of the above shows that this system is in many  ways wedded to the technology of the printing press and, as it 20 Goldstein, supra note 8 at 528. 21 Fox, supra note 19 at 2.  96 will be stated later on, it understands Copyright more as a practical tool for technological improvement rather than taking a moral or natural right approach, as the civil tradition does. The case of Mexico is different. Even though Mexico's legal system is based on the civil law tradition which gives primary importance to statutes; the nature of the main right protected by Copyright legislation, resembles the natural right's theory, where "intellectual creations are property like other species of property, but belong to their originators by right of the highest possible title."22 This resemblance is shown by including the protection of authorship rights under the individual's guaranteed rights established by the Mexican Constitution. In other words, Mexico's Copyright legislation or "Ley Federal de Derechos de Autor"(LFDA)23 is considered a reglamentary law of Article 28 of Mexico's highest statute: the Constitution. Such Article, in its paragraph seven, establishes an exception to the general prohibition of monopolies in Mexico by stating the following: Art. 28 (paragraph 7).- Neither will the privileges granted for a limited time to authors and artists on the production of their works constitute monopolies...24  Article 28 is one of twenty-nine articles which protect the individual's guarantees in Mexico. Even though the statute grants authors and artists limited rights, to include "derechos de autor" (author's rights) under the individual's guaranteed  22 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.  97 provisions implies a tacit recognition of the moral nature such institution has in Mexico. Even when comparing the name given to this institution in Mexico with the one given to it in Anglo-Saxon countries, it is easy to point out the differences. The former calls it 'author's rights', taking an eminently moral or natural rights approach; while the latter simply calls it a 'Copy right', which is easier to justify as a statutory right. This idea will be clarified in the following paragraphs, when I will discuss the main rights assigned to Copyright by domestic legislations.  Mexico's LFDA, on its Article 2, recognizes and protects in every 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 cause any harm on his/her honor, prestige or reputation. 3. The temporarily and profitable use or exploitation of a  work by himself/herself or by an assignee.  25  It is obvious that Mexico gives great importance to the relationship between the author and his/her work. At the same time, it is observed that all of these primordial rights have a high moral content.  25 LFDA, supra note 23 at 8.  98 In relation to the main rights protected by Copyright legislation 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 copyright under this title has the exclusive right to do and to authorize any of the following: 1) to reproduce the copyrighted work in copies or phonorecords; 2) to prepare derivative works based upon the copyrighted work; 3) to distribute copies and phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; 4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; and 5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly. 26 American legislation addresses Copyright's main rights from a pragmatic perspective. It establishes in detail possible actions protectable under Copyright. It definitely focuses on the author's works rather than protecting the author itself, as the Mexican legislation does.27 The above statement does not mean that the U.S. Code ignores the author's 'moral' rights. It refers to them in Section 106A. However, they are given a secondary position with relation to the exclusive rights which Section 106 embraces. In other words, these types of rights are classified as "Rights of attribution  26 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. Copyright on Section 106. The "Ley Federal de Derechos de Autor" includes such rights under Article 4, however, they are complementary to the rights established on Article 2.  99 and integrity" m and its scope is reduced to the protection of an author's work of visual art.  Canada's Copyright Act (Act) 29 also includes a comparatively small 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 of the work and, in connection with an act mentioned in subsection 3(1), the right, where reasonable in the circumstances, to be associated with the work as its author by name or under a pseudonym and the right to remain anonymous. 30 This example shows that Canada's legislation main interest also relies on protecting the work rather than the author. The Act establishes, under its Section 3, the main purpose of Copyright in Canada; which is, "the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform, or in the case of a lecture to deliver, the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof •"31 For all of the above, it is clear that one of the main differences between Mexico's legislation on the one hand, and its NAFTA's counterparts on the other, is the importance given to the moral 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) (hereinafter Copyright Act). 30 Ibid. at "s.14.1(1)". 31 Ibid. at "s.3".  100 rather than focusing on the work itself, as in the case of the latter.  In relation to Copyright's subject matter, the three nations basically 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 this title, in original works of autorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Works of authorship include the following categories: 1) literary works; 2) musical works, including any accompanying words; 3) dramatic works, including any accompanying music; 4) pantomimes and choreographic works; 5) pictorial, graphic, and sculptural works; 6) motion pictures and other audiovisual works; 7) sound recordings; and 8) architectural works.32 This long list's primordial goal is to include a wide variety of works.  Canadian legislation does not divide the protected works in so many categories. It rather includes all of these works in four broader subjects: literary, dramatic, musical and artistic  32  Copyrights Code, supra note 26 at "s.102(a)".  101 works. 33 However, in general, there are few differences with the American legislation regarding subject matter.  Mexico's legislation treats subject matter in a similar way as the U.S. Code does. Article 7 of the LFDA enumerates basically the same works than the American Code does. However, some differences 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 categories under its Section 102. At the same time, the LFDA does not include under Article 7 any protection for dramatic works and sound recordings. The fact that some types of works are not explicitely stated under Article 7, does not mean that the LFDA excludes its protection completely. Under this Article, subsection "j" opens the possibility of implicitely including other works. Subsection "j" states as protected works, the following: j) Every other, which by analogy could be included under any of the generic types of the artistic and intellectual works, mentioned before. 35 Thus, if a wide interpretation is applied, either dramatic works or sound recordings could be included under any of the remaining subsections of Article 7. In relation to the latter, Article 77 reenforces the fact that, even if they are not included in Article 7, sound recordings are protected under the LFDA by explicitely mentioning an exception to the protection discs or phonograms have under the 33 Copyright Act, supra note 29 at ns.5(1)". 34 LFDA, supra note 23 at "art.7". 35 Ibid. at "art.7(j)".  102 law. It establishes that "the authorization to record in discs or phonograms does not include the faculty to use them in order to obtain profit."36 In other words, the unauthorized profitable use of any of these works is prohibited. Even though, it does not make specific reference to sound recordings, both discs and phonograms are considered sound recordings. Still, Mexico's legislation lacks any connotation regarding particular rights which might be protected under sound recordings, as other legislation specifies. For example, U.S. law establishes under Section 114(a) that "the exclusive rights of the owner of a copyright in a sound recording are limited to the rights specified by clauses (1), (2), and (3) of section 106,..."37, which basically include the rights to reproduce; prepare derivative works; and distribute copies or phonerecords of the works to the public by sale, rental or lease.38 Mexico, on the other hand, reduces the protection in sound recordings to the prohibition of using a protected work in order to obtain any profit.  An important omission exists in the Mexican legislation regarding computer programs. There is no article in the LFDA which explicitely refers to such works. The possible explanation for this gap is that this law was published in 1963, long before computers 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".  103 could allow for the inclusion of computer programs as protected works.  On the other hand, the U.S. and Canada's legislation consider computer programs to be literary works, and protect them as such. 39 These statutes explicitely mention these type of works. For example, the U.S. Code defines, under Section 101, a computer program as "a set of statements or instructions to be used directly in a computer in order to bring about a certain result." 40 This Code even includes Section 117, which establishes certain limitations on computer program author's exclusive rights. 41 Canada began protecting computer programs in 1988, eight years after the U.S. did. Both statutes deal with this issue in a similar way by authorizing the single reproduction for a computer's program. However, when dealing with the justifications of taking such action, the Canadian legislation seems to be more flexible by allowing more elements of proof than the U.S. Code does. Canada's Copyright Act, Section 27(1)(1), when referring to acts which do not constitute copyright's infringement, establishes the following: (1) the making by a person who owns a copy of a computer program, which copy is authorized by the owner of the copyright, of a single reproduction of the copy by adapting, modifying or converting the computer program or translating it into another computer language if the person proves that: i) the reproduction is essential for the compatibility of 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".  104 ii) the reproduction is solely for the person's own use, and iii) the reproduction is destr oyed forwith when the person ceases to be the owner of the copy of the computer program;... 42 This subsection has an important element which is not included in the U.S. legislation: the authorization of reproducing a computer's program for the copiers' own use. In other words, even though Section 117 of the U.S. Code does include similar conditions as the ones stated under subsections (i) and (iii) of the Copyright Act, it does not contemplate the possibility of copying a computer program for one's own use.° This statutory difference, added to the fact that there was an eight-year gap in which these works lacked protection in Canada, might have encouraged copyright infringers in the U.S. to migrate into Canada in order to seek protection under the former's legislation. An important similarity in this area is that both legislations include the possibility of copying a computer program for long term storage purposes. The U.S. defines it as being for 'archival purposes' while Canada prefers to justify it as 'backup purposes'."  Every Copyright legislation needs to allow certain limitations or exceptions to the author's absolute right, in order to achieve a just and flexible statute which can actually work. 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.  105 Such is the case among Canada's, the U.S.', and Mexico's legislations. Section 27 of Canada's Copyright Act, for example, includes the highest number of limitations by contemplating fourteen different exceptional hypotheses. The U.S. Code on the other hand, includes fewer exceptions; however, it describes each hypotheses with more detail by dedicating a complete Section for each.  45  Finally, Mexico's LFDA only  contemplates, under Article 18, five broad limitations." Under these limitations to Copyright, some similarities can be found among these nations' domestic laws. Generally accepted principles such as fair dealing or use, the publication of collections for didactical or scientific purposes, and the making or publishing of a work of sculpture or artistic craftmanship in public places, are good examples of the above-  47  bb) Similarities  I have stated some of the main differences separating NAFTA's Parties with relation to Copyright law. From what has been stated before, it may look like the different positions taken by each country's legislations, mainly a common law against a civil law approach, would not allow for having any reconcilable or common issues. Nevertheless, there are some important similarities which I will briefly address in the following paragraphs.  