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FTA Dispute Settlement Mechanisms: Alternative Fora for Trade Disputes—The Case of CETA and EUJEPA

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Global Politics and EU Trade Policy

Part of the book series: European Yearbook of International Economic Law ((Spec. Issue))

Abstract

This chapter investigates whether in the context of the Appellate Body crisis and the more developed substantive FTA norms, the dispute settlement mechanisms contained in EU FTAs, particularly CETA and EUJEPA, could emerge as attractive alternative fora for solving trade disputes. The chapter will analyze potential substantive and procedural aspects that would shape the answer to the posed question. It will argue that CETA and EUJEPA dispute settlement mechanisms could become only partial attractive bilateral alternatives to solve trade disputes between the parties. It will also show that there are certain aspects that will act against these mechanisms.

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Notes

  1. 1.

    More than 97% of PTAs signed in the 2000s contain means of dispute settlement. (Todd Allee, Manfred Elsig, ‘Dispute Settlement Provisions in PTAs: New Data and New Concepts’ in Andreas Dür, Manfred Elsig (eds), Trade Cooperation: The Purpose, Design and Effects of Preferential Trade Agreements (Cambridge University Press 2015) p. 319, 324.

  2. 2.

    For a list of disputes initiated under regional trade agreements see the website of Porges Trade Law <www.porgeslaw.com/rta-disputes/> accessed 24 July 2019.

  3. 3.

    Tetyana Payosova, Gary Clyde Hufbauer, Jeffrey J. Schott, ‘The Dispute Settlement Crisis in the World Trade Organization: Causes and Cures’ (2018) 18-5 PIIE Policy Brief p. 1, 1 <https://piie.com/system/files/documents/ pb18-5.pdf> accessed 24 July 2019.

  4. 4.

    European Commission, ‘EU Asks for a Panel with Ukraine on Wood Export Ban’ (21 June 2019) <http://trade.ec.europa.eu/doclib/press/index.cfm?id=2034> accessed 24 July 2019.

  5. 5.

    Comprehensive Economic and Trade Agreement (‘CETA’) between Canada, of the one part, and the European Union and its Member States, of the other part [2017] OJ L11/23.

  6. 6.

    Agreement between the European Union and Japan for an Economic Partnership (‘EUJEPA’) [2018] OJ L330/3.

  7. 7.

    Based on the available data till 2017 the EU was the second most active user of the WTO DSM, Canada – the third, and Japan – the eighth. (Arie Reich, ‘The Effectiveness of the WTO Dispute Settlement System: A Statistical Analysis’ (2017) 11 EUI Working Papers p. 1, 5).

  8. 8.

    As of January 2020, Canada was a complainant against the EU in nine disputes and a respondent in six, while Japan was a complainant in one and a respondent in six. ‘WTO, Map of Disputes between WTO Members’ <https://www.wto.org/english/tratop_e/dispu_e/dispu_maps_e.htm?country_selected=EEC&sense=e> accessed 2 January 2020.

  9. 9.

    This could happen while also making efforts to find alternatives within the WTO, as for example, by using appeal arbitration proceedings under Art. 25 of the Dispute Settlement Rules: Understanding on Rules and Procedures Governing the Settlement of Disputes (‘DSU’), Marrakesh Agreement Establishing the World Trade Organization, Annex 2, 15 April 1994, 1869 U.N.T.S. 401, 33 I.L.M. 1226 (1994).

  10. 10.

    Claude Chase and others, ‘Mapping of Dispute Settlement Mechanisms in Regional Trade Agreements – Innovative or Variations on a Theme?’ in Rohini Acharya (ed), Regional Trade Agreements and Multilateral Trading System (Cambridge University Press 2016) p. 608, 610.

  11. 11.

    DSU, Art. 4; CETA, Art. 29.4; EUJEPA, Art. 21.5.

  12. 12.

    DSU, Art. 3.7; CETA, Art. 29.19; EUJEPA, Art. 21.26.

  13. 13.

    DSU, Art. 6, 8 (‘[U]nless the parties to the dispute agree […] to a panel composed of five panelists.’); CETA, Art. 29.6; EUJEPA, Art. 21.7.

  14. 14.

    DSU, Art. 15; CETA, Art. 29.9-29.10; EUJEPA, Art. 21.18-21.19.

