WT/REG342/3  
22 July 2014  
(14-4239)  Page: 1/4  
Committee on Regional Trade Agreements  Original: Spanish  
 
  FREE TRADE AGREEMENT BETWEEN COSTA RICA AND PERU 
(GOODS AND SERVICES) 
Questions and replies 
The following communication, dated 21 July 2014, is being circulated at the request of the 
delegations of Costa Rica and Peru. 
This document reproduces the follow-up questions addressed to the Parties following 
the 73rd session of the Committee on Regional Trade Agreements and the responses submitted. 
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Questions from the delegation of Mexico 
Trade remedies 
1.1.  Paragraph 3.51: We note that accordin g to Article 8.1.2, a party may apply 
a bilateral safeguard measure "… to the exte nt necessary to prevent or remedy serious 
injury, or threat thereof, an d facilitate adjustment …". 
As we understand it, this means that th e possible cases in which such measures 
may be imposed are: (a) when it is necessary to prevent se rious injury; (b) when it is 
necessary to prevent a threat of serious injury; (c) to remedy serious injury; and 
(d) to remedy a threat of serious injury. 
We would like to know in what kind of  situation the measure would be necessary 
to prevent a threat of serious injury. 
The conditions for establishing a bilateral safeguard measure are set forth 
in paragraph 8.1.1 of the Chapter entitled Trad e Defence in the Agreement, which states that 
a bilateral safeguard measure may be adopted "if, as a result of the reduction or elimination of a customs duty pursuant to this Agreement, an  originating good of one Party is being imported 
into the other Party's territory in such increased quantities, in absolute terms or relative 
to domestic production and under such conditions as to constitute a substantial cause of serious injury, or threat thereof, to a domestic industry producing like or directly competitive goods". 
 
Paragraph 8.1.2 states that the conditions laid down in paragraph 8.1.1 must be fulfilled 
in order to impose a bilateral safeguard measure and also specifies that the measure must be necessary to prevent or remedy serious injury or the threat thereof and to facilitate adjustment. 
The purpose of the safeguard measure is to remedy  serious injury or to prevent it when there 
is a threat that it may occur.  
The wording of this paragraph is not intended to go beyond the condition established 
in Article 5.1 of the  WTO Agreement on Safeguards and must therefore be interpreted in a similar 
way, in the light of the commitments undertaken in the Peru-Costa Rica FTA. 
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  1.2.  Paragraph 3.54: We note that according to Article 8.8.2, "a Party taking a global 
safeguard action may exclude imports of an or iginating good of the other Party if such 
imports are not a substantial cause of serious injury or threat thereof". What would be 
the criteria for determining whether imports are a "substantial cause" of the injury 
or threat thereof, and if those criteria ar e different from those that must be adopted 
under the WTO Agreement on Safeguards, how could they be consistent with 
that Agreement? 
The global safeguard provisions of the FTA be tween Peru and Costa Rica will be applied 
in accordance with Article XIX of the GATT and the Agreement on Safeguards, as interpreted by the jurisprudence of the Appellate Body. If it is determined that the imports of the other Party 
are not a substantial cause of serious injury or threat thereof ("substantial cause" meaning 
an important cause that is no less important than any other cause of serious injury or threat 
thereof), the other Party may be excluded from application of the measure. This analysis must be carried out on a case-by-case basis. However, taki ng into account the jurisprudence relating to the 
principle or requirement of "parallelism", the po ssibility of excluding regional imports from the 
application of safeguard measures, as envisaged in the agreement in question, would also imply 
the exclusion of such imports from the determination of an increase in imports and serious injury 
(or threat thereof). 
 