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, and 113 of the U.S. Code.  106 In the first place, registration in order to get Copyright protection is not required by any of the North American countries. Mexico's LFDA, Article 8, establishes that any copyrightable work will be protected "even if it has not been registered, made publicly known, or is unpublished, and independently from the end at which it is destined."48 Registration of Copyright is justified in Canada, basically, for evidential purposes; as every official register of copyrights "shall be admissible in evidence in all courts without further proof of production of the originals-"49 Meanwhile, the U.S. Code, in its Section 408, is consistent with the two other countries legislations by stating that although "at any time during the subsistence of copyright in any published or unpublished work, the owner of a copyright or of any exclusive right in the work may obtain registration... Such registration is not a condition of copyright protection."" It is my opinion that even if registration is not required in any of these nations, it is advisable for an author to register his/her work. The fact that with NAFTA, North America might become a more competitive 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., and Mexico is the term for which copyright is protected. The three legislations assert, as a general rule, that an author's work will be protected for his/her whole life plus a fifty year  48  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".  107 term." The existence of a transnational homogeneous principle, such as this, makes it easier for nations to have an interdependent relationship. Consensus is important as it leads to legal certainty.  A third and, in my opinion, most important similarity among North American nations derives from the international principle of reciprocity. By signing an international agreement, nations are able to receive several benefits from other Parties' domestic legislation. An example, which is also related to a copyright's duration, is given by Mexico's LFDA, Article 28.  52  This Article  states that when the author of a work is a national of a foreign country which does not have a treaty or convention with Mexico, the author's right will be protected for seven years, but only if there is reciprocity with Mexico. This example shows the importance treaties have in making possible the unification of asymmetrical principles among nations.  c) Linkages  In the former subsection, I stated some obvious differences as well as similarities, regarding copyright, amongst the domestic legislation of Canada, Mexico, and the United States. A broad conclusion of such comparison could be summarized with the assertion that the differences surpass similarities. At this point is where international documents gain importance as  51 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".  108 instruments of guidance or legal links for the homogeneization of laws. In the following paragraphs, I will briefly give a quick reference on the importance international conventions have for the purpose of unifying legal criteria in a certain region. Afterwards, I will get into the main focus of this thesis: NAFTA itself; and deal with some of the main improvements, if any, which this international agreement has brought for Copyright law.  aa) International Conventions  Reciprocity among nations is one of international conventions' main principles. It is clearly stated under Mexico's LFDA, Article 30, that copyright protection will be granted to all copyrightable works of a nation which has a treaty or convention, in force, with Mexico." The Berne Convention re-enforces this statement by obliging each signing Party to extend domestic copyright protection to the nationals of other Convention's members.54 The above is an example of a general benefit obtained from these international instruments. However, in the following paragraphs, I will point out a different type of benefit which can be achieved by specific nations.  It is evident that civil law tradition's influence over Mexican Copyright legislation places a legal and practical  53 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 Berne  Convention).  109 distance between Mexico and the rest of North America 55 , which follow 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 for the purpose of re-enforcing written law principles, which have supremacy over the former. This difference is relevant when a country needs to fill out gaps left by domestic legislation. In the case of common law nations, jurisprudence can do so without reforming a statute, as long as it does not contradict it. Under the civil law tradition is different, as domestic reform is needed when judicial interpretation is not able to fill out a legal gap. However, in the latter case, a treaty or international convention might be able to do that job without the necessity of having an immediate domestic legal reform. In other words, as stated before 56 , a treaty which is ratified by the Senate of Mexico, for example, automatically becomes law. Therefore, an international convention, besides serving as a multinational instrument which unifies different criteria, is also a practical tool when it comes to filling gaps in domestic legislation. The fact that some of Mexico's statutes have not been reformed in a considerable amount of time, even though circumstances and practices have changed, is a good example of how treaties might be a practical alternative to legal reform. For example, with its 1974 accession to the 'Geneva Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of their Phonograms', Mexico is now able 55 Another exception in North America is the province of Quebec, Canada, which also follows the civil law tradition. 56 See page 92.  110 to contemplate issues which were not included under its 1963 LFDA, such as protecting phonogram producers from the importation into Mexico of their works for public distribution purposes .  57  bb) NAFTA  The North American Free Trade Agreement reflects an outstanding legal effort, aiming at the homogeneization of copyright laws in North America. This treaty focuses on some of the main issues which are left out of some country's domestic legislation and by other international documents, such as the Berne Convention. In the following paragraphs, I will, briefly, analize the most relevant improvements brought by NAFTA in order to unify North American Copyright legislations.  1. NAFTA clarifies which type of works are protected under the North American region.  Article 1705(1), entitled Copyright, states that "each Party shall protect the works covered by Article 2 of the Berne Convention, including any other works that embody original expression, within the meaning of that Convention."58 The Berne Convention explicitely protects all literary, scientific, and artistic 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 la Reproduccion 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)".  111  and sculptures, among others.59 It must be noted, that this Convention includes 'dramatic' as protected works, while Mexico's LFDA does not do so, under the protected works enlisted in Article 7. Therefore, by acceeding to NAFTA, Mexico's law now automatically includes such, as protected works. It should also be observed that even though the Berne Convention talks about protecting literary works, it never specified if computer programs are included under that category. There is no doubt that such work are included in Canadian and American legislation. However, as stated earlier, Mexican legislation does not talk about considering computer programs as literary works. NAFTA provides a solution to this problem by clarifying, in Article 1705(1)(a)(b), that the works covered by Article 2 of the Berne Convention will be protected but, in particular, it states that "all types of computer programs are literary works within the meaning of the Berne Convention and each Party shall protect them as such;.. ."60This subsection is important because it is directed at modernizing and broadening Mexico's concept of literary works without the necessity of amending domestic legislation. It, will also help combat piracy of computer's programs across North America.  2. NAFTA provides authors with specific rights which they can exercise throughout North America.  In other words, NAFTA's Article 1705(2), establishes the following 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)".  112 Each Party shall provide to authors and their successors in interests those rights enumerated in the Berne Convention in respect of works covered by paragraph 1, including the right to authorize or prohibit: a) the importation into the Party's territory of copies of the work made without the right holder's authorization; b) the first public distribution of the original and each copy of the work by sale, rental or otherwise; c) the communication of a work to the public; and d) the commercial rental of the original or a copy of a computer program. 61  This given faculty, which allows an author to authorize or prohibit any of the enumerated acts in relation to his/her work, is aimed at giving transnational legal security to the nationals of each signing country. I find subsection "b" especially relevant because it specifies the different ways in which public distribution of a work is achieved: sale, rental or otherwise. This specification is important because Mexico, for example, does not protect a copyrighted work from being rented. I understand that the word " otherwise"  means to include, as American and Canadian  legislation does, the lending or leasing of a protected work. Another gap in Mexico's domestic legislation is filled by including, under subsection "d", the commercial rental of a computer program.  3. NAFTA gives explicit protection to sound recordings.  61 Ibid. at "art.1705(2)".  113 Article 1706 provides the producer of a sound recording with the right to authorize or prohibit any of the acts which were stated under subsections (a) and (b) of Article 1705, plus authorizing or prohibiting "the direct or indirect reproduction of a sound recording" and "the commercial rental of the original or a copy of the sound recording, The same commentaries given for Article 1705 are applicable in this case.  National Treatment or, in other words, the multilateral consensus giving "nationals of another Party treatment no less favorable to that it accords to its own nationals"63 is applicable regarding the protection and enforcement of all intellectual property rights. In the case of sound recordings this principle is not absolute. Although producers are entitled to such treatment, performers have limited rights in respect of secondary uses of sound recordings, where the reciprocity principle applies. This provision may also have a cultural perspective. Secondary uses of sound recordings are defined by NAFTA as "the use directly for broadcasting or for any other public communication of a sound recording." 64 This limitation might be directed at protecting national performers in their domestic market. By applying the reciprocity principle, each country will be able to allow foreign performances only in the amount which is granted to its nationals by the other nation. This could help, at the same time, as a regulatory device for preventing a possible foreign cultural invasion. 62 Ibid. at "art.1706". 63 Ibid. at "art.1703(1)". 64 Ibid. at "art.1721(2)".  114 Cultural invasion is not a new concern among NAFTA Parties. When Canada and the United States negotiated the bilateral Free Trade Agreement (FTA), cultural industries became a common topic for discussion. For a considerable number of Canadians, the FTA was jeopardizing Canada's culture and values by putting into effect 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 or Canadian values. To Americans, provisions which allow freedom of capital flows of investment, regardless of sector or company, is an all-embracing safeguard to allow U.S. interests to invest where they may, independent of a country's cultural heritage, tradition, or vulnerability. 65  This worry was diminished by the FTA with the exemption of cultural industries (with specific exceptions) from its provisions . 66 Even though NAFTA also includes such excemption 67 , Mexico should be ready to face U.S. cultural conglomerates which have global strategies to penetrate Mexico and other areas in Latin America. Fortunately, NAFTA includes other legal remedies to prevent a cultural invasion from other Member States such as the one which limits perfomers' rights in the case of sound recordings.  4. NAFTA unifies the term of protection for works in which such is calculated on a basis other than the life 65 C.J. McMillan, "Riding on Emotion: Cultural Industries and a NAFTA Accord", in  Implications of a North  American 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".  115 of a person.  Article 1705(4) establishes the following: Each Party shall provide that, where the term of protection of a work, other than a photographic work or work applied art, is to be calculated on a basis other than the life of a natural person, the term shall be no less than 50 years from the end of the calendar year of the first authorized publication of the work or, failing such authorized publication within 50 years from the making of the work, 50 years from the end of the calendar year of making.68  An example of the above would be the term of copyright in records and perforated rolls which is calculated by referring to the making of the original plate from which the contrivance was indirectly or directly derived. Even though there is general agreement, among the three nations, regarding the term in copyright, a problem could be found in Mexico's LFDA in relation to the legal concept of the "certificados de reserva" (reserve certificates). Such certificates are given, for example, when it comes to protecting fictional characters in Mexico. Instead of acquiring a copyright, the author receives a reserve certificate which lasts five extendable years.69 In my opinion, these certificates may create confusion regarding the uncertainty of whether such works are protected for fifty or, rather, five years.  5. NAFTA protects new and important copyright subject matter: the Encrypted Program-Carrying Satellite Signals. 68 Ibid. at "art.1705(4)". 69 LFDA, supra note 23 at "art.25".  116  It is clearly understood that satellite signals carry all sorts of information, including copyrighted works. These type of signals can travel enormous distances without being subjected to any restriction or regulation outside national borders. Transnational piracy of satellite signals is a common practice derived from the above. Another problem coming from technological developments, such as the improvement in communication systems, is that countries are subjected without control to the invasion of negative influences from other countries' cultures. In relation to this danger, Charles J. McMillan states the following thoughts: Television - the machine that the Canadian scientist Marshall McLuhan predicted, accurately, would create the global village - introduces the same expectations, values, and wants in Monterrey, Mexico, as in Minnesota, U.S.A. , or Montreal, Canada, regardless of income, race, language, or geography. m  This idea reflects a main concern Mexico and Canada have, in relation to a possible U.S. cultural invasion which would come as a consequence of NAFTA's implementation. It is believed that the U.S.' supremacy in the communications field might also dominate most copyright areas. A typical commentary made by some critics is 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 now CNN. This cultural machine is about to expand to TimeWarner-type conglomerates which will dominate books, magazines, local broadcasting, radio, cassettes, movies, and even the news itself... The product is the American way of life. 71 70 McMillan, supra note 65 at 197. 71 Ibid. at 201.  117  Although this is a valid statement, it must be acknowledged that even if it seems impossible to regulate the transnational flow of culture, an international agreement such as NAFTA could bring important solutions. As stated before, satellite signals are one of today's primary national as well as transnational communication's means. By using this media, countries are able to communicate different works which might reflect a particular culture. A double-sided problem derives from this issue. In the first place, an unauthorized reception of such signals might lead to piracy regarding copyrighted works. Secondly, an uncontrolable transmission of such signals might affect the receiving Party's cultural interests. NAFTA tries to correct these problems by forcing North American nations to regulate and protect Encrypted ProgramCarrying Satellite Signals. NAFTA defines an Encrypted ProgramCarrying Satellite Signals as a "program-carrying satellite signal that is transmitted in a form whereby the aural or visual characteristics, or both, are modified or altered for the purpose of preventing the unauthorized reception, by persons without the authorized equipment that is designed to eliminate the effects of such modification or alteration, of a program carried in that signal."72 Once it has clearly defined the subject matter, NAFTA's Article 1707 obliges each country to implement, within a year, the following double offense for infringers:  72  NAFTA, supra note 11 at nart.1721(2)".  118  a) a criminal offense to manufacture, import, sell, lease or otherwise make available a device or system that is primarily of assistance in decoding an encrypted programcarrying satellite signal without the authorization of the lawful distributor of such signal; and b) a civil offense to receive, in connection with commercial activities, or further distribute, an encrypted programcarrying satellite signal that has been decoded without the authorization of the lawful distributor of the signal or to engage in any activity prohibited under subparagraph (a).Th  This provision combats piracy in the strongest possible way by imposing criminal sanctions under each country's domestic legislation, which obviously include the possibility of imprisoning the active infringer. The passive infringer or receiver of the unauthorized signal will also be punished with a civil sanction. The fact that the transmission as well as the reception of encrypted program-carrying satellite signals is now regulated, helps nations preserve their cultural identities by working as a control instrument against a foreign, unvoluntary, 'cultural invasion'. Only enterprises willing to pay for an authorized reception of a foreign satellite signal, will receive it. However, it must be stated that NAFTA does not sanction, in any way, the reception of an unauthorized encrypted program-carrying satellite signal for private viewing, as it only punishes such reception for distribution or commercial purposes.  d) Conclusion  It is evident that many asymmetries separate North American countries' copyright domestic legislation. ^International 73 Ibid. at "art.1707".  119 Agreements such as the Geneva and Berne Conventions are important linking instruments for the homogeneization of laws. NAFTA's importance resides in the fact that it fills important legal gaps left by domestic legislation and other international conventions. This gap-filling function is clearly manifested in issues regarding new subject matter. For instance, NAFTA explicitely includes 'computer programs' as protectable subject matter, while under the Berne Convention, an interpretation was needed to include and therefore protect such works as literary materia1.74 First time protection of 'encrypted program-carrying satellite signals' constitutes another tangible example of how NAFTA provides protection for new and highly technological subject matter. Regarding this area NAFTA even establishes criminal sanctions for this provision's infringement.m  C. Trademark  a) Definition  A Trademark is, in a broad sense, defined as "a distinctive symbol that identifies a particular products of a trader to the general public."m Even though this definition might be useful domestically; at an international level, where general wordings  74 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).  120 could be interpreted in several ways, a more specific definition is needed. NAFTA gives, for its own purposes, a specific definition of Trademark. Article 1708(1), states that: A trademark consists of any sign, or any combination of signs, capable of distinguishing the goods or services of one person from those of another, including personal names designs, letters, numerals, colors, figurative elements, or the shape of goods or of their packaging. Trademarks shall include service marks and collective marks, and may include certification marks."  This definition is useful to avoid any ambiguity among the contracting nations. A trademark has two basic functions. On the one hand, it helps consumers identify quality from non-quality goods. On the other hand, it allows producers to be able to protect and distinguish their goods and services from cheap imitations. Paul Goldstein summarizes trademark's justification, in the two following points: The primary reasons for the existence and protection of trademarks are that (1) they facilitate and enhance consumer decisions and (2) they create incentives for firms to produce products of desirable qualities even when these are not observable before purchase. Both of these effects are a consequence of the fact that trademarks permit consumers to distinguish between goods which look identical in all features that are observable before purchase. 78 Even though this reasoning is basically applied at a domestic level, it may also be valid when dealing with international trade relations. Today's world economy is characterized by the commercialization of the same products in 77 NAFTA, supra note 11 at "art.1708(1)". 78 Goldstein, supra note 20 at 16.  121 different geographically situated markets. The fact that a trademark relies on the existence of goods or services which, at the same time, are subjected to the flow of market forces and not to the will of private individuals or corporations, makes the effective enforcement of trademark laws difficult to accomplish. Thus, a proper international control of such goods and/or services is rarely obtained. Regional agreements, such as NAFTA, focus on solving these type of problems by establishing a common legal framework. In the following paragraphs, I will briefly compare some of the differences existing among the Parties legislation in this area and how they are dealt by NAFTA and Mexico's new domestic legislation.  b) Asymmetries  Trademark's regulation does not differ much among North American nations. When comparing NAFTA Parties' domestic legislations regarding this particular area, substantial similarities can be noticed. For example, every nation agrees on including goods as well as services under trademark protection. Prohibited trademarks' provisions are also similar among the three nations except for the fact that each nation protects different official symbols. Also, the fact that registration in each nation's legislation gives the owner of a trademark the exclusive right to use a mark, is useful when it comes to the homogeneity of rules in a certain region, as it clarifies who the registered owners in each country are.  122 As stated above, similar trademark provisions link NAFTA Parties' domestic legislations. However, some important differences should be stated. One of the most conflicting issues is related to a trademark's use. Formal and substantive requisites to prove such use vary from legislation to legislation. Canada's Trademarks Act, for example, establishes under section 4(1) that: A trade-mark is deemed to be used in association with wares if, at the time of the transfer of the property in or possession of the wares, in the normal course of trade, it is marked on the wares themselves or on the packages in which they are distributed or it is in any other manner so associated with the wares that notice of the association is then given to the person to whom the property or possession is transferred. 79  This provision demonstrates that Canadian legislation requires a mere exteriorization to prove a trademark is being used. Mexico's 1976 legislation (LIM), on the other hand, understands a trademark is being effectively used when the ware or service it is protecting is being produced and commercialized in an amount and conditions which could be claimed as corresponding to an effective commercial exploitation in the national territory.  80  Obviously, Mexican requirements seem harder to prove. In order to obtain a trademark's renewal, all three nations require 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 80  Trademarks Act, T-13 us.4" (1985) (hereinafter Trademarks Act). Ley de Invenciones y Marcas, Mex. L.P.I.T.T.I.E. (Porrua, 1987) "art.118" (hereinafter LIM).  