Abstract
The present chapter focuses on the question of whether the Dispute Settlement Mechanism (DSM) included in the Pacific Alliance (PA), which comprises Chile, Colombia, Mexico and Peru, offers better and more effective guarantees, in the case of treaty breaches, than DSMs in other agreements between PA members. In other words, this chapter compares the PA’s DSM with the DSMs included in the bilateral free trade agreements (FTAs) previously signed between its members, as well as with the World Trade Organization (WTO) Dispute Settlement Understanding (DSU). This question arises because, despite the availability of multiple bilateral forums to solve commercial disputes, they appear useless. Experience has shown that States have preferred to appear before the WTO system, which has demonstrated a certain level of effectiveness that the bilateral DSUs had not. In this regard, this chapter will firstly focus on the relevant features of the PA’s DSM and compare them with the DSU. Secondly it will look at how the PA’s DSM interacts with the multilateral Dispute Settlement Body (DSB), in light of the importance of trade liberalization. Finally, conclusions are drawn regarding its relevance, taking into account the many overlapping international court systems in place, and how this situation could affect the implementation of the PA commercial Agreement by creating uncertainty among its members.
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- 1.
Chile-US Free Trade Agreement (entry into force 1 June 2004), Colombia–United States Trade Promotion Agreement (entry into force 15 May 2012); North American Free Trade Agreement (entry into force 1 January 1994), Peru–United States Trade Promotion Agreement (entry into force 1 February 1 2009).
- 2.
“Protocolo Adicional al Acuerdo Máximo de la Alianza del Pacífico” (entry into force 1 May 2016)
- 3.
In the case of the FTA between developed and LDC, the issues subject to negotiation where those that were of interest of the developed one that were left unaccounted for by the WTO, or where their aims were not achieved completely after the Uruguay Round negotiations, which at the end of the bilateral negotiations were achieved.
- 4.
Additional Protocol to the Pacific Alliance Framework Agreement, Article 17.2 (2).
- 5.
Additional Protocol to the Pacific Alliance Framework Agreement, Annex 17.3 nullification or impairment, allows to understand better the consideration (iii) of Article 17.3. According with this provision a Member is entitled to resort to the DSM when the measure, although does not contravene other provisions of the Protocol, it nullifies or impairs the legitimate expectations regarding the chapters on Market Access, Rules of origin, Sanitary and phytosanitary measures, Technical obstacles on trade, Public Procurement, Cross border Trade on services.
- 6.
Economic Complementation Agreement N°33 (Colombia, Mexico and Venezuela Free Trade Agreement) Article 19-02.
- 7.
Economic Complementation Agreement N°41 (Mexico and Chile Free Trade Agreement) Article 18-02.
- 8.
Free Trade Agreement between Chile and Peru. Article 16.2.
- 9.
Trade Integration Agreement between Mexico and Peru. Article 15.2.
- 10.
Treaty Creating the Court of Justice of the Cartagena Agreement Article 4- “Member Countries are under the obligation to take the necessary steps to enforce the rules comprising the legal system of the Cartagena Agreement. They are also hereby committed to refrain from adopting or employing any measure that opposes these rules or that in any way restricts their application.”
- 11.
Treaty Creating the Court of Justice of the Cartagena Agreement Article 41.- In order to comply with the Court’s verdicts, no official approval or exequatur will be required in any Member Countries.
- 12.
Additional Protocol to the Economic Complementation Agreement N°24, article 16.3; Economic Complementation Agreement N°33, article 19-03; Economic Complementation Agreement N°41. Article 18-03; Free Trade Agreement between Chile and Peru, article 16.03; Trade Integration Agreement between Mexico and Peru. Article 15.3.
- 13.
Article 17.14 (3) sets a list of guarantees for the procedure, such as: each party has the opportunity to present on written, at least, the initial considerations as well as a rejoinder; each party is entitled to of, at least, one hearing before the arbitral tribunal, and in the same sense, they are entitled to present their case orally; the hearing in front of the arbitral tribunal should be open to the public, unless the information under debate is considered confidential or there is an agreement between the parties that there are justifiable reasons to not make public the hearing; the Tribunal’s deliberation process is confidential as well as the documents classified as confidential by any of the parties; all the information presented to the Tribunal must be made available for the counterparty; the information classified as confidential has to be protected.
- 14.
“One clear policy implication arising from the new RTAs is that introduction of competition among different trade agreements in the area of dispute settlement will not work. Two different trade agreements covering the same economic (market access) jurisdiction with competing court systems would inevitably render inconsistent legal rulings. Such fragmentation of international trade law and juris-prudence would increase policy uncertainty that would discourage firms from investing in international commerce.”
- 15.
“The complainant’s choice of forum depends on whether it prefers to set a regional or multilateral precedent, or no precedent at all. By setting a precedent, I mean adding to an institution’s body of case law that is followed by its judicial bodies when ruling on subsequent disputes.”
References
Statutes
Additional Protocol to the Economic Complementation Agreement N°24 (Colombia and Chile Free Trade Agreement) entry into force May 8th 2009.
Additional Protocol to the Pacific Alliance Framework Agreement, entry into force May 1st 2016.
Economic Complementation Agreement N°33 (Colombia, Mexico and Venezuela Free Trade Agreement), entry into force January 1st 1995.
Economic Complementation Agreement N°41 (Mexico and Chile Free Trade Agreement), entry into force August 1st 1999.
Free Trade Agreement between Chile and Peru, entry into force March 1st 2009
Pacific Alliance Framework Agreement, signed on June 6 2012.
Trade Integration Agreement between Mexico and Peru, entry into force February 1st 2012.
Treaty Creating the Court of Justice of the Cartagena Agreement, entry into force on May 28 1979. Modified on May 28 of 1996.
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Álvarez Zárate, J.M., Beltrán Vargas, D.M. (2019). The Pacific Alliance Dispute Settlement Mechanism: One More for the Heap. In: Sauvé, P., Polanco Lazo, R., Álvarez Zárate, J. (eds) The Pacific Alliance in a World of Preferential Trade Agreements. United Nations University Series on Regionalism, vol 16. Springer, Cham. https://doi.org/10.1007/978-3-319-78464-9_13
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