This meeting is part of the RTA Exchange dialogue series aimed at constructing better trade and investment agreements for sustainable development at the regional and multilateral levels.
Together with the proliferation of regional trade agreements (RTAs), there has been a proliferation of dispute settlement mechanisms (DSMs) included in those agreements. While they are far from being used as often as the WTO dispute settlement mechanism, even in relative terms, these mechanisms are regular elements of RTAs and exist as one of the tools for handling trade differences. In light of the different paces of rule-making at the multilateral and regional levels, DSMs under RTAs are likely to become increasingly relevant in the future as litigious fora for addressing trade differences among trading partners, particularly with respect to WTO-extra obligations. For this to happen however, RTA DSMs need to function efficiently and effectively.
The few concluded RTA disputes highlight some of the challenges facing countries when using RTA DSMs and how such mechanisms relate to other international DSMs. While RTA DSMs may need to be improved in order for them to foster confidence and be able to resolve trade differences efficiently, they provide direct legal basis for RTA trade differences to be heard, especially those relating to WTO-extra matters. A relevant overarching question in this respect is therefore what can be done to promote a system that would address trade disputes in a more comprehensive manner.
As a contribution to this debate, this informal dialogue organised by the International Centre for Trade and Sustainable Development (ICTSD) and the Inter-American Development Bank (IDB) aimed at systematically reviewing dispute settlement provisions and practical experiences in using RTA DSMs. Leading experts, private sector representatives, practitioners and policy makers together with Geneva-based delegates and relevant IGOs engaged in the discussion. Ultimately, such a review will lead to the identification of priorities for action or governance reform that enhance coherence at the global level.
This special edition of Talking Disputes series discussed the recent arbitral panel report in the dispute In the Matter of Guatemala – Issues Relating to the Obligations Under Article 16.2.1(a) of the CAFTA-DR, which was initiated by the United States in 2010.
The Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) also includes Costa Rica, El Salvador, Honduras, and Nicaragua as its parties.
The dispute centres on the alleged failure of Guatemala to enforce its domestic laws dealing with the protection of the right of association, protection of the right to organize and bargain collectively, and acceptable conditions of work. The United States argued that those failures constituted “a sustained or recurring course of action or inaction” by Guatemala and that they were “in a manner affecting trade”, in violation of the Labour Chapter of the CAFTA-DR.
The US claims were not sustained by the panel. In particular, the panel found that majority of Guatemala’s alleged failure to enforce domestic labour legislation was not done “in a manner affecting trade.”
Following a presentation on the key findings of the panel, the experts engaged in an exchange of views on the legal and policy implications of the findings, and also discussed substantive and procedural aspects of international trade and investment law, international labour standard and FTA negotiations in the context of the dispute.