  15. 15.

    CETA, Art. 29.10; EUJEPA, Art. 21.15(8).

  16. 16.

    DSU, Art. 17.

  17. 17.

    DSU, Art. 21; CETA, Art. 29.12-29.15; EUJEPA, Art. 21.20-21.23.

  18. 18.

    DSU, Art. 21.1; CETA, Art. 29.13(1); EUJEPA, Art. 21.20(1).

  19. 19.

    DSU, Art. 21.3; CETA, Art. 29.13(2); EUJEPA, Art. 21.20(2).

  20. 20.

    DSU, Art. 21.5-22; CETA, Art. 29.14; EUJEPA, Art. 21.21-21.22.

  21. 21.

    DSU, Art. 21.6; CETA, Art. 29.14(5)-(6); EUJEPA, Art. 21.22(6).

  22. 22.

    Henrik Horn, Petros C. Mavroidis, André Sapir, Beyond the WTO? An Anatomy of EU and US Preferential Trade Agreements (Bruegel Blueprint Series 2009) p. 1, 4.

  23. 23.

    CETA, Art. 29.2; EUJEPA, Art. 21.2.

  24. 24.

    Stephan W Schill, ‘Authority, Legitimacy, and Fragmentation in the (Envisaged) Dispute Settlement Disciplines in Mega-Regionals’ in Stefan Griller, Walter Obwexer, Erich Vranes (eds) Mega-Regional Trade Agreements: CETA, TTIP, and TiSA: New Orientations for EU External Economic Relations (Oxford University Press 2017) p. 111, 123.

  25. 25.

    CETA, Art. 3.7; EUJEPA, Art. 5.9(2), 5.11(2).

  26. 26.

    CETA, Art. 23.11, 24. 16; EUJEPA, Art. 16.17.

  27. 27.

    CETA, Art. 17.4; EUJEPA, Art. 11.9.

  28. 28.

    CETA, Art. 7.9.

  29. 29.

    CETA, Annex 8-C.

  30. 30.

    EUJEPA, Art. 6.16(1); These EUJEPA provisions concern the risk assessment according to Art. 5 SPS Agreement (Art. 6.6), the arbitrariness or unjustifiability of import procedures (Art. 6.7(4)(b)), publication and communication of processing period of import procedures (Art. 6.7(4)(c)), information requirements for import procedures (Art. 6.7(4)(d)) and equivalence of SPS measures (Art. 6.14).

  31. 31.

    EUJEPA, Art. 7.3(3).

  32. 32.

    EUJEPA, Art. 12.10.

  33. 33.

    EUJEPA, Art. 14.52.

  34. 34.

    EUJEPA, Art. 15.7.

  35. 35.

    EUJEPA, Art. 18.19.

  36. 36.

    EUJEPA, Art. 19.8.

  37. 37.

    EUJEPA, Art. 20.4.

  38. 38.

    Horn, Mavroidis, Sapir supra note 22 p. 4.

  39. 39.

    See Lorand Bartels, ‘Applicable Law in WTO Dispute Settlement Proceedings’ (2001) 35(3) Journal of World Trade p. 499, 502-503; Joost Pauwelyn, ‘How to Win a World Trade Organization Dispute Based on Non-World Trade Organization Law? Questions of Jurisdiction and Merits’ (2003) 37(6) Journal of World Trade p. 997, 1000.

  40. 40.

    DSU, Art. 9(2).

  41. 41.

    DSU, Art. 10.2.

  42. 42.

    Appellate Body Report, United States – Final Anti-Dumping Measures on Stainless Steel from Mexico, WT/DS344/AB/R, 30 April 2008, [160].

  43. 43.

    Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WTO/DS8/AB/R, 4 October 1996, 14.

  44. 44.

    Joost Pauwelyn, ‘Going Global, Regional, or Both? Dispute Settlement in the Southern African Development Community (SADC) and Overlaps with the WTO and Other Jurisdictions’ (2004) 13 Minnesota Journal of Global Trade Minnesota Journal of Global Trade p. 231, 250.

  45. 45.

    Fernando Pierola, Gary Horlick, ‘WTO Dispute Settlement and Dispute Settlement in the “North-South” Agreements of the Americas: Considerations for Choice of Forum’ (2007) 41(5) Journal of World Trade p. 885, 895.

