Giving NAFTA Some Teeth

The eighth round of negotiations on the North American Free Trade Agreement (NAFTA) are expected to take place sometime next month. While progress has been made, the thorniest issues have yet to be addressed. One of the most contentious issues is dispute settlement. There arethree main types, and all are controversial. The most fundamental dispute provision is Chapter 20, the Agreement ’s state-to-state dispute settlement mechanism, which allows the government of any NAFTA country to file a complaint when it believes another government is violating the Agreement. The future of Chapter 20 is particularly uncertain. In October last year, the U.S. pushed aproposal that would make Chapter 20 “non-binding” by allowing parties to a dispute to ignore the findings of an independent body of jurists (referred to as a panel). This change would take Chapter 20 in the wrong direction, as it would make NAFTA less useful as an instrument to promote and enforce trade liberalization.In a recentpaper, my colleagueSimon Lester and I examine the history of NAFTA Chapter 20, showing that the mechanism has not been used all that much. While there have been twenty-one disputes initiated since 1994, only three have gone to a panel and had decisions rendered. Strikingly, no panel has been composed since 2000. Why? We argue that NAFTA ’s state-to-state dispute settlement chapter has a fundamental flaw in its provisions, which effectively allow the responding party to the dispute (the country b...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs