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2. Rule Makers and Rule Takers: Negotiating CAFTA
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CHAPTER 2 Rule Makers and RuleTakers: Negotiating CAFTA The Agreement clarifies and builds on existing international standards for the protection and enforcement of intellectual property rights [IPR], with an emphasis on new and emerging technologies. The Agreement ensures that the Central American countries and the Dominican Republic will provide a high level of IPR protection, similar to that provided under U.S. law. Key provisions of the Agreement, such as those on preventing circumvention of anti-piracy devices and establishing the scope of liability for copying works on the Internet, are modeled on U.S. statutes. usTR (n.d.) In 2002, political leaders of five Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua) and the United States began preparatory work on a free trade agreement. Formal negotiation started in January 2003 and proceeded through nine brisk rounds; the draft agreement was signed in December 2003, with Costa Rica joining in January 2004 and the Dominican Republic adding on in August. CAFTA provisions would open most markets immediately and others over time and lock in regulatory standards and “back of the border” reforms, some of which exceeded those required by the World Trade Organization (WTO). The United States and Central America obviously differ in size, power, standard of living, and institutional characteristics. Why would Central American countries advance toward this free trade agreement, given this pronounced economic asymmetry? Conventionally, trade policy making is interpreted in terms of business bargaining and interest-group politics. Sectors and firms that expect to benefit are likely to push for trade liberalization, and uncompetitive opponents are expected to seek protection (Lusztig 2004; Milner 1988; Irwin 2002). This 62 ContestingTrade in Central America model, while useful for understanding certain aspects of trade policy negotiation , suffers from conceptual limitations. Since the 1980s, international trade negotiation has shifted focus from “shallow integration,” which concentrated on tariffs and market access, to “deep integration,” which incorporates regulatory and institutional reform covering services, government procurement policy, investment protections, and intellectual property rules. Regional trade agreements between industrial and developing countries have also become more common.1 As the number of multidimensional and North-South trade agreements has increased, the limits to the lateral bargaining model that was developed to explain earlier agreements have become apparent. Understanding trade policy as it now operates requires us to embed the analysis in international power structures. As developing nations increased their participation in regional and bilateral arrangements with dominant powers, debate grew about the extent to which asymmetrical power between states necessarily produces asymmetrical outcomes in their negotiations (Cameron and Tomlin 2000, 17–32). Some theorists claim that unbalanced results are not inevitable and that small powers and weak states may benefit from greater focus and intensity or from institutional parameters that guarantee formal equality. Others question these claims. Tussie and Saguier (2011, 2), for example, contend that under conditions of absolute asymmetry, trade agreements expand to cover a wide range of “elements of interest” to dominant actors and become a “manifestation of coherent geopolitical strategies on the part of the major trading countries .” Seeking a “spiral of precedents” (7), in which the terms of one agreement become the baseline for the next, major powers may impose disciplines that contract policy space and constrain democratic processes in less powerful countries. Recent North-South trade agreements have been found to undermine the development prospects of developing countries by precluding industrial policies such as protection for infant industries and support for investors in priority areas, which had previously contributed to rapid growth in emerging powers (Shadlen 2005; Stiglitz and Charlton 2005; Gallagher 2008). The requirement of reciprocity in liberalization also meant the loss of “special and differential” treatment for developing countries and of trade preferences that had been granted to former dependencies and designated allies. The mandated administrative reforms, which raised the costs of implementing new rules while reducing revenues from tariffs, imposed a heavy burden on lowincome nations with weak institutions (Njinkeu and Cameron 2008; Estevadeordal et al. 2008). These new trade agreements introduced numerous obligations that had not been elements of prior trade rules. [3.238.62.124] Project MUSE (2024-03-28 19:00 GMT) Rule Makers and RuleTakers 63 Conventional trade negotiation theory, which assumes that trade partners independently designate their own goals, strategies, and parameters and then negotiate toward agreement, misses the power dynamics and resource realities that characterize “bargaining” between highly unequal nations. Manger and Shadlen’s (2011) concept of “political trade dependence” helps fill that gap. This concept...