  46. 46.

    Amy Porges, ‘Designing Common but Differentiated Rules for Regional Trade Disputes’ [2018] ICTSD RTA Exchange Issue Paper p. 1, 6.

  47. 47.

    DSU, Art. 17.5.

  48. 48.

    Calculated by summing up the terms prescribed by CETA, Art. 29.6(1), 29.7(2)-(4). 29.9-29.10; EUJEPA, Art. 21.5, 21.8(2)-(3), 21.18-21.19.

  49. 49.

    Chase and others supra note 10 p. 610; Céline Todeschini-Marthe, ‘Dispute Settlement Mechanisms Under Free Trade Agreements and the WTO: Stakes, Issues and Practical Considerations: A Question of Choice?’ (2018) 13(9) Global Trade and Customs Journal p. 387, 402.

  50. 50.

    See infra Section 4.4 The Absence of an Appeal Stage under CETA and EUJEPA DSMs.

  51. 51.

    Pauwelyn, supra note 44 p. 258.

  52. 52.

    DSU, Art. 8.6.

  53. 53.

    DSU, Art. 8.4.

  54. 54.

    WTO Secretariat, ‘The Stages in a Typical WTO Dispute’ in A Handbook on the WTO Dispute Settlement System (2nd edn, Cambridge University Press 2017) p. 49, 72.

  55. 55.

    DSU, Art. 8.6.

  56. 56.

    The procedures under the DSU are administered by the Dispute Settlement Body (‘DSB’) – a political body, composed of representatives of all the Members. According to Art. IV:3, Marrakesh Agreement Establishing the World Trade Organization, 15 April 1994, 1867 U.N.T.S. 14, 33 I.L.M. 1143 (1994): ‘The General Council shall convene as appropriate to discharge the responsibilities of the Dispute Settlement Body provided for in the Dispute Settlement Understanding.’.

  57. 57.

    DSU, Art. 8.7.

  58. 58.

    CETA, Art. 29.7(2); EUJEPA, Art. 21.8(2).

  59. 59.

    CETA, Art. 29.8; EUJEPA, Art. 21.9.

  60. 60.

    CETA, Art. 26.1(1); EUJEPA, Art. 22.1(3).

  61. 61.

    Chase and others supra note10 645.

  62. 62.

    CETA, Art. 29.7(4).

  63. 63.

    Simon Lester, Inu Manak, Andrej Arpas, ‘Access to Trade Justice: Fixing NAFTA’s Flawed State-to-State Dispute Settlement Process’ (2019) 18(1) World Trade Review p. 63, 74.

  64. 64.

    EUJEPA, Art. 21.8(3)-(4).

  65. 65.

    Lester, Manak, Arpas supra note 63 p. 75.

  66. 66.

    As of January 2020, there are no published lists of arbitrators established under CETA and EUJEPA rules.

  67. 67.

    David A. Gantz, ‘The United States and NAFTA Dispute Settlement: Ambivalence, Frustration and Occasional Defiance’ (2009) 06-16 Arizona Legal Studies Discussion Paper p. 356, 387.

  68. 68.

    CETA, Art. 29.7(6).

  69. 69.

    EUJEPA, Art. 21.8(5)(a).

  70. 70.

    EUJEPA, Art. 21.8(5)(b).

  71. 71.

    EUJEPA, Art. 21.8(5)(a)(iii).

  72. 72.

    Jennifer Hillman, ‘Dispute Settlement Mechanism’ in Jeffrey J. Schott, Cathleen Cimino-Isaacs (eds) ‘Assessing the Trans-Pacific Partnership’ vol 2 (2016) 16-4 PIIE Briefing p. 101, 102; Todeschini-Marthe supra note 49 p. 401.

  73. 73.

    Pauwelyn, supra note 44 p. 260.

  74. 74.

    Pierola, Horlick supra note 45 p. 899.

  75. 75.

    Schill supra note 24 p. 119.

  76. 76.