Nevertheless, Peru and Costa Rica note that, in accordance with the ruling of the 
Appellate Body in US - Steel Safeguards  (paragraphs 446-474), the right exists to exclude from 
the application of a safeguard measure import s from a party to a regional agreement, 
without excluding such imports from the determination of an increase in imports and serious injury. This would only be admissible if the competent authorities explicitly establish, 
through a reasoned and adequate explanation, that imports from sources outside the free trade 
area created by the FTA between Peru and Costa Rica satisfy, alone, the conditions for the 
imposition of a safeguard measure, in accordance with Article 2.1 and as described in Article 4.2 
of the Agreement on Safeguards. 
 1.3.  Paragraph 3.55: Article 8.10(a ) of the text of the Agreement states that the parties 
agreed to establish a cooperation mechanis m between their investigating authorities, 
which includes the possibility of exchanging  available non-confidential information 
on trade defence investigations they have conducted in respect of imports originating 
in or coming from third countries. 
1.4.  In this connection, we would appreciate  further information from the Parties 
on the following: 
a. What kind of non-confidential informatio n from third parties could in your view 
be exchanged? 
The confidential nature of the information submitted in a proceeding is determined 
in accordance with the domestic legislation of each Party. For Costa Rica, this includes all non-confidential information contained in the administrative file on the case. For Peru, 
non-confidential information that can be exchanged is that contained in the relevant record 
of the proceeding. 
b.  We assume that this is informatio n on investigations that have been 
concluded. Could you confirm this? 
Yes, the information is on investigations that have been concluded. c. Are the third parties informed of th e disclosure of your information? 
The information that would be disclosed is pu blic and therefore third parties do not need 
to be informed. WT/REG342/3 
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  Competition policy 
1.5.  Paragraph 3.13: Will the authority responsi ble for implementing competition policy 
from each one of the countries be particip ating in the Committee on Trade in Goods? 
The functions entrusted to the Committee on Trade in Goods established by Article 2.16 
of Chapter 2 (Market Access of Goods) of  the Free Trade Agreement between the 
Republic of Costa Rica and the Republic of Peru, in accordance with paragraph 3 of this Article, 
do not allow it to address issues relating to Ch apter 11 (Competition Policy). It has not been 
envisaged that the authority responsible for implementing the Parties' competition policy will 
participate in the Committee on Trade in Goods. 
In order to promote understanding between the Pa rties and to address specific issues arising 
under Chapter 11 (Competition Policy), the Parties, in accordance with Article 11.6 of this Chapter, 
may enter into consultations upon the request of either Party. 
Moreover, it should be emphasized that the Part ies may also, if they see fit, raise any issue 
concerning implementation of the Agreement, incl uding matters relating to Chapter 11, before the 
Free Trade Commission established by Articl e 17.1 of Chapter 17 (Administration of the 
Agreement), which will meet at least once a year in regular sessions, unless it decides otherwise. 
Intellectual property rights 
1.6.  Paragraph 5.25: What is the procedure for defining well-known marks in each 
country? How are these marks protected? 
In Peru, well-known marks are regulated by Andean Community Decision 486 establishing 
the Common Industrial Property Regime and by Legislative Decree No. 1075, which were duly 
notified to the WTO in documents IP/N/1/PER/I/3 (dated 7 November 2000) and IP/N/1/PER/2 
(dated 29 July 2010), respectively. Title XIII of Decision 486 establishes that a well-known distinctive sign is one that is recognized as su ch by the relevant sector in any member country 
of the Andean Community, independently of the way or means by which it was made known. 
Moreover, the well-known nature of a sign may not be denied solely on the grounds that it is not registered or is not in the process of being registered in a member country of the Andean 
Community or abroad. The aforementioned Deci sion establishes the scope of protection 
for well-known marks, the criteria used to determine whether a mark is well-known, and the relevant enforcement mechanisms. 
In Costa Rica, well-known marks are regulated by the Law on Trademarks 
and Other Distinctive Signs (Law No. 7978 of 6 January 2000) and its Implementing 
Regulations (Executive Decree No. 30233 of 20  February 2002), which are available at: 
http://www.pgrweb.go.cr/scij/main.aspx . 
Articles 44 and 45 of Law No. 7978 define the scope of protection and establish 
a non-exhaustive list of criteria to determine whether a mark is well-known, and also provide the possibility to use any form of evidence in orde r to demonstrate the well-known character of the 
mark. Owners of well-known marks have the right to prevent third parties from taking improper 
advantage of knowledge of the mark or weakening its distinctive force or commercial or advertising value. Consequently, protection for a well-known mark cannot be denied solely 
on the grounds that it is not registered. 
1.7.  Paragraph 5.26: What are the mechanisms fo r ensuring that the protection of goods 
with denominations of origin does no t unnecessarily restri ct competition? 
In Peru, trade in protected goods with denominations of origin, as with any other industrial 
property right, must be conducted in accordance with the principles of commercial good faith 
and fair competition which apply to market operators. All acts of unfair competition relating to industrial property, including those involving goods or products with denominations of origin 
that may unnecessarily restrict competition, are therefore regulated in Peru by Andean Community 
Decision 486, which was duly notified to the WTO in document IP/N/1/PER/I/3 (dated 7 November 2000). Title XVI of Decision 486 establishes that any act carried out in respect WT/REG342/3 
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  of industrial property in the course of trade that is contrary to honest commercial practices will be 
considered unfair. Acts of unfair competition related to industrial property also include the following: (a) any act capable of causing confusion, by any means whatsoever, with respect to the business, goods or industrial or commercial activity of a competitor; (b) false affirmations made 
in the course of trade that are capable of discred iting a competitor's business, goods or industrial 
or commercial activity; and, (c) indications or affirmations whose use in the course of trade may mislead the public with regard to the nature, method of manufacture, characteristics, usefulness 
or quantity of the goods in question. 
In Costa Rica, Article 1 of Law No. 7978 stipulates that the purpose of the Law is to protect, 
in an effective manner, the legitimate rights an d interests of owners of trademarks and other 
distinctive signs (including denominations of origin ), and to guard against the indirect effects that 
acts of unfair competition may have on the legitimate rights and interests of consumers. Title VIII 
of the Law is also applicable, as it states that geographical indications may not be used in a way that constitutes an act of unfair competition, as defined in Article 10 bis of the Paris Convention. 
This Law is available at: http://www.pgrweb.go.cr/scij/main.aspx . 
Similarly, Article 17 of the Law on the Promotion of Competition and Effective Protection 
of the Consumer (Law No. 7472 of 19 December  1994) prohibits acts of unfair competition 
between economic operators. This Law is available at: http://www.pgrweb.go.cr/scij/main.aspx . 
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