123 Each registration may be renewed for periods of ten years from the end of the expiring period upon payment of the prescribed fee and the filing of a verified application therefor, setting forth those goods or services recited in the registration on or in connection with which mark is still in use in commerce and having attached thereto a specimen or facsimile showing current use of the mark, or showing that any nonuse and it is not due to special circumstances which excuse such nonuse and it is not due to any intention to abandon the mark...81  Although the American legislation explicitely requires the proof of use on a mark, its requirements of proof are not very strict as it only asks for "a specimen or facsimile showing current use of the mark". Mexico's former legislation, on the other hand, strictly stated that the renewal of a mark's registration only proceeded if the interested person "verifies in an authentic manner the effective and continuous use.  eg 82  This procedural  difference made renewal of a mark's registration in Mexico more difficult than in the U.S.  Finally, another important difference dividing NAFTA's Parties in relation to Trademarks is the different term under which each nation's marks are protected. Canada's legislation allows a fifteen year term before the registration of a trademark may be renewed.83 The U.S. differs from the Canadian legislation's term by allowing a ten year period before a certificate of registration is renewed. 84 Finally, Mexico contemplated the shortest period of protection by assigning marks a five year renewable term.85 Even though neither of the terms 81 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".  124 coincide, every nation's legislation contemplates the possibility of renewing registration. The only problem is that in Canada and the U.S., renewal will be easier and less frequent than in Mexico. This fact implied a loss of time and money when registering a trademark in Mexico.  c) Linkages  aa) NAFTA  The North American Free Trade Agreement has become the most important instrument to achieve the homogeneity of trademark rules in North America. NAFTA's Article 1708, which regulates trademarks, has two main objectives: The elimination of cultural and legal barriers among North American countries; and the simplification of legal requirements in order to facilitate trademark regulation in North America.  I will briefly address some of the issues which NAFTA contemplates in order to eliminate the existing cultural and legal barriers among Canada, Mexico, and the U.S.  The main legal barrier that NAFTA's Parties could face when dealing with a problem which is related to trademark law homogeneization, resides in the fact that transnational recognition of domestic trademark rights might not exist. However, this is not the case for North American nations, as each is, also Party to the "Paris Convention for the Protection of Industrial Property" which, under Article 2(1), imposes an  125 obligation to give national treatment to every other signing country's nationals, regarding intellectual property rights.86 NAFTA goes further, by stating that: Each Party shall provide to the owner of a registered trademark the right to prevent all persons not having the owner's consent from using in commerce identical or similar signs for goods or services that are identical of similar to those goods or services in respect of which the owner's trademark is registered, where such use would result in a likelihood of confusion.87  By including this provision, NAFTA is being more specific than the Paris Convention, which solves this gap by providing a National Treatment clause. NAFTA focuses on providing every Party's nationals with the right to prevent use in commerce of identical or similar signs, to those protected in their own or in another signing Party's territory. This Article is useful because it does not give domestic legislators the opportunity to determine what should be protected under intellectual property, as the Paris Convention does.  Another important NAFTA provision deals with the transnational recognition of well-known trademarks. Article 1708(6), states that:  Article 6bis of the Paris Convention shall apply, with such modifications as may be necessary, to services. In determining whether a trademark is well-known, account shall be taken of the knowledge of the trademark in the relevant sector of the public, including knowledge in the Party's territory obtained as a result of the promotion of the trademark. No Party may require that the reputation of the  86 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)".  126  trademark extend beyond the sector of the public that normally deals with the relevant goods or services . m  Again, NAFTA is being more specific than the Paris Convention. In the first place, it extends trademark protection to well-known services. Secondly, it does not leave the local registrar to determine what must be understood as a well-known good (as the Paris Convention does )89 but establishes a criterion for determining such circumstance; primarily, that "account shall be taken of the knowledge of the trademark in the relevant sector of the public...". Thus, a more realistic and tangible criteria is followed by taking into account the public's concern, rather than leaving such decision to the discretion of local authorities.  An important inconsistency is overcome by NAFTA requiring each Party to have a minimal ten year initial registration term." This provision is directed to avoid any less protection, as Mexico's LIM did, by providing the right-holder with a five year term.  In relation to trademark use, NAFTA gives each of its members the choice to make capacity to register depend on the use of the mark. 91 However, it does oblige the Parties to require such use in order to maintain registration. The Agreement provides the Parties with important international trade exceptions for justifying a trademark's non-use. In the Accord's own words, each nation has to recognize as valid reasons for non88 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)".  127  use, "circumstances arising independently of the will of the trademark owner that constitute an obstacle to the use of the trademark, such as import restrictions on, or other governments requirements for, goods or services identified by the trademark."92 Thus, the addition of these international justifications will aid trademark owners in dealing more effectively with international trade flows, which may now have a direct influence on their rights.  Finally, the cultural barrier of language is broken with NAFTA, by stating that: Each Party shall prohibit the registration as a trademark of words, at least in English, French or Spanish, that generically designate goods or services or types of goods or services to which the trademark applies.°  This means that, from now on, the scope of trademarks is broadening to include marks in three different languages.  As stated before, NAFTA also has as a primary objective the simplification of legal and administrative procedures, in order to facilitate the regionalization of different issues in North America. In relation to trademarks, the Agreement provides its members with the obligation of installing in their domestic regimes a system for the registration of such marks, which basically should aim at improving the legal and administrative relations among them. Such system's procedures must include the following guarantees: 92 93  Ibid. Ibid.  at "art.1708(8)". at nart.1708(13)".  128 (a) examination of applications; (b) notice to be given to an applicant of the reasons for the refusal to register a trademark; (c) a reasonable opportunity for the applicant to respond to the notice; (d) publication of each trademark either before or promptly after it is registered; and (e) a reasonable opportunity for interested persons to petition to cancel the registration of a trademark."  This provision aims at the protection of trademark applicants by establishing certain procedural obligations for each country's local authorities. It certainly achieves one of its main goals, which is that of providing trademark applicants with legal security in home as well as abroad. For example, the system provides each country's nationals with the right to know if a trademark has already been taken or if it is still available, by compeling each nation, under subsection (d), to make a "publication of each trademark either before or promptly after it is registered". Nevertheless, in my opinion, this system is still lacking of procedural agility. The fact that many vague terms, such as "promptly" and "reasonable", are used, does not establish any real obligation for domestic authorities to follow; as they can interpret such terms as broadly as they wish. For example, Mexico's former trademark law established a two month term for an applicant to respond a notice. Could this be considered a "reasonable" opportunity for a trademark applicant? Only domestic authorities will know. The caution displayed by 94 Ibid. at "art.1708(4)". 95 LIM, supra note 80 at "art.104".  129 NAFTA's Parties as to the establishment of specific legal provisions which could clash with domestic concerns is understandable, as any of these clauses could be interpreted as an external imposition on a sovereign state's domestic legislation.  bb) Mexico's New Industrial Property Legislation  The modern trend towards economic regionalization in North America, has not only encouraged a developing country, such as Mexico, to embark into international trade agreements, but it has also awakened a need for domestic legal reform, which could prepare it to face its new economic challenges. One of the many necessary modifications in Mexico's domestic legislation comes in the area of industrial property, where new legal instruments are necessary to help support the Mexican economy's participation in international markets. Responding to such needs, on June 28, 1991, the new "Ley de Fomento y Proteccion de la Propiedad Industrial" (LFPPI) (Law for the Development and Protection of Industrial Property)  96  became  in force, abrogating the former 1976, "Ley de Invenciones y Marcas"97 and the 1982, "Ley sobre el Control y Registro de la Transferencia de Tecnologia y el Uso y Explotacion de Patentes y Marcas" (Law for the Control and Registration of the Transfer of  96 Ley de Fomento y Proteccion de la Propiedad Industrial, Mex. LFPPI (Porrua, 1991) (hereinafter LFPPI). 97 See LIM, supra note 80.  130 Technology and the Use and Exploitation of Patents and Trademarks), which used to regulate this matter. The LFPPI broadly aims at becoming a constant support for Mexico's improvement in its productive, innovative, and technological sectors; satisfying consumer's quality demands; and giving Mexico more advantage in the international economy. 99  In  the area of trademarks, the new law brings several benefits which could be summarized in the following four improvements.  1. The term of protection for trademarks, commercial advertisements, and commercial names is broadened from five to ten years. Such term can also be consecutively renewed by the owner.  Besides giving the applicant a procedural benefit, this provision assures some legal security for the right-holder. In other words, by having to renew his/her registration every ten instead of five years, the applicant will be able to save time and money. At the same time, by eliminating the requirement of such a frequent renewal, the right-holder is at less risk of losing such a term and, therefore, losing his/her right, as a consequence of such carelessness. Article 95 of the LFPPI, establishes that the ten year term will begin at the time the application is presented." ° This is an important difference between LFPPI and Mexico's former legislation, under which the term ran from when the mark was 98 Ley Sobre el Control y Registro de la Transferencia de Tecnologia y el Uso y Explotacion de Patentes y Marcas, 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".  131 registered. Thus, the authority will only require about essential information before a trademark can be valid. This measure will save him/her time and facilitate administrative procedures. Even though there are reasons, as the ones stated above, for increasing a trademark's term of protection; it is possible that the strongest cause for Mexico's legal domestic reform might have developed from NAFTA. LFPPI's Article 95 is in accord with the minimal ten-year protection term NAFTA provides for each nation. This short-term implementation is tangible evidence of Mexico's efforts towards the homogeneization of its laws with the rest of North America, in order to facilitate its adjustment in a new regionalized economy.  2. When it comes to the renewal of trademark registration, there is no longer a need for the registered owner to efficiently provide proof of use. Rather, a simple under oath statement is sufficient for such renewal to take place.loi  The main purpose of this provision is to simplify administrative procedures. A concern may arise in relation to the fact that this Article may encourage non-users to renew their trademark by putting in jeopardy other legitimate users' rights. However, the law provides that if a third person opposes such renewal, proof of use will then be required. As I stated before, the importance of provisions such as the above, resides in the fact that they are tangible examples of the administrative simplification that is happening under some of 101 Ibid. at Hart.134H.  132 Mexico's most important regulations. This procedural shift towards simplification, tends to encourage outsiders which were formerly reluctant to invest and register their products and signs in Mexico.  