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[Deborah James]

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http://insidetrade.com/201204182396245/WTO-Daily-News/Daily-News/us-colombia-side-deal-on-ipr-treaties-allowed-fta-implementation-to-go-forward/menu-id-948.html

U.S.-Colombia Side Deal On IPR Treaties Allowed FTA Implementation To  
Go Forward
Posted: April 18, 2012
The Obama administration late last week struck a side deal with the  
Colombian government that cleared the way for the U.S.-Colombia free  
trade agreement to enter into force on May 15 even though Colombia has  
not formally completed all steps necessary to comply with its FTA  
obligations, according to informed sources.

The side deal outlines punitive steps that the U.S. can take if  
Colombia does not fulfill in the near term its remaining obligations,  
which relate to its ratification of three intellectual property rights  
(IPR) treaties.

Colombia is required to ratify those three IPR treaties under the  
terms of the FTA, but has not yet done so because its Constitutional  
Court has not yet completed its review of the treaties. The court is  
not expected to complete its work until the second half of this year,  
presenting an obstacle when it comes to swift implementation of the  
FTA because Colombia cannot formally ratify the treaties until the  
court rules they are consistent with the Colombian law.

To get around this problem, the U.S. and Colombia have negotiated a  
side deal under which the U.S. has agreed to move forward with FTA  
implementation in exchange for an agreement from Colombia that if it  
does not ratify the treaties in the near term, the U.S. can impose  
unspecified sanctions against Colombian imports. This is an apparent  
attempt by the U.S. to ensure Colombia fulfills its FTA obligations  
relatively quickly.

The side deal, confirmed in an April 15 exchange of letters between  
U.S. Trade Representative Ron Kirk and Colombian Foreign Minister  
Maria Angela Holguin, states that the U.S. may “withhold and/or  
suspend” the application of benefits to Colombia under the FTA to such  
an extent as the U.S. deems appropriate if Colombia does not ratify  
the three IPR treaties by certain dates, sources said.

Under the side deal, Colombia must ratify the Budapest Treaty on the  
International Recognition of the Deposit of Microorganisms for the  
Purposes of Patent Procedure of 1977, as amended in 1980, by Jan. 31,  
2013, sources said.

The side deal stipulates that the remaining two treaties -- the  
International Convention for the Protection of New Varieties of Plants  
of 1991, known as UPOV 91, and the Convention Relating to the  
Distribution of Program-Carrying Signals Transmitted by Satellite of  
1974 -- must be ratified by April 15, 2013, sources said.

If the U.S. does end up imposing such sanctions due to a lack of  
action on the Colombian side, the side deal clarifies that it would  
promptly remove them once Colombia ratifies the three IPR treaties,  
sources said.

The side deal appears to give Colombia ample time, as most observers  
believe the court can complete its review of the constitutionality of  
the treaties this year. After that, Colombia must submit its  
instruments of acceptance to formally ratify them, sources said.

However, the deal notes that, in the case of the UPOV 91 treaty, even  
after approval by the constitutional court the government of Colombia  
may need to take “further steps” in consultation with the treaty's  
governing council to complete its ratification process, sources said.

Under the deal, Colombia is required to update USTR every 60 calendar  
days of its efforts to complete the ratification process of the three  
treaties. The exchange of letters confirming the side deal is distinct  
from the exchange of letters stating that the FTA will take effect on  
May 15, sources said.

In the event that the Constitutional Court fails to issue a positive  
determination for any of the three treaties, the side deal stipulates  
that Colombia will take steps immediately to “remedy any deficiency  
that is identified” and will continue informing the United States  
regarding its progress in accordance with the 60-day notification  
requirement.

This is not the first time that USTR has opted to allow FTA  
implementation to go forward even though an FTA partner has not taken  
all the necessary steps called for under that FTA. In fact, the side  
deal with Colombia resembles an earlier arrangement the U.S. worked  
out with Costa Rica to facilitate the implementation of the Central  
American Free Trade Agreement (CAFTA).

Under that deal, the U.S. allowed Costa Rica to implement the trade  
deal even though it had not passed all IPR-related laws necessary to  
uphold its FTA obligations, but reserved the right to impose trade  
sanctions in the event of non-compliance. When Costa Rica exceeded the  
agreed-upon time period for compliance, the U.S. ultimately blocked  
sugar imports from Costa Rica until it made the necessary legislative  
changes on IPR (Inside U.S. Trade, May 28, 2010).

House Ways and Means Ranking Member Sander Levin (D-MI), who voted  
against the FTA in October, this week acknowledged that Colombia still  
needs to complete the constitutional court reviews for the three  
treaties, but he downplayed the notion that this posed a real hurdle  
when it comes to FTA implementation.

"We discussed that when we were [in Colombia last week], and the  
answer was in 95 percent of the cases, the court approves, so there's  
high confidence that that will happen," he said during an April 16  
press conference with reporters.

At that press conference, however, Levin signaled that he was not  
satisfied with Colombia's implementation of the bilateral labor action  
plan, which was politically linked to passage of the FTA (see related  
story).
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