WT/REG305/2  
15 September  2016 
(16-4893) Page: 1/5 
Committee on Regional Trade Agreements  Original:  English/Spanish  
 
  FREE TRADE AGREEMENT BETWEEN THE DOMINICAN REPUBLIC AND CENTRAL AMERICA 
(COSTA RICA, EL SALVADOR, GUATEMALA, HONDURAS, AND NICARAGUA)  
(GOODS AND SERVICES)  
QUESTIONS AND REPLIES  
 The following communication, dated 7 September  2016, is being circulated at th e request of 
the delegations of the Dominican Republic and Central America (Costa Rica, El Salvador, 
Guatemala, Honduras, and Nicaragua).  
 
_______________  
 
 
 This document reproduces the questions addressed to the Parties and the 
responses  submitted.  
 
Ques tions from the delegation of the European Union  
 
Regulatory provisions on trade in goods  
Standards  
Sanitary and phytosanitary measures  
 
1.1.  Paragraph 3.46 : Could the Parties clarify what the prospect for adoption of 
Mutual  Recognition of Drug Registration in C osta Rica is?  
 Procedure for "Mutual recognition of sanitary registration medicinal products for human use" 
in force for El Salvador, Costa Rica, Guatemala, Honduras and Nicaragua ; does not apply to 
Costa  Rica and the Dominican Republic.  
 
Provisions on t rade in services and investment  
Other measures on investment  
 
1.2.  Could the Parties clarify whether the investment protection provisions in the 
agreement contain any guarantee on the right of states to regulate for legitimate public 
policy objectives?  
 According  to the Preamble of the Agreement, Parties maintain their right to safeguard 
public  welfare.  
 
In the Chapter on Investment, the Parties agreed on standards for the protection of 
investment and investors and they understand that this does not undermine regu latory powers for 
legitimate public policy objectives . Several provisions in the Chapter reflect such understanding 
between the Parties.  
 
 In Article 9.01, the definition of "investment " establishes that the protection of property or 
rights will be granted  as long as the investments were made in accordance with the domestic 
legislation of the Parties.  
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   In Article 9.02, "Scope of application and coverage of the obligations " excludes from the 
coverage of the Chapter on Investment:  
 
- Economic activities rese rved by each Party according t o its domestic law in force at 
the date of signature of the Agreement ; and 
 
- Measures adopted by a Party to restrict the participation of investments of investors of 
another Party in its territory, on grounds of nationa l secu rity or public order, 
protection of cultural and environmental heritage and environmental conservation.  
 
- Investment -related disputes prior to the entry into force of the Agreement.  
 
 On "Transfers ", Article 9.10.1 establishes that transfers will be made freely and without 
delay in accordance with the domestic legislation . Article 9.10.3 guarantees the right of the 
Parties, through the equitable and no -discriminatory application of its legislation, to request 
information and establish requirements to repor t on currency transfers or other monetary 
instruments . Furthermore, Article 9.10.4 provides for the possibility to apply temporary controls on 
transfers where there is a serious unbalance and following internationally accepted standards.  
 
 Article 9.11, "Expropriation and Compensation ", recognizes the fact that in certain 
situations, countries need to undertake expropriations in order to comply with legitimate public 
policy objectives . This is reflected in the recognition that expropriation measures will be  consistent 
with the Parties commitments in the Chapter when they are adopted for reasons of "public utility ". 
 
 Article 9.12, "Special Formalities and Information Requirements ", guarantees the possibility 
of the Parties to adopt or maintain measures that prescribe special formalities in connection with 
covered investments, such as incorporation in accordance with the domestic legislation, or require 
provision of information.  
 
 Article 9.13 . Establishes that any measure adopted by a Party to regulate public  policy 
objectives such as : security and health, among other, regulated in other chapters of the 
Agreement will not be incompatible with the protection granted to investors or investments from 
other Parties.  
 
 Article 9.15, "Measures related to the environ ment", states that Parties can adopt, maintain 
and enforce measures, consistent with the provisions in the Chapter, which they consider 
appropriate to ensure that investments in their territory comply with the environmental 
legal framework.  
 