3. Variations in the use of a trademark are now allowed with the only condition that its distinctive characteristics are not essentially altered.  102  This provision helps trademark holders in preserving their modified marks while, at the same time encouraging them to improve such marks without losing their rights. The flexibility expressed by this provision represents a strong effort towards legal modernization on behalf of Mexico, bringing it into line with the laws of its industrialized northern neighbors.  4. Protection is broadened to include the possibility of registrating tridimentional forms."3  This improvement on trademark's subject matter is congruent with Mexico's new policy of adjusting with contemporary marketing practices. In accord with this new ideology, the LFPPI also protects combinations of letters, numbers, and colors, with distinctive characteristics.104 These sort of provisions assure legal security in Mexico for foreign trademark holders which  102 Ibid. at "art.128". 103 Ibid. at "art.89(II)". 104 Ibid. at "art.90(V)".  133 already enjoy the protection of such forms under their native countries' legislation.  5. Foreign trademark owners will have a longer term to demand the nullity of an illegaly acquired trademark in Mexico .105  In many occasions, individuals used to submit an application in order to acquire a trademark in Mexico which was already granted by another country. This action brought a double-sided problem. On the one hand, it harmed the commercial interests of the original foreign right-holders, as cheap imitations competed with his/her mark or even displaced it from the Mexican market. On the other hand, the Mexican consumer was also damaged as he/she was induced into error, when relating an original mark with a false product or service. Mexico's LFPPI has solved this  problem by increasing the  term a foreign trademark owner has to exercise a nullity action. Today, the right holder has a year to exercise his/her right instead of the six month period, which the former legislation provided.  It is important to point out that international  reciprocity is a condition for this provision to apply. The new Mexican law also enables the authority to reject the registration of any well-known mark of any country with which Mexico has reciprocity. Thus, the reciprocity brought by NAFTA will enable Canadian and American trademark holders to enjoy additional rights, such as the one stated above.  105 Ibid. at "art.151(III)".  134  D. Patent  a) Definition  A Patent is, generally, defined as "the grant of an exclusive right to exploit an invention.  006  A patent must be  understood as an absolute monopoly given by the state to an inventor so he/she could use or sell a new and useful product or process 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 bargain between the inventor on the one hand and the Crown representing the public on the other hand, consisting of the grant of a monopoly to the inventor in return for the disclosure to the public of a full and accurate description of a new and useful invention and its method of construction or use. 107  Thus, the grant of a patent brings simultaneous benefits for the state or society on the one hand, and inventors or individuals on the other. A patent's societal worth, partly consists on providing an incentive on research, development, and innovation. It also stimulates the investment of additional capital, needed for further development and marketing of an invention which the State might not be able to provide, while motivating individuals in registering their inventions in order to seek a further economic remuneration."8 106 Oxford Reference, supra note 76 at 295. 107 Fox, supra note 19 at 4-5. 108 Goldstein, supra note 20 at 10.  135 Nevertheless, for this study's purposes, I shall focus on the international benefit which nations could receive from patent regulation, such as the fact that it "promotes the beneficial exchange of products, services, and technological information across national boundaries by providing protection for industrial protection of foreign nationals." 109 North Americans are now aware of such benefits, and are, thus, putting an emphasis on the regulation of this intellectual property's branch. In the following, I will analyze how NAFTA Parties' domestic legislation differed before this agreement was envisioned, and how it has subsequently influenced Mexico in the renewal of its patent law.  b) Statutory Asymmetries  Some important differences arise when comparing the patent laws of Mexico, Canada, and the U.S. It is accurate to state that, in general, rules among these countries do not differ as much regarding patents as they do in copyright. However, it is also noticeable that some of these differences are similar to the trademark differences analyzed above.  The following, are some of the most relevant differences amongst North America's domestic legislation.  The scope of the subjects protected under patent law, clearly differ amongst the three countries. This fact might be attributed to existing differences as to levels of technological 109 Ibid.  at 11.  136 development. The U.S., being the most developed nation in North America, considers patentable subject matter an invention or discovery of "any new and useful process, machine, manufacture, or composition of matter, or any new and useful and useful improvement thereof... um Thus, the U.S. accepts as possible subject matter anything that could be included under these broad categories. In addition to these categorization, the U.S. Code includes a complete chapter, in which it contemplates the possibility of patenting the invention or discovery of plants. Section 161, establishes that: Whoever invents or discovers and asexually reproduces any distinct and new variety of plant, including cultivated spores, mutants, hybrids, and newly found seedlings, other than a tuber propagated plant or a plant found in an uncultivated state, may obtain a patent therefor, subject to the conditions and requirements of this title.111  This provision shows how the high level of technology existing in the U.S., has forced its legislation to regulate and consider as human inventions specific forms of plant life. The Canadian Patent Act includes a broad categorization of patentable subject matter, which is almost identical to the one contemplated by the U.S. Code.112 Nevertheless, the Canadian statute does not include any section which specifically regulates the patentability of plant life. Mexico's former legislation on the other hand, did not include any definition of what could be considered as an invention. Instead, Mexico's LIM tried to define an invention, by exclusion. It enumerates in detail, sixteen categories which 110 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).  137 cannot be considered inventions.  113  Among these, the most  relevant issues excluded from patentability are biotechnological processes for obtaining pharmochemicals and medicines; chemicalpharmaceutical products; products with biological activity; genetic processes used to obtain plant and animal species; and plant and animal species or the biological processes used to obtain them. 114 The law also stated that some of these issues would gain patentability by 1997. These legal differences made the United States the safest place to invest in certain inventions.  The term of protection is another important issue which differed amongst the three nations. Again, Mexico's LIM gives the least protection by assigning the patent owner a nonrenewable fourteen year term.  115  Canada's Patent Act gives the  owner more protection by assigning him/her a twenty year term.  116  The U.S. Code gives a shorter protection term of seventeen years, however, this term could be extended under several circumstances." 7 The existing differences regarding patent protection terms, translated into a difficult hurdle when it came to economic regionalization. Where there is no homogeneity of norms, no legal certainty is obtained nor can equal investment opportunities can be achieved as nations and individuals will focus their inventions on the country which assures him/her more legal security. 113 114 115 116 117  See LIM, supra note 80 at "arts. 9-10". See Ibid. at Hart.10(I)(VIII)(XI)". Ibid. at "art.40". Patents Act, supra note 112 at "s.44". Patents Code, supra note 110 at "ss.154-156".  138  Patent publication creates legal security by allowing the public to know which rights are already assigned or in the process of being assigned to its respective inventors. It also establishes the basis for calculating term limits. Even though this topic is considered by all three of the formerly mentioned legislations, some differences existed among them. Mexico's LIM obliged the authority to make a monthly publication of every patent which had been assigned. 118 However, it did not establish any obligation for the authority regarding the 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 make patent publications.119 The authority also, "may supply printed copies of specifications and drawings of patents to public libraries in the United States which shall maintain such copies for the use of the public... on ; however, there is no specific provision stating the time at which this prerrogative might be exercised. Canada's Patent Act obliges the Commissioner to publish, at least once a year, a list of every patent issued in that year.  121  Additionaly, however, it does state the Commissioner's obligation to keep open for public inspection "all applications for patents and documents filed in connection with applications for patents and all patents and documents filed in connection with H122 patents.^Even though some exceptions apply123, Canada's patent  118 LIM,  supra note  80  at "arts.201-202".  119 Patents Code, supra note 120 Ibid. at  110  at  "s.11".  "s.13".  121 Patents Act, supra note 112 at "s.26.1(1)". 122 Ibid. at  "s.10(1)".  139 legislation makes public any patent from the moment an application is submitted. It is evident that, among the three statutes, the Canadian Act allows more availability to the public than the Mexican or the American legislation, regarding patent's information. This fact might make patent procedures more simple in Canada, as applicants know beforehand whether they can apply for a patent or if it has already been granted. Finally, it is also interesting to observe that while Mexican and Canadian legislation makes publication mandatory for the authority, the U.S. leaves this to the authority's prerrogative.  Mexico's LIM contemplated another type of industrial property right, commonly known as "certificados de invencion" (invention certificates)  124  . These legal instruments were  similar to patents, however they did not have the same status. Under this law's provisions, a patent applicant had the option to choose between getting his/her invention patented or obtaining an invention certificate instead. 125 An invention certificate had the advantage that it could protect non-patentable subject matter such as procedures used for obtaining food and beverages for human consumption; and biotechnological procedures used to obtain pharmochemicals, medicines in general, food and beverages for animal consumption, fertilizers, and other products with biological activity.  126  Invention certificates also protected the  holder 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".  140 these certificates had several disadvantages in comparison with patents, as the former could be exploited by anyone who entered into an agreement with the right holder.127 In other words, it did not confer an absolute monopoly on the certificate's holder. I could not find any similar instrument to the invention certificates under the American legislation. However, Canada's Patent Act includes the possibility of giving licences under patent, particularly "in the case of any patent for an invention intended or capable of being used for the preparation or 028o _r "in the case of any patent for an production of food...  invention intended or capable of being used for medicine or for the preparation or production of medicine... 029 This possibility of giving individuals limited licenses in certain areas is similar to the creation of the invention certificate under Mexico's previous legislation.  