    WTO, DSB Meeting, ‘Statements by the United States at the Meeting of the WTO Dispute Settlement Body Geneva’, 27 August 2018 <https://geneva.usmission.gov/wp-content/uploads/sites/290/Aug27.DSB_.Stmt_.as-delivered.fin_.public.pdf> accessed 24 July 2019; Office of the United States Trade Representative, The President’s 2018 Trade Policy Agenda p. 1, 22-28 <https://ustr.gov/sites/default/files/files/Press/Reports/2018/ AR/2018%20Annual%20Report%20I.pdf> accessed 24 July 2019.

  77. 77.

    DSU, Art. 27.1.

  78. 78.

    DSU, Art. 17.7.

  79. 79.

    Amelia Porges, ‘Dispute Settlement’ in Jean-Pierre Chauffor, Jean – Christophe Maur (eds) Preferential Trade Agreement Policies for Development: A Handbook (World Bank 2011) p. 467, 479.

  80. 80.

    James Flett, ‘Referring PTA Disputes to the WTO Dispute Settlement System’ in Andreas Dür, Manfred Elsig, Trade Cooperation: The Purpose, Design and Effects of Preferential Trade Agreements (Cambridge University Press 2015) p. 555, 558.

  81. 81.

    William J. Davey, ‘Dispute Settlement in the WTO and RTAs: A Comment’ in Lorand Bartels, Federico Ortino (eds) Regional Trade Agreements and the WTO Legal System (Oxford University Press 2006) p. 343, 354; Pierola, Horlick supra note 45 p. 898; Todeschini-Marthe supra note 49 p. 402.

  82. 82.

    Davey supra note 81 p. 355; Robert McDougall, ‘Regional Trade Agreement Dispute Settlement Mechanisms: Modes, Challenges and Options for Effective Dispute Resolution’ [2018] RTA Exchange Issue Paper p. 1, 9.

  83. 83.

    Chase and others supra note 10 p. 676.

  84. 84.

    EUJEPA, Art. 21.25(2).

  85. 85.

    Geraldo Vidigal, ‘Making Regional Dispute Settlement Attractive: The “Court of Arbitration” Option’ (RTA Exchange, ICTSD 2018) <www.ictsd.org/opinion/making-regional-dispute-settlement-attractive-the-> accessed 24 July 2019.

  86. 86.

    Ibid.

  87. 87.

    Ibid.

  88. 88.

    DSU, Art. 4.6.

  89. 89.

    DSU, Art. 18.2; Unless Members decide to individually release their submissions.

  90. 90.

    WTO, AB, Working Procedures for Appellate Review, WT/AB/WP/6, 16 August 2010, Appendix 3, para 2; DSU, Art. 17.10.

  91. 91.

    Gabrielle Marceau, Mikella Hurley, ‘Transparency and Public Participation in the WTO: A Report Card on WTO Transparency Mechanisms’ (2012) 4 (1) Trade, Law and Development p. 19, 25.

  92. 92.

    Ibid p. 26.

  93. 93.

    Lothar Ehring, ‘Public Access to Dispute Settlement Hearings in the World Trade Organization’ (2008) 11(4) Journal of International Economic Law p. 1021, 1022.

  94. 94.

    Panel Report, Canada – Continued Suspension of Obligations in the EC – Hormones Dispute (US – Continued Suspension), WT/DS321/R, 31 March 2008, [7.38-7.52]; Appellate Body Report, US – Continued Suspension, WT/DS321/AB/R, 16 October 2008, Annex IV.

  95. 95.

    WTO, ‘Farewell speech of Appellate Body Member Ricardo Ramírez-Hernández’ 28 May 2018 <www.wto.org/english/tratop_e/dispu_e/ricardoramirezfarwellspeech_e.htm> accessed 24 July 2019.

  96. 96.

    CETA, Art. 29.4(6); EUJEPA, Art. 21.5(6).

  97. 97.

    CETA, Annex 29-A Rules of Procedure for Arbitration, para 38; EUJEPA, Art. 21.15(3).

  98. 98.

    CETA, Annex 29-A Rules of Procedure for Arbitration, para 38; EUJEPA, Art. 21.15(1).

  99. 99.

    Ehring supra note 93 p. 1024.

  100. 100.

    Theresa Squatrito, ‘Amicus Curiae Briefs in the WTO DSM: Good or Bad News for Non-State Actor Involvement?’ (2018) 17(1) World Trade Review p. 65, 65-66.

  101. 101.

