The Law of Regional Trade Agreements in the WTO Dispute Settlement System: Lessons from the Peru-Agricultural Products Case

Abstract

The recently pronounced decision of the panel and Appellate Body in the Peru-Agricultural Products case brings with it a set of legal issues related to the relationship between RTA law and WTO rules and the application of the principle of good faith in the WTO dispute settlement system. This article is divided into two parts. The first part explicates the difficulties in rebutting the presumption of good faith in international disputes such as those of the WTO, as well as the boundaries of the principle of good faith regarding its necessary consistency with WTO law and the requirement of a “legal hook” with a specific good faith standard under the DSU. The second part examines the scope and effect of the principle of prevalence of RTA law over WTO rules echoed in some RTAs. This paper deals with the manner in which the panel and Appellate Body responded to these principles invoked by Peru. The subject is further explained by studying the practice of RTA tribunals as regards the utilization of WTO rules as a defence to set aside RTA rules in the RTA context. For this reason, the paper explains as far as possible the case law of RTA tribunals showing how they frame the relationship between RTAs and WTO law. The paper finds that despite the incorporation of the principle of prevalence of RTA law over WTO rules, the former cannot set aside the latter. It also concludes that good faith obligations under general international law can only find room in WTO proceedings through specific good faith expressions under WTO law.