Finally, there is an important difference among North American Patent legislation, which derives from varied tendencies influencing each nation's political regimes. I am referring to the issue of patent expropriation. On the one hand, Mexico's LIM considered the possibility of patent expropriation by the Executive Power."° This Act is justified under Mexican law when public utility causes exist.131 I 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 its broad meaning. Therefore, it usually came to a Presidential's subjective decision if a patent should be expropiated or not.  141 Canada's Patent Act does not deal directly with expropriation. However, the possibility for the government of using a patent is prescribed under s.19(1), which states that: The Government of Canada may, at any time, use any patented invention, paying to the patentee such sum as the Commissioner reports to be a reasonable compensation for the use thereof. 132  Even though this provision might be confused as an act of expropriation, it must not be taken as such. In this case, the government is only using an invention, while in the case of expropriation, the government acquires title to the patent. The U.S.^Patent Code also does not contemplate expropriation. For all of the above, it is possible to observe how domestic legislation may reflect some of the political ideologies prevailing in any country, at a certain time. By including expropriation, Mexico's LIM reflected the nationalist view predominating in Mexico during this law's enactment. It showed a strong interventionist tendency from the Mexican State, which compromised an individual's right to own a patent. On the other hand, the Canadian and American legislations by not including such figure reflect individualist principles.  c) Linkages  aa) NAFTA  132 Patents Act, supra note 112 at "s.19(1)".  142 One of NAFTA's main purposes is to correct some of the previously stated asymmetries, among its Parties, regarding patent legislation. Even though this agreement aims at assuring legal security for its Parties, it must do so without unduly interfering in each country's domestic affairs.  In the following paragraphs, I will outline some of the main issues NAFTA deals with regarding Patents.  1. NAFTA obliges each Party to "make patents available for any inventions, whether products or processes, in all fields of technology, provided that such inventions are new, result from an inventive step and are capable of industrial application."133  This provision makes recognition of patentability mandatory, for every signing country, in "all fields of technology". Some exceptions to this rule are allowed. In other words, plants and animals other than microrganisms; diagnostic, therapeutic and surgical methods for the treatment of humans or animals; and essentially biological processes for the production of plants or animals; might be excluded from patentability.  134  The main reason  for allowing such exceptions might be that the patentability of such topics is still controversial in some nations. Thus, by excluding such issues, NAFTA is not interfering with some of its Parties domestic regulations.  133 NAFTA, supra note 11 at Hart.1709(1)H. 134 See Ibid. at "art.1709(3)".  143 It is evident that such requirements were promoted by the U.S., as its domestic legislation was demonstrably the most advanced regarding this subject matter.  135  Even though Mexico's  LIM did not protect all fields of technology, the new legislation, already in force (LFPPI), does include the protection of such matters. However, Mexico still has a long way to go in incorporating these fields of technology into its legislation. NAFTA realizes this fact and, therefore, in its Annex 1701.3, exclusively imposes on Mexico the obligation to comply, either, with the substantive provisions of the 1978 or the 1991 International Convention for the Protection of New Varieties of Plants (UPOV Convention), no later than two years after the signing of the Agreement. 136  2. NAFTA allows any Party to "exclude from patentability inventions if preventing in its territory the commercial exploitation of the inventions is necessary to protect ordre public or morality,..." 37  This provision responds to the international concern, surrounding every multinational agreement, respecting the principle of state sovereignty. In this particular case, each Party is allowed to have a discretionary margin in order to decide exceptional cases over the absolute rule  138 ,  established by  the 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 or health" or avoiding "serious prejudice to nature or the environment". However, the exception is not limited to these.  144  This provision could lead to a controversy, in which Mexico, for example, might be able to "justify", unjustifiable expropriatory acts, reasoning that such action was motivated to protect the morality or ordre public of its country, as the latter term would be interpreted by some government officials as a public utility cause.139 The only limitation included in Article 1709 is to exclude from patentability an invention "based solely on the ground that the Party prohibits commercial exploitation in its territory of the subject matter of the patent. Therefore, there is always a risk that if Mexico excedes the use of this exceptional clause, the U.S. might take retaliatory action by establishing unilateral trade sanctions.  Another provision which touches on sovereignty issues is Article 1709(10). This Article limits an inventor's monopoly by authorizing each Party's domestic legislation to "allow for use of the subject matter of a patent,... without the authorization of the right holder, including use by the government or other 041 persons authorized by the government... This governmental  limitation to an individual's absolute right must be adequately justified.142 Among other things, it is stated that "any such use shall be authorized predominantly for the supply of the Party's domestic market;" and "the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization.  11143  These two  139 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 anyone the use of another's patent. 143  NAFTA,  supra note  11  at "art.1709(10)(f) and (h)".  in  order to authorize  145 justifications might just look like a couple of requirements which the government can use in order to justify an expropriation. However, this provision is not about expropriation as it only authorizes the use of a patent and not On the contrary, it the transfer of property in such rights. 144 basically 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 an international instrument limiting each signing country's sovereignty.  3. NAFTA makes mandatory for each Party to "provide a term of protection for patents of at least 20 years from the date of filing or 17 years from the date of grant."  145  This provision combines two different patent-protection terms, contemplated by the American ^and Canadian domestic legislation. It aims at assuring a patent's owner to a protection term of at least 17 years; which, by the way, is the same term granted by the American legislation. However, it also allows for the possibility of considering a 20 year protection term, which would run from the filing of the application; as the Canadian domestic legislation asserts.  146  This Article's main  objective is to provide equal or rather similar protection all over North America. As I stated before, by the homogeneization of 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 as government. Expropriation, on the other hand, only benefits the government. 145  NAFTA, supra note 11 at "art.1709(12)".  146 See page 137.  146 inventors will be eager and legally secure to invest their knowldege in any country in North America, including Mexico.  bb) Mexico's New Industrial Property Law  The economic regionalization process taking place in North America today, which includes as one of its major objectives Mexico's insertion into the world market, did not happen overnight. Prior to NAFTA, Mexico had already been setting solid bases in order to achieve the economic development needed to face these new international tasks. The modernization process which has been taking place in Mexico for the last six years, aims at streghthening its internal market with the deregulation of most economic activities.147 Such activities include two elements: productive processess and technological knowledge; which, at the same time, strongly rely on inventions. This is the reason why Mexico's new Industrial Property Legislation (LFPPI), which regulates patents and trademarks, is so important, as it reforms Mexican intellectual property law in accordance with new economic realities.  The new LFPPI makes patentable every invention which can fulfill three basic characteristics: novelty, originality, and applicability.  148  Although this might be considered as a new  approach to patent regulation in Mexico, it basically demonstrates a strong effort towards the deregulation of economic activity as patentability relies today on broader and more 147 See Serrano, supra note 16 at 35-36. 148 LFPPI, supra note 96 at "art.15".  147 practical requirements, such as the fact that the invention must be new, must develop from an inventive activity, and must be susceptible for industrial use. From these three main characteristics come an important number of substantive and procedural changes in Mexico's patent legislation, which represent a vehicle for this nation's internationalization process. In the following paragraphs, I will address some of the most important of these.  The following are some of the most important substantive reforms achieved by the new LFPPI, regarding patents;  1. New patents are granted for inventions in technological areas such as plant varieties; micro-organisms; and biotechnological processes for obtaining pharmochemicals, general medicine, beverages and food destined for animal and human consumption, fertilizers, plaguecides, herbecides, funguicides or products with a biological activity.  149  This provision's main objective is to provide equal stimulation in every technological sector in Mexico, while at the same time, promote investment in the industrial development of new processes and products. Mexico could not afford to wait until 1997, to authorize the patentability of certain inventions such as biotechnological and genetic processes, as LIM ordered. Rather, by broadening the scope of patentability to include certain forms of living matter, Mexico is modernizing its patent law in accordance with other 149 Ibid. at "art.20".  148 advanced countries which had already contemplated this type of life form as patentable subject matter.  2. For the first time in Mexico, additional protection is provided for distinctive improvements on pre-existing objects, tools and utensils, with the incorporation of a legal figure called "Modelos de Utilidad" (Utility Models) .150  With this provision, Mexico is recognizing the rights of everyday inventors and innovators who may accomplish small but distinctive improvements on tools, utensils and/or other objects. At the same time, with this legal figure's incorporation into its new legislation, Mexico is now in accordance with the Paris Convention which already provided for the protection of ordinary inventions. The procedure for obtaining a utility model is easier than the one granting a patent. The problem is that the former, only lasts for ten years. However, the existence of this simplified new model may bring a lot of benefits to Mexico as inventors from the U.S. and Canada will be eager (at least initially) to use such legal instrument as more inventions are likely to be of this type.  3. Revalidation of certain types of foreign inventions in favor of the original inventor is now possible, if such invention is new and has not been exploited in Mexico.151 150 Ibid. at "arts.27-30". 151 Ibid. at "arts.40-41".  149  Besides the fact that this provision provides legal security to foreign inventors; it also aims at closing the technological gap formerly generated by the exclusion of certain types of subject matter which were already contemplated by other foreign legislation, such as that analyzed in point number one.  4. "Certificados de Invencion" (Invention Certificates) are no longer granted.  Today instead, patents are being granted to protect most of the technological areas formerly protected by these certificates. 152 In my view, this is a positive provision as such certificates used to reduce any incentive to invest on technological areas which were protected under a shorter term than the one provided for patents. At the same time, these certificates did not have any parallel in most foreign legislations; thus, by eliminating them, Mexico is taking a step forward towards the homogeneization of its rules with, at least, the rest of North America.  Some of the most relevant procedural improvements achieved by 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.  