 Article 9.16,  "Promotion of investments and exchange of information ", establishes that 
Parties will promote investments in accordance with their general policy in the field of 
foreign  investment.  
 
 Article 17.02, In this article, the Parties reserved the right to adopt  measures to protect 
their essential interests on matters of national security.  
 
1.3.  Could the Parties clarify whether investors have recourse to investor to state 
dispute settlement prior to establishing commercial presence in the host country?  
 The Preamble of this Agreement establishes that Parties considered the need to establish a 
regulatory framework that has clear, transparent and mutually beneficial rules in order to promote 
and protect investments.  
 
 According to Article 9.20, "Dispute settlement betwe en a Party and investor of the other 
Party", the investor -State dispute settlement procedure may be used for disputes arising within 
the scope of the Agreement, between a Party and an investor of the other Party that has made an 
investment in the territory  of the former Party.  
 
1.4.  Could the Parties clarify how the agreement does promote sustainable investment 
and responsible business conduct?  WT/REG305/2  
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   In the preamble of the Agreement, the Parties recognize that it is necessary to promote 
economic development in a mann er that takes into account the protection and conservation of the 
environment, as well as sustainable development.  
 
 In accordance with Article 9.15, the Parties have the right to regulate for legitimate public 
policy objectives, which includes the policie s to promote sustainable investment and responsible 
business conduct.  
 
 The Agreement stipulates that every Party can adopt, maintain or introduce any measure 
consistent with this chapter that it considers appropriate to ensure that the investments in its 
territory comply with the environmental legislation of such Party.  
 
 With respect to the promotion of sustainable investment, Parties can adopt measures that 
do not contravene the TRIMS Agreement, in accordance with article 9.07 . Responsible business 
condu ct is fundamental for the effective implementation of the Agreement, and Parties shall 
ensure, in accordance with their constitutions, the implementation of this Agreement. 
(Article  20.01).  
 
 Furthermore, nothing in this agreement prevents any of the Parti es from adopting measures 
that promote sustainable investment and responsible business conduct.  
 
 For example, in the case of Costa Rica, which has a reputation for its forward -looking 
policies regarding protection of the environment, enforcement of human rights and investment in 
public health and education, such policies will continue to be developed and implemented.  
 
Competition policy  
 
1.5.  Paragraph 5.38 : According to Art. 15.01 the Parties will promote the development 
of competition policy and ensure the im plementation of rules on free competition 
between and within the Parties, in order to avoid negative effects of the anticompetitive 
business practices in the free trade area.  
 Guatemala is still in the process of adopting a national competition law.  
 
a. Could  the Parties clarify if the Committee on Trade and Free Competition 
had/has played a role in the process of the adoption of a national competition 
law by Guatemala?  
The adoption of a Competition Law in Guatemala is purely a national process, this is why th e 
Committee on Trade and Free Competition as established in accordance with Article 15.02 of the 
Agreement has not played a role in Guatemala 's process . Nevertheless, there are international 
trade agreements in force for Guatemala that have incentivized an d accelerated the process 
towards an adoption of a national competition law . At the moment, Guatemala 's Executive Branch 
has tabled a law proposal to Congress and is now being evaluated.  
 
b. Could the Parties explain how the Committee on Trade and Free Compet ition is 
working (and has worked) for Guatemala ? What is the role of Guatemala in 
this Committee?  
 Although the Committee on Trade and Free Competition was established in accordance with 
Article 15.02 of the Agreement, such Committee has not been active in  the past years.  
 
Question s from the delegation of Mexico  
 
Sanitary and phytosanitary measures  
 
1.6.  Paragraph 3.45:  A risk assessment procedure by the importing Party to introduce 
an SPS measure, must not exceed a maximum period of three months . The Parties sh all 
designate the competent authority for notification to the Committee on Sanitary and 
Phytosanitary Measures and shall use the information centres as the channel for 
notification to the other Party . The Parties shall notify proposed SPS measures through 
the appropriate channels . For emergency measures, the notification shall be made in WT/REG305/2  
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  writing to the information centre at least three days before entry into force or at the 
latest three days after.  
Regarding the first sentence, by what mechanism was the tim e period for 
risk assessment established ? Is there no alternative if that time -frame is not respected?  
 
