A Study on the Dispute Settlement Procedure for the Preferential Rules of Origin

Abstract

The preferential Rules of Origin (RoO) govern tariff preferences that are given in accordance with the FTA. However, relatively few studies have been devoted to the procedures in settling disputes that are relevant to RoO under the FTA. This study is a first attempt at analyzing the applicability and the potential improvement in dispute settlement procedures in FTAs targeted at the preferential RoO. By exploring three dispute cases involving the preferential RoO, it is suggested that restrictiveness, complexity, and uncertainty that are inherent in the preferential RoO may trigger political tension and dispute. Forming a panel that is capable of mitigating political tension, facilitating participation and early cooperation of experts and stakeholders, and establishing a well-structured enforcement procedure are essential in dispute settlement procedures to resolve disputes involving cases on RoO. Furthermore, the current dispute settlement procedure that hinders the private sector’s access should be changed to one that is more open to private sector entities, such as companies, to facilitate the enforcement of the decision. Given that more improved FTA dispute settlement procedure may guarantee the enforcement and application of the FTA preferential treatment in relation with more politically powerful states and foster genuine free trades, more in-depth studies must be conducted on this topic.