152 See page 139. 153 LFPPI, supra note 96 at "art.23".  153  ,  150 This provision is similar to the one established by Canada's Patent Act 154 , and fits the minimum term required by NAFTA. Although the general rule provides for an unrenewable twenty year protection term, in the specific case of pharmochemical or pharmoceutical products and the processes to obtain them, such term might be extended for three more years. This is a positive amendment because, in my view, a fourteen-year protection term was too short. Besides, a similar protection term allows Mexico to compete with the other North American nations in no less favorable terms as, by means of this new rule, inventors will be motivated and confident enough to afford long term investment in Mexico.  2. A prompt publication of the patent application is now mandatory.  155  The LFPPI establishes that a patent application must be published eighteen months after the application was presented, or even before that date, if the applicant should request it. Besides assuring legal certainty among patent applicants, by establishing a system which can provide them with information on which patents are taken and which are still available, this provision will help in determining the novelty of an invention and, thus, its patentability all over North America.  154 See page 137. 155 LFPPI, supra note 96 at "art.52".  151 It is evident that pre-existing patent legislation in Mexico strongly differed from other North American domestic legislation. Thus, Mexico has embarked in a strong legal effort which includes a more active participation in international conventions and radical domestic legal reform. Economic factors have been a main incentive for such reforms as, among other things, Mexico's productive sectors are looking for a more flexible legislation that could allow for a better diffusion of technological knowledge from abroad. Additionaly, in preparation for NAFTA, Mexico has had to modernize its domestic rules regarding patents in order to deal as an equal partner along with its other two trading partners. Thus, the LFPPI aims at allowing into Mexico more innovation and technology in order to raise the efficiency levels of its productive sectors; protecting consumer's interests; and, generally, modernizing this country's legislation in accordance with contemporary developments occuring at an international level regarding patents.  E. Other  In the following paragraphs, I will address two other important issues, contemplated by NAFTA, which constitute a significant step in the homogeneization of intellectual property laws in North America.  a) Enforcement of Intellectual Property Rights: General Provisions  152  When it comes to international treaty enforcement, the possibility of encountering problems is high as state sovereignty usually obstructs coercive international action. Even though the level of success on enforcement procedures will definitely depend on the type of domestic action taken by each contracting nation, NAFTA provides its members with mandatory general guidelines. Thus, NAFTA's Article 1714(1) provides the following: Each Party shall ensure that enforcement procedures, as specified in this Article and Articles 1715 through 1718 are available under its domestic law so as to permit effective action to be taken against any act of infringement of intellectual property rights covered by this Chapter, including expeditious remedies to prevent infringements and remedies to deter further infringements. Such enforcement procedures shall be applied so as to avoid the creation of barriers to legitimate trade and to provide for safeguards against abuse of the procedures.156  The specific enforcement procedures which NAFTA refers t  ,  under Articles 1715 through 1718, consist of "procedural and remedial aspects of civil and administrative procedures"157; certain "provisional measures u158 ,. "criminal procedures and penalties"159; and a unique procedure to enforce intellectual property rights at border regions160. The procedural and remedial aspects referred to, under art.1715, basically include the guarantee of civil judicial procedures, such as the defendant's right to written notice; and the establishment of means to protect confidential information. NAFTA, supra note 11 157 Ibid. at "art.1715". 158 Ibid. at "art.1716". 159 Ibid. at "art.1717". 160 Ibid. at "art.1718". 156  at "art.1714(1)".  153  At the same time, judicial authorities must also be provided by each Party with certain faculties, such as "to order the infringer of an intellectual property right to pay the right holder damages adequate to compensate for the injury the right holder has suffered because of the infringement... uuo Provisions such as these, carry out a double objective: they provide every individual in North America with legal security regarding his/her intellectual property rights and they give each signing country's domestic authority equal coercive power. Provisional measures are also contemplated under NAFTA, as a necessary tool used by local judicial authorities "to prevent an infringement of any intellectual property right, and in particular to prevent the entry into the channels of commerce in their jurisdiction of allegedly infringing goods, including measures to prevent the entry of imported goods at least immediately after customs clearance;  11 162  and "to preserve relevant  evidence in regard to the alleged infringement.  "  163  Such  measures, which must be exercised by the local authority, provide a domestic right holder with prompt and effective protection from any sort of infringement. However, at the defendant's request, the Party's judicial authorities "shall revoke or otherwise cease to apply the provisional measures... if proceedings leading to a decision on the merits are not initiated"  164,  within a reasonable  period 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)".  154  More severe enforcement measures may be used by the domestic authority, as criminal procedures and penalties are allowed "in cases of willful trademark counterfeiting or copyright piracy on a commercial scale.1065 Infringing goods may be also seized, forfeited and destroyed in specific cases.  A specific procedure is also established by NAFTA in order to assure the enforcement of intellectual property rights at the border regions of Canada and the U.S. on the one hand, and the U.S. and Mexico on the other. Regarding this issue, NAFTA provides that: Each Party shall.., adopt procedures to enable a right holder, who has valid grounds for suspecting that the importation to counterfeit trademark goods or pirated copyright goods may take place, to lodge an application in writing with its competent authorities, whether administrative or judicial, for the suspension by the customs administration of the release of such goods into free circulation.m6  The fact that this provision is destined to protect trademarks and copyright (basically sound recordings) at border regions; demonstrates how such issues tend to reach transnational borders faster than patents do, as the former strongly depend on the international flow of market forces, while the latter's infringement is easier to control within national boundaries.  Each Party is obliged to ensure that its enforcement procedures are fair and equitable, not unecessarily complicated or costly, and do not entail unreasonable time-limits or 165 Ibid. at "art.1717(1)". 166 Ibid. at "art.1718(1)".  155 unwarranted delays.  167  These minimal procedural guarantees are  destined to ensure an homogeneous enforcement of intellectual property rights. Its main purpose is to avoid the possibility of corruption in domestic judicial and administrative practices, and ensure a quick and fair application of law.  Even though NAFTA establishes general guidelines in order to ensure the enforcement of intellectual property rules all over North America, there is no obligation to change any of the Parties' 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 shall be construed to require a Party to establish a judicial system for the enforcement of intellectual property rights distinct from that Party's system for the enforcement of laws in general. 168  By enclosing this provision, NAFTA respects national sovereignty, by having no direct intervention in each of its members internal legal systems, while at the same time, providing general rules, which are needed for the treaty's success.  b) Cooperation and Technical Assistance  In any multinational agreement, international cooperation is a decisive factor in order to determine such agreement's success. NAFTA recognizes this fact and specifies which type of cooperation must be promoted by its members. Thus, Article 1719(1), states that: 167 Ibid. at "art.1714(2)". 168 Ibid. at "art.1714(5)".  156 The Parties shall provide each other on mutually agreed terms with technical assistance and shall promote cooperation between their competent authorities. Such cooperation shall include the training of personnel.wi  This provision benefits countries with reduced technological knowledge by promoting international cooperation regarding technical assistance. Mexico, for instance, has highly benefited from an inflow of Canadian technology regarding cellular communicationsm and electronical engineeringm. Besides technical assistance, NAFTA also aims at promoting inter-governmental cooperation. In this regard, it states the following: The Parties shall cooperate with a view to eliminating trade in goods that infringe intellectual property rights. For this purpose, each Party shall establish and notify the other Parties by January 1, 1994 of contact points in its federal government and shall exchange information concerning trade in infringing goods.172  An elimination of trade in goods infringing intellectual property rights cannot be achieved without the cooperation of each signing nation's authorities. The fact that it contains a deadline, makes this Article a tangible provision likely to give rise to short term results.  169 Ibid. at Hart.1719(1)". 170 Northern Telecom, Ltd., a high skilled Canadian company, is well into a 300 million dollar contract to provide Mexico with cellular communication equipment. In addition to this company, BCE Ventures Corp. of Toronto has built several cellular networks in Mexico. Sales of thousands of cellular phones have surprised the latter industry. 171 Capilano Electronics, a Vancouver based company, has dealt with Mexico's government in order to send experts in electronics to train Mexican personnel. 172 NAFTA, supra note 11 at Hart.1719(2)".  157 F. Conclusion  The strong differences in intellectual property legislation which existed among NAFTA Parties before 1991, translated into a difficult hurdle for regional economic integration. Until today, Canada and the United States, which are both considered to be intellectual property exporters, have not been prone to the idea of investing this type of property in Mexico, where as legal protection was poor. In preparation for NAFTA, Mexico has undergone a process of strong domestic legal reforms which has tried to correct existing asymmetries respecting its NAFTA's counterparts. The new Mexican Industrial Property Law (LFPPI), contains a lot of novel provisions, regarding Trademarks and Patents, which reach, and may even improve over the standards set by the other two North American nations. In Copyright, however, improvement has not been so evident, as this institution is perceived differently by the civil law tradition of Mexico. Civil law perceives Copyright from a 'moral approach', as the protection is directed to the author's personal rights, rather than to the work itself. The common law tradition focuses, instead, on a more pragmatic approach, which gives priority to the protection of the individuals proprietary interest of the work. These issues might be a strong factor impeding the harmonization of Copyright standards in North America.  Nevertheless, NAFTA does aim at correcting most of the existing asymmetries in the three areas which cover intellectual property: Copyright, Patents, and Trademarks.  158 In Copyright, for example, NAFTA clarifies which types of works will be protected in North America. Among these, it contemplates protecting new technological-related works such as computer programs, which were not covered at all by Mexico's domestic legislation.in NAFTA also gives explicit protection to sound recordings, in order to avoid transnational piracy in such a lucrative business.rn Finally, another important provision established by NAFTA is that protecting encrypted programcarrying satellite signalslm; this Article also combats international piracy, by establishing a control mechanism on viasatellite signals. International trade treaties usually confront problems with trademarks; as these signs, protect and identify goods and services which are subjected to the flow of market forces. NAFTA deals with this issue by having as one its main goals, the transnational recognition of trademark rights.lm For example, it makes transnational recognition of well-known trademarks mandatory in each of the Parties' territories.177 In order to achieve the previously mentioned goal, NAFTA also obliges every North American nation to provide trademark protection in three different languages;lm and have a minimum protection term of ten years:79 NAFTA also establishes a trademark registration system which helps eliminate legal and administrative difficulties:8° Finally, by establishing a common legal framework, NAFTA will 173 See page 110.  