 The competent authorities make every effort to carry out the risk assessment within the 
time-frame established in the FTA. To that end, the phytosanita ry authorities of the Parties remain 
in constant contact.  
 
Intellectual property  
 
1.7.  Paragraph 5.40: With reference to this paragraph, what work has been done in 
relation to the implementation of the TRIPS Agreement and to use  the patent system?  
Although Deci sion No.  11/2003 of the Joint Administrative Council for the Central America – 
Dominican Republic Free Trade Agreement directed the Intellectual Property Committee  to 
research and develop  a technical cooperation plan for patents together with the World Int ellectual 
Property Organization (WIPO) and the European Patent Office, no specific work on this matter has 
been undertaken. However, all countries party to the Agreement have received WIPO support  for 
intellectual property capacity building on an individua l basis.  
 
 El Salvador has notably benefitted from WIPO support  in the areas of patent protection 
and registration.  
 
 Costa Rica is currently receiving WIPO support to implement the IPAS patent IT system. In 
addition, WIPO will provide the technical assist ance required for migration to this new system.  
 
 As it has its own patent management system, Guatemala is not involved in the IPAS project; 
however, it has made changes to its intellectual property legislation to fulfil its new commitments 
in this sphere.  
 
 The Government of Nicaragua has been strengthening the protection and enforcement of 
intellectual property rights, ensuring that the measures and procedures designed to respect those 
rights are implemented, and this has contributed to the achievement of  technological and 
development objectives which promote social and economic well -being in the country. With respect 
to patents, the legal framework has been enhanced through the introduction of provisions which 
protect inventions, utility models and design s, industrial designs and trade secrets, and prevent 
acts constituting unfair competition. National patent offices have been strengthened and 
examiners and technicians trained to take full advantage of the  patent system. On 16  June 2013, 
MIFIC Ministerial Decision No.  015-2003 was published in Official Journal La Gaceta  No. 111, page 
2993 of which refers to  the decision of the Joint Administrative Council for the Central America – 
Dominican Republic Free Trade Agreement, known as Joint Administrative Counci l 
Decision  CCA/DEC No.  11/2003: Research and Development  of a Technical Cooperation Plan for 
Patents.  
 
 Having signed a cooperation agreement with WIPO, Honduras has introduced  
the IPAS patent registration system and is currently working on implementing th e IPAS system for 
trademark registration. WIPO is working with the Honduran Directorate -General of Intellectual 
Property  on a project to strengthen collective marks as well as providing technical and 
legal advice.  
 
 Lastly, it is worth mentioning that the industrial property offices of Central America and the 
Dominican Republic, with the suppo rt of WIPO, the European Patent  Office (EPO) and 
the Spanish  Patent and Trademark Office (SPTO), have developed a Patent Examiner Manual which 
provides patent examiner s with guidelines to help them  in their substantive examinations of patent 
applications. This manual is revised periodically to reflect amendments and new provisions in the 
countries to which it applies.  
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  Question from the delegation of Thailand  
 
Competiti on policy  
 
1.8.  Paragraph 5.38 : A Committee on Trade and Free Competition is established, 
composed of two members of each Party . Its function shall be to seek the most 
appropriate means to implement Article 15.01 or any other task assigned to it by 
the Council.  
Since the Committee on Trade and Free Competition was established, have they 
considered any issues relating to breaches of obligations under this Chapter ? Please 
describe about it.  
 
 The Committee on Trade and Free Competition has not considered any issue  related to 
breaches of obligations under the Competition Policy Chapter, as the Parties have not detected 
that anticompetitive practices in each Party 's market have undermined trade benefits derived from 
the free trade agreement.  
 
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