Academic journal article The George Washington International Law Review

Chapter 20 Dispute Resolution under Nafta: Fact or Fiction?

Academic journal article The George Washington International Law Review

Chapter 20 Dispute Resolution under Nafta: Fact or Fiction?

Article excerpt

I. INTRODUCTION

When the North American Free Trade Agreement (NAFTA) became effective in 1994, it contained several mechanisms through which its parties-the United States, Canada, and Mexico-could seek dispute resolution for alleged violations of its provisions. Among these provisions, Chapter 20 provides the basis for dispute resolution relating to NAFTA's implementation.1 In NAFTA's short history, only a handful of occasions have arisen in which a party has invoked Chapter 20 protections in attempts to force another party to comply.2 Even fewer cases have proceeded to the point of arbitration.3 As a result, little opportunity has existed to thoroughly examine the effectiveness of Chapter 20 in promoting compliance with NAFTA provisions.

This Note will address the workings of the Chapter 20 arbitration process, with particular focus on the most recent decision of a Chapter 20 panel, In re Cross-Border Trucking Services.4 It will also address obstacles that the implementation of the panel decision faced in Congress and how the United States' .delay in compliance affects future trade with Mexico and NAFTA in general. Finally, this Note will attempt to place the Chapter 20 process in the context of other international trade dispute resolution mechanisms, specifically those of the World Trade Organization (WTO). Based on that comparison, the Note proposes an improved method of dispute resolution consistent with the free trade goals of NAFTA.

II. DISCUSSION

A. Recent Events in the Trucking Dispute

The effectiveness of Chapter 20 decisions recently faced scrutiny as the United States and Mexico struggled to resolve a controversy that has plagued the two nations since even before the adoption of NAFTA: Mexico's demands for the relaxation of cross-border trucking restrictions imposed by the United States against Mexican trucks.5 In 1998, unable to reach an agreement on this issue through negotiation, Mexico sought resolution through a Chapter 20 panel, hoping to force the United States to comply with several NAFTA articles pertaining to cross-border services.6 In February 2001, the NAFTA panel issued its final decision in In re Cross-Border Trucking Services, ruling that the United States had breached its obligations under several NAFTA provisions.7 The panel recommended that the United States comply with those articles by granting Mexican trucks permits to enter the country.8 The panel's ruling stated that the United States could no longer continue its blanket ban on the entry of all Mexican trucks into the United States and it instructed the United States to consider granting operating authority to Mexican trucks on a case-by-case basis.9

Despite the panel's ruling, the United States did not immediately comply with the decision, identifying a concern over the safety of Mexican carriers as its principal reason for noncompliance.10 Safety concerns about Mexican trucks have always laid at the heart of the controversy.11 As a basis for its refusal to adhere to the decision, the United States cited the lack of an adequate inspection system to ensure that vehicles entering the country meet U.S. safety standards.12 Specifically, the United States worried about variations between Mexican and U.S. standards with respect to the regulation of, inter alia, consecutive hours of driving without rest, maximum driving hours in an eight-day period, drug testing, minimum driving age for interstate driving, and maximum weight.13

While the safety of the operation of the carriers has constituted the predominant concern with respect to lifting the truck ban, environmental safety has also played a role in the controversy. At issue is the increased air pollution that would be result from an increase in truck traffic through the United States.14 Under the 1990 Clean Air Act, the Environmental Protection Agency (EPA) and individual states must establish minimum acceptable standards for air pollution, including standards for truck emissions. …

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