Coordinative Approach to Resolve Normative and Operational Conflicts between Inner and Outer-FTAs

Abstract

The existing method for dealing with FTA-FTA conflict is to require consultation by the common parties to find a mutually satisfactory solution, or to require an FTA to prevail, or to require consultation to take into consideration general principles of international law. Such methods do not create much problems when the number of parties to an FTA is small and the common parties in different FTAs are also limited in number. However, with the emergence of mega-FTAs, the issue about FTA-FTA conflicts has different dimension. For instance, within TPP’s geographic coverage (the “outer-FTA”), there are some FTAs (the “inner-FTAs”).The existing methods fail to take into account the possible adverse effect to the outer-FTA. The article argues that it is desirable to coordinate the outer-FTA and its inner-FTAs. It suggests a procedural coordination to prioritize the application of the dispute settlement mechanism in the outer-FTA, with some exceptions to allow further trade liberalization and higher quality standards. It also suggests admitting third-party participation by other outer-FTA parties in the dispute settlement proceedings conducted under the inner-FTA. It further suggests outer-FTA serving as a platform to coordinate the substantive standards/rules so as to fundamentally resolve the difference.