    Robert Howse, ‘The World Trade Organization 20 Years On: Global Governance by Judiciary’ (2016) 27(1) European Journal of International Law p. 9, 40.

  102. 102.

    Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp Products (US – Shrimp), WT/DS58/AB/R, 12 October 1998, [106-108]; Appellate Body Report, United States – Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom (US – Lead and Bismuth II) WT/DS138/AB/R, 10 May 2000, [41].

  103. 103.

    From 1998, when amicus briefs were first recognized to 2014: ‘In total, there have been 98 amicus submissions representing 148 actors. [...] Sixteen amicus submissions have formally been accepted and considered by panels. It is especially rare for the AB to consider an amicus brief. In fact, the AB has only found one amicus to merit consideration.’ (Squatrito supra note 100 p. 71-74).

  104. 104.

    CETA, Annex 29-A Rules of Procedure for Arbitration, para 43; EUJEPA, Art. 21.17(3). However, this is only ‘unless the Parties agree otherwise’ according to the Rules of Procedure of a Panel (Decision No 1/2019 of 10 April 2019 of the Joint Committee of the EU-Japan EPA [2019/1035]), para. 38.

  105. 105.

    Astrid Wiik, Amicus Curiae before International Courts and Tribunals (4 vol Successful Dispute Resolution, Nomos, Hart Publishing 2018).

  106. 106.

    CETA, Art. 29.14(1)(a).

  107. 107.

    EUJEPA, Art. 15.15(1).

  108. 108.

    CETA, Art. 29.14(1); EUJEPA, Art. 21.22(2).

  109. 109.

    Bryan Mercurio, ‘Why Compensation Cannot Replace Trade Retaliation in the WTO Dispute Settlement Understanding’ (2009) 8(2) World Trade Review p. 315, 324.

  110. 110.

    Ibid p. 328.

  111. 111.

    Arwel Davies, ‘Reviewing Dispute Settlement at the World Trade Organization: A Time to Reconsider the Role/s of Compensation?’ (2006) 1 (5) World Trade Review p. 31, 40; Marco Bronckers, Freya Baetens, ‘Reconsidering Financial Remedies in WTO Dispute Settlement’ (2013) 16 (2) Journal of International Economic Law p. 281.

  112. 112.

    DSB, Contribution of Ecuador to the Improvement of the Dispute Settlement Understanding of the WTO, TN/DS/W/9, 8 July 2002; DSB, Proposal by Mexico: Improvements and Clarifications of the Dispute Settlement Understanding, TN/DS/W/91, 16 July 2007.

  113. 113.

    EUJEPA, Art. 21.22(1).

  114. 114.

    CETA, Art. 29.14(3); EUJEPA, Art. 21.22(4)(a)).

  115. 115.

    CETA, Art. 29.14(1).

  116. 116.

    Bronckers, Baetens supra note 111 p. 289.

  117. 117.

    CETA, Art. 29.14(3); EUJEPA, Art. 21.22(4)(b).

  118. 118.

    DSU, Art. 22(6).

  119. 119.

    Simon Lester, Bryan Mercurio, Arwel Davies, World Trade Law: Text, Materials and Commentary (3rd edn, Hart Publishing 2018) p. 168.

  120. 120.

    CETA, Art. 29.14(1); EUJEPA, Art. 21.22(1).

  121. 121.

    Peter van den Bossche, Werner Zdouc, The Law and Policy of World Trade Organization: Text, Cases and Materials (4th edn, Oxford University Press 2017) p. 291.

  122. 122.

    Appellate Body Report, Canada – Continued Suspension of Obligations in the EC – Hormones Dispute (Canada – Continued Suspension), WT/DS321/AB/R, 16 October 2008 [345].

  123. 123.

    CETA, Art. 29.15; JEEPA, Art. 21.23.

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Furculita, C. (2020). FTA Dispute Settlement Mechanisms: Alternative Fora for Trade Disputes—The Case of CETA and EUJEPA. In: Weiß, W., Furculita, C. (eds) Global Politics and EU Trade Policy. European Yearbook of International Economic Law(). Springer, Cham. https://doi.org/10.1007/978-3-030-34588-4_5

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  • Print ISBN: 978-3-030-34587-7

  • Online ISBN: 978-3-030-34588-4

  • eBook Packages: Law and CriminologyLaw and Criminology (R0)

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