Arizona Center Tackles Obstacles to Trade Pact

Article excerpt

IN a small, pueblo-style house across from the University of Arizona at Tucson, Boris Kozolchyk asks the burning question: "If a Canadian buys an appliance from a Mexican dealer in Mexico City and pays with a check ... when does the Mexican dealer get his money?"

The answer has to do with when, if, and how well the North American Free Trade Agreement (NAFTA) gets off the ground, beginning in January 1994. Once tariffs and other barriers to trade, services, and investment between Canada, the United States, and Mexico are dropped, North America will become the world's largest trading bloc.

But how well it functions depends on hundreds of details that need to be ironed out - from standardization of invoices and bills of lading to warehouse receipts and model franchise agreements. Some existing differences are purely mechanical in that they reflect incompatible or cumbersome legal formalities. Other differences are structural, reflecting sometimes firmly entrenched attitudes in the interpretation and enforcement of laws.

For now, the man and the organization with most answers is Mr. Kozolchyk and the National Law Center for Inter-American Trade (NLCIFT) which he directs at the University of Arizona here. A research and educational center with funding from Congress, the state of Arizona, and the university, the center opened last May.

"We are here to do away with legal obstacles so that free trade can happen quickly and efficiently," Kozolchyk says. Currently budgeted at about $350,000 for a staff of three people, the center has become the umbrella for dozens of volunteer lawyers in the US, Mexico, and Canada, as well as professional and student researchers. First few months busy

In the first few months, the center has worked on establishing procedures for letters of credit (legal instruments used to ensure payment for international goods or services), rules for selling Mexican securities on the Arizona stock exchange, and regulations on standardizing commercial invoices and designating surrogate nationals with the power of attorney.

One major achievement has been establishing guidelines for check-clearing. "The way things stood before, a Mexican holding a Canadian check might have to wait days, weeks, months, or even years," Kozolchyk says.

But in recent weeks, Kozolchyk has overseen meetings between the Association of Mexican Bankers, the US Council on International Banking (USCIB), and the Canadian Bankers Association. Guidelines have been agreed upon governing check-routing, deadlines for payment or rejection (24 hours), and uniform systems of microencoding. Checks changing hands

"The Canadians were hesitant to participate at first," Kozolchyk recalls. "But then they took a look at the volume of checks changing hands among NAFTA nations - literally millions per day - and they were flabbergasted and realized something needed to be done."

Kozolchyk is a Cuban-American law professor at the University of Arizona who is widely known as an expert on international banking and trade law. …