Innovative Mechanisms for Resolving or Avoiding Inter-State Trade Disputes in an Asia-Pacific Regional Free Trade Agreement
Williams, Brett G., Australian International Law Journal
This article elaborates upon ideas contributed to a symposium considering the possible shape of an Asia Pacific Community, including future trade arrangements within an Asia Pacific Community. It suggests some innovations in dispute settlement that could be considered for inclusion in such arrangements. The author suggests some innovative mechanisms by focussing on the way in which trade agreements and the dispute settlement mechanisms influence the internal political position of governments. The first mechanism would provide for a pre-quantification of the extent of retaliation that would he permitted should a complaint be successful. This mechanism would encourage respondent governments to focus earlier on weighing the potential loss of political support from exporters with any political support from import competing producers. The second mechanism would provide for free publication of an expert economic report on the economic welfare cost to the respondent of maintaining the protectionist measure subject to the complaint. This mechanism could increase the political weight attributed by the respondent government to the overall economic effects of the controversial measure. The paper further suggests that something similar to the second mechanism could be adopted as a separate transparency mechanism unrelated to dispute settlement. Such a mechanism might make it more likely that governments reform protectionist measures so as to avoiding the possibility of any legal dispute ever arising.
The article in this issue by Micah Burch and Luke Nottage (1) describes some of the regional and bilateral trade initiatives (for example, the Asia-Pacific Economic Cooperation forum (2)) and some of the bilateral and regional trade agreements ('BRTAs') (for example, the Japan Singapore Free Trade Agreement of 2001, (3) the Australian Singapore Free Trade Agreement of 2003, (4) the ASEAN-China Framework Agreement, (5) the Trans-Pacific Rartnership Agreement of 2005 between Brunei Darussalarn, Chile, New Zealand and Singapore) (6) in place and under negotiation (the proposed ASEAN plus three--is China, Japan and Korea--the expansion in membership of the Trans-Pacific Partnership) among nations of the Asia-Pacific region. Burch and Nottage then discuss some novel approaches to mechanisms which could be built into existing agreements or any further agreements in the region to help resolve disputes:
1. the inclusion of investor State arbitration mechanisms for resolving disputes arising when Status engage in conduct that detrimentally affects foreign investors; and
2. the inclusion of mandatory arbitration provisions like those in the Organisation for Economic Cooperation and Development ('OECD') model tax treaty for resolution of double tax disputes enabling taxpayers to ensure double tax disputes between different States are resolved.
This article makes some suggestions for novel approaches to resolving disputes between States arising from alleged breaches of the market access commitments contained in any BRTA among Asia-Pacific nations. These mechanisms could be considered in the context of existing BRTAs or in new BRTAs under negotiation or indeed in any wider Asia-Pacific Economic Community should such a thing ever come into existence. The suggested mechanisms are designed to be compatible with any unilateral initiatives in individual countries or to be capable of being multilateralised into World Trade Organization ('WTO') rules should any pair or group of Asia-Pacific countries find the mechanism workable and worthy of a proposal for amendment of WTO dispute resolution procedures.
The suggested mechanisms for resolving trade disputes between States are:
1. a mechanism for pre-quantifying the extent of permissible retaliation, that is: provision for an early estimation of the possible retaliation that could be imposed should a complaint be successful; and