The WTO’s Exclusive and Compulsory Jurisdiction v.Dispute Resolution Mechanisms in Regional Trade Agreements: A Clash of Jurisdiction?

Abstract

Recently, the number of regional trade agreements (RTAs) has flourished and at the same time, trade disputes are increasing. The dispute settlement mechanisms (DSMs) in those RTAs may be potentially at odds with the DSM of the World Trade Organization (WTO), the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). The interaction between the DSMs of the WTO and in RTAs raise various concerns, including forum shopping and conflicts of jurisdiction. The key question is: which DSM should prevail? The relationship between the DSU and the default DSM in the North American Free Trade Agreement (NAFTA) provides an example of such an interaction and illustrates the potential fragmentation in case of overlapping jurisdiction. In the Mexico – Tax Measures on Soft Drinks and Other Beverages case, the WTO’s Appellate Body was reluctant to adopt a straightforward position on such overlaps. Thus, at least for now, there are many open questions, but no clear-cut answers. After providing an overview of the legal framework and discussing this important case, the authors propose solutions as to how to deal with jurisdictional overlaps in trade disputes. World Trade Organization (WTO), Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), Mexico – Soft Drinks, regional trade agreements (RTA), North American Free Trade Agreement (NAFTA), dispute settlement mechanisms, jurisdiction, proliferation, multiplication, international courts and tribunals