112. 115. 176 See page 124. 177 See page 125. 178 See page 127. 179 See page 126. 180 See page 127-128. 174 See page  175 See page  159 facilitate consumer's decisions when it comes to choosing quality from non-quality goods, and will create incentives on qualitygoods' producers by providing them with appropriate protection.  181  Patents play a very important role in international trade, as, among other things, patentability encourages the export of technology. This is one of the reasons why NAFTA makes patents available for any invention, in all fields of technology, all over North America.  182  NAFTA also encourages inventiveness, in  the whole North American region, by increasing protection terms. 183  As I stated before, the new Mexican Industrial Property Law introduces a modern conception of Patent and Trademark protection. It reforms Mexico's domestic legislation in preparation and in accordance with NAFTA. Among some of these improvements are an increase on the duration of protection terms; a broadened scope of protection; and, simplified administrative procedures.  184  All of these, will help Mexico gain international  economic competitiveness.  It is important to point out that prior to NAFTA, other treaties already regulated intellectual and industrial property at a transnational level. North American nations are Parties to most of these treaties.  185  This fact has made harmonization of  intellectual and industrial property rules easier in North America. Also, the existence of prior obligations leading to the 181 See pages 120-121. 182 See page 142. 183 See page 145. 184 See pages 129-133 and 146-151. 185 See page 91.  160  establishment of common principles might explain why intellectual property discrepancies are obtaining, in the short run, tangible and prompt solutions.  Besides filling up important gaps left by other international conventions regarding intellectual property, NAFTA has helped eliminate most relevant differences in this area between three North American Parties. It has done so by establishing clear and unified principles; and by encouraging domestic legal reform. Thus, intellectual property has been one of the greatest beneficiaries of the process of regionalization effected under NAFTA.  161  CONCLUSION  At an international economic level, the late twentieth century is being characterized for its proclivity towards a globalization process. Such process has had, among its many effects, a general shift in each countries' production of finished products into the generation of merchandise; a new interest in nations for getting involved in market competition at an international level, rather than being satisfied with its own domestic competition; and an increase on developing nations' participation in the international market.  1  These developments  have provided nations with an alternative option for economic growth: regional interdependence. Nations which have decided to follow this path, are now involved in the formation of economic blocs, which include trade liberalization as one of its main objectives. Open markets are being favored against isolationism. Today, protectionism is being rejected because, among other things, imports give an important boost on domestic economies' productivity 2  ;  trade barriers such as tariffs have proven to  reduce the quantity and quality of goods and services 3 ; and market's expansion has proven to create domestic competitiveness 4 . Therefore, it seems like free trade's benefits overshadow its disadvantages.  1 See pages 30-34. 2 See page 24. 3 See page 25. 4 See page 30.  162 The participation of less developed nations in this "new world" trend embracing economic regionalization has raised some doubts regarding Latin America's state of underdevelopment. The dependency theory might be able to explain why Latin America was not able to grow at the same pace developing nations have; it might also be of some help in understanding why developing countries decided in the past, to clasp at protectionist policies instead of aiming at an open market. Nevertheless, the protectionist measures endorsed by this theory are no longer justifiable in Mexico and other Latin American countries. Historical hurdles and international mechanisms which formerly justified these nations' isolation from the industrialized world have changed.  5  For instance, the extraction  of raw materials from the developing world is not a common practice among industrialized countries anymore; therefore, developing nations are now capable of opening their markets in order to allow foreign investment which can foster domestic productivity. Under these circumstances, unilateral practices aimed at helping the developing world, such as foreign aid, should be reduced; as some Latin American countries are now eager and able to face international competition. 6 State paternalism should be put aside and nations should prepare themselves for a competitive world. I must point out that not all developing countries are ready to take such a step. Trade liberalization should not be taken as an isolated attempt at market-oriented reform within a statist framework. Rather, a broader policy shift which includes 5 See pages 35-45. 6 See page 48.  163 encouragement of exports and foreign investment; legal reform; the modernization of the financial system; and the privatization of industry; should be implemented.  7  Mexico is a vivid example  of the above. By signing NAFTA, Mexico is taking the first step towards the creation of an autonomous productive infrastructure by fostering domestic economic growth. A free trade agreement contains reciprocal rights and obligations. Therefore, an interdependent relationship among the Parties is established. NAFTA means free trade, and free trade means interdependency not dependency.  NAFTA and the EEC are projected internationally as palpable examples of economic bloc formation. Parallels between the EEC and NAFTA are often made, either to reject or justify the latter's creation. Even though it is valid to compare both international associations, one must also aknowledge that marked differences separate these agreements. The EEC constitutes a complex international community which involves its participants in a deal which includes broad and numerous issues. The agreement, itself, is not complicated. Its goals are rather clear: establish substantive rules; define a common market; and allow for a number of freedoms and common economic policies. Nevertheless, when it comes to achieving the progressive convergence of economic policies, the EEC implicates other areas not explicitely stated on the Treaty of Rome.  8  This  alters the nature of a basic economic treaty into a complex 7 See pages 52-55. 8 See pages 61-63.  164 organization which is entangled with a whole variety of issues, besides economic. NAFTA on the other hand, is meant to be an economic treaty destined to regulate free trade. North American nations should try to avoid the involvement of other issues which could increase the complexity of such agreement. The EEC and NAFTA may also be compared for having other noticeable disparities. As I stated before, there are severe discrepancies on the incentives which motivated NAFTA's creation from the ones perceived by the EEC's drafters. 9 Also, the objectives" and means" to achieve them, vary considerably between the two agreements. Finally, as a consequence of the above, the institutions regulating each international association differ radically from one agreement to the other, as the EEC obviously needs a more developed institutional organization which should be able to deal with all the different issues that could arise in a community.  12  Notwithstanding the previously stated differences, some particular situations experienced under the EEC should be taken into account by NAFTA, either to avoid making the same mistakes or to follow the correct path. A good example of the above, is Europe's less developed nations' experience in the EEC. The cases of Greece, Portugal and Spain are a clear example on homogeneization of divergent economies. 13 It is true that Mexico's economic, historical, and political background may be different than that of Europe's developing nations; therefore, the process of integration in North America 9 See pages 70. 10 See pages 75-77. 11 See pages 71-75. 12 See pages 77-81. 13 See pages 63-69.  165 might be slower. Nevertheless, Mexico's past does coincide with Europe's developing nations' background regarding highly regulated economies.  14  Another common ground resides in the  progressive actions, such as adjustment terms  15  and economic  reform 16 , which were taken by developing nations in both continents in order to afford integration. Thus, the Treaty of Rome and NAFTA cannot be considered analogous documents. However, regarding trade and economic issues, the EEC constitutes a realistic precedent for NAFTA. Additionaly, Spain, Portugal and Greece's possitive experiences in the European economic arena should be taken into account by Mexico, in order to facilitate its adjustment in a North American common market.  The European experience has taught us that economic interdependence between developed and developing countries is possible. The existence of a European Common Market ratifies the hypothesis that divergent economies may coexist and grow at the same time. But, what means may be used in order to reach a level of homogeneity which would simplify such interdependence in North America? NAFTA responds to this question by promoting the homogeneization of laws. Political, cultural and social behaviour is usually reflected on each country's legislation. Therefore, by promoting legal reform, a reasonable amount of discrepancies may be overcome. Intellectual Property is a good example of how legal discrepancies have been eliminated amongst North American nations 14 See page 64. 15 See page 66. 16 See page 69.  166 in order to facilitate free trade. Before 1991, strong asymmetries were separating NAFTA Parties regarding Industrial and Intellectual Property; such differences constituted a considerable obstacle for the proper functioning of a North American Market as Canada and the United States, which may be consider as Intellectual Property exporters, did not have the proper legal incentives to invest in Mexico. Mexico on the other hand, is in need of foreign investment regarding this type of property. Technological investment, for instance, is highly welcomed by Mexico; therefore, its domestic patent law has been reformed in order to provide legal security to foreign inventors." Thus, Mexico's interest to improve its international competitiveness and modernize its legislation came briefly before NAFTA was signed and in accord with such Agreement's basic principles. I must point out that even though NAFTA homogeneizes both Industrial and Intellectual Property's main concepts all over North America n , at a domestic level, such homogeneization has not yet been attained, mainly because Intellectual Property (Copyright) embraces a high content of cultural and legal asymmetries which are more difficult to reconcile.  19  Therefore,  so far, Mexico has only embarked into domestic reform in the area of Industrial Property.  Benefits of free trade have encourage nations to forming international economic blocs which will improve their competitiveness at both the domestic and international level. 17 See page 148-148. 18 See page 90. 19 See page 95.  167 Less developed nations which are interested in participating in this new economic trend, have engaged into legal reform and trade liberalization in order to satisfy the pressures and meet the standards of industrialized nations. Besides, rules homogeneization has become a mandatory pattern in order to achieve competitiveness as a unitary economic bloc. NAFTA has proven to be an efficient instrument for the homogeneization of rules. Because, especially in the branch of Intellectual Property, the Agreement helps eliminate most differences between the Parties in establishing clear and unified principles and encouraging domestic legal reform in Mexico.  168  BIBLIOGRAPHY  Articles J.F. 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