Free Trade Agreement between the Government of the People’s Republic of China and the Government of Nicaragua

On November 17, 2023, the full text of the National Assembly No. 8868 Decree that approves the Free Trade Agreement between the Government of the People’s Republic of China and the Government of China was published in La Gaceta, Official Gazette No. 2023.

Free trade agreements, between two or more countries, revitalize their trade reducing or eliminating tariff barriers between them. These treaties are always complex and cover countless legal aspects that must be reviewed by specialists in different areas.

The treaty in question contemplates, amongst others, the following aspects:

  1. General foundations of the treaty:
    • Establishment of a Free Trade Zone.
    • Respect for international agreements signed between the parties, including those of the World Trade Organization (WTO) and especially the “General Agreement on Tariffs and Trade” (GATT), and this treaty is based on the latter.
    • Joint work to eliminate agricultural import subsidies.
    • Rules of origin and implementation procedures, establishing that the containers and packaging materials used for the transportation of the goods will not be considered to determine the origin of the goods.
  1. Likewise, it points out the guidelines on topics such as:
    • Customs procedures.
    • Sanitary and phytosanitary measures.
    • Financial services where, among other topics, the creation of an inter-institutional committee to look at issues that concern the union is mentioned.
    • Migration: temporary entry of businesspersons and includes expedited application procedures.
    • Environment and trade: commitment to promoting international trade in a way that contributes to the goal of sustainable development.
    • Intellectual Property: compliance with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the exchange of information relating to intellectual property policies, changes, and developments in the implementation of national systems and on the administration and enforcement of intellectual property rights.
    • Treaty Dispute Settlement: It is indicated that, in the event of disputes, the parties will attempt to resolve them through cooperation and consultation. When a dispute arises about this treaty or any other agreement between the parties, the complaining party may choose the forum in which it will be resolved. That said, the treaty contemplates specific rules for consultations, good offices, conciliation, and mediation and if the controversy is not resolved under any of these measures, the rules of the arbitral tribunal are established about the establishment, integration, functions, rules, and all arbitral processes.

Also, it is important to highlight some relevant aspects of the treaty:

A- Merchandise trade

Article 2.12 establishes a merchandise trade committee and indicates:

    • Meeting once a year or more frequently if needed.
    • Committee functions:
      • Promote trade in merchandise between the parties.
      • Address obstacles to trade in merchandise between the parties.
      • Review future amendments to the harmonized commodity description and coding system.
      • Consult and make efforts to resolve disputes regarding the classification of goods in the harmonized system.
      • If necessary, establish working groups.
      • Exchange information on trade issues.

B- Investment

In investment matters, it contemplates the respect for the concepts of:

    • National Treatment.
    • Most Favored Nation Treatment (MFN)
    • Each party is granted fair and equitable treatment and full protection and security, following customary international law.
    • Non-discriminatory treatment
    • The expropriation or nationalization of a covered investment is prevented except in the cases established in 11.6.
    • Regarding the settlement of disputes between an investor and the State, this chapter of the treaty indicates:
      • In the event of a dispute, the claimant who wishes to submit it to arbitration must initiate a consultation process at least 180 days before submitting the dispute to arbitration. If it is not resolved in consultations, the dispute may be submitted to arbitration.
      • No claim may be submitted to arbitration after 3 years have passed from the date on which the claimant first had or should have had knowledge of the alleged breach and knowledge that the claimant suffered loss or damage.
      • The arbitration will be carried out under the rules established in 11.21 and following the TLC, which establishes rules for the integration, place, and procedure of arbitration.
      • The law applicable to the issues in controversy will be in accordance with this Free Trade Agreement and international law.

C- Digital economy

In this regard, the treaty reflects the following:

    • It is established that the parties will minimize the regulatory burden of electronic commerce and ensure regulatory frameworks that support the development of electronic commerce.
    • Regarding the electronic signature, it is indicated that no legislation for electronic signatures may be adopted or maintained that denies the legal validity of a signature simply because the signature is electronic.
    • The parties will adopt and maintain, to the extent possible, measures that provide consumers who use electronic commerce with protection at least equivalent to consumer protection measures for other forms of commerce.
    • About this chapter, the parties may not resort to dispute resolution.

D – Periodic Review of the treaty

It is indicated that the treaty will be reviewed to promote its objectives within three years from the date of its entry into force and at least every five years thereafter unless otherwise provided.

The treaty is an extensive document that requires specialists with experience and deep knowledge of international law and trade, customs, international arbitration, and local aspects of all the areas it addresses. Therefore, at Consortium Legal you will find the Firm that can advise you in all areas in a professional and timely manner.