For the efficient operation and the enforcement of the provisions of the USMCA, this Agreement sets forth the following dispute settlement procedures: (i) Trade Remedies; (ii) Investor-State; and (iii) State-State. The Ministry of Economy has published some of the modifications and additions that such procedures have had in comparison to the provisions established in NAFTA. This article provides a summary of these procedures
The new United States-Mexico-Canada Agreement (USMCA), sets forth several dispute settlement procedures as mentioned in the following chapters:
Chapter 10 (Dispute Settlement Procedures in Trade Remedies)
In the USMCA, as in NAFTA's provisions, countries keep their right to impose measures related to anti-dumping or countervailing duty, as well as a binational panel to adjudge disputes.
Through this procedure, the involved Party may request that a Panel reviews a final anti-dumping or countervailing duty determination of a competent investigating authority of the importing Party.
Moreover, the USMCA provides that in case a Party carries out an antidumping or countervailing duty amendment applied to goods from another Party, the affected country may request that a binational panel review such amendment.
Chapter 14 (Investor-State Dispute Settlement)
A binding Investor-State arbitration procedure is established only by and between Mexico and the United States for the following claims:
- Any investor of a Party may claim a breach of National Treatment, Most-Favored-Nation Treatment and Direct Expropriation obligations; and,
- It may claim a breach of any provisions established in the Investment Chapter when the investor or his investment is part of an agreement from the following sectors: oil or gas, telecommunication services, power generation services, transportation and infrastructure projects.
The dispute settlement procedure between U.S. and Canada under NAFTA 1994 shall expire three years from the entry in force of the USMCA. In case of any dispute between investors and governments, it should be solved through host state court or other dispute resolution procedure (for example, CPTPP, in the case of Mexico and Canada).
Chapter 31 (State-State Dispute Settlement)
As in NAFTA´s provisions, this procedure allows a State Party to submit a claim against another State Party when it considers that there is a breach of the Agreement.
This procedure establishes the right of a Party to request a panel, comprised by five members, to analyze and resolve the dispute. Panel decisions are binding. If the disputing Party is unable to comply with the resolution, the complaining Party has the right to cease the trade benefits until the panel’s decision is fully enforced.
This procedure was improved in the USMCA by incorporating new provisions, such as: (i) cooperation between the Parties, through consultation, conciliation and mediation; (ii) transparent procedures, through public hearings and third parties participation; and (iii) greater certainty, since it could be used to resolve disputes arising under labor and environmental matters.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.