Dispute Settlement under Free Trade Agreements: The Proposed Australia-China Free Trade Agreement

in The Journal of World Investment & Trade
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Dispute Settlement under Free Trade Agreements: The Proposed Australia-China Free Trade Agreement

in The Journal of World Investment & Trade

References

For example, while Germany favours litigation over ADR, China and Japan give more or equal status to the two. 2 Bryan Mercurio and Rebecca Laforgia, 'Expanding Democracy: why Australia should Negotiate for Open and Transparent Dispute Settlement in its Free Trade Agreements' (2006) 6(2) Melbourne Journal of International Law 485: 490. ' According to Dsu Art 4, the parties must attempt to resolve their differences through consultations trying to reach a "mutually agreed solution".

4 Ibid., Art 5. 5 Dispute Settlement: The Disputes (2010) World Trade Organisation http://wwvv.wto.org/english/tratop e/ dispu_e/dispu_status_e.htm (12 Apr. 2010). !' Kara Leitner and Simon Lester, 'WTO Dispute Settlement 1995-2009 - A Statistical Analysis' (2010) 13(1) Joumal of International Economic Law 205, 213. 7 Dsu, supra n. 3, Art 21 (3). 8 WT/DS285. 9 WT/DS285/13. 10 WT/DS285, Article 21.5 Panel Report circulated on 30 March, 2007.

11 WT/DS285/Atiu This includes Section 1 Copyright and related rights; Section 2 Trademarks; Section 4 Industrial designs; Section 5 Patents and Section 7 Protection of undisclosed information. 12 Leitner and Lester, supra n. 6. 214. " John H Jackson. William J Davcy and Alan 0 Sykes Jr, Legal Prn6lems of International Economic Relations: Cases, Materials atid Test (West Group, 5th ed, 2008), 275. 14 Ibid. Is DSU, supra n. 3, Art 21.

Ibid, Art 21 (3). 17 Jackson et al, supra n. 13, 276. Ibid, 274. 11 See, Naboth van den Broek, 'Power Paradoxes in Enforcement and Implementation of World Trade Organization Dispute Settlement Reports' (2003) 37(1) Journal of World Trade 127; Donald McRae, 'Measuring the Effectiveness of the W r<> Dispute Settlement System' (2008) 3(1) Asian Journal of WTO & International Health Lay and Policy 1; Heinz Hauser and Thomas A. Zinunermann, 'The Challenge of Reforming the WTO Dispute Settlement Understanding' (2003) 38(5) Reviero of European Economic Policy 241. 20 William Davey, 'Dispute Settlement in the WTO and RTAS: A Comment' in Lorand Bartels and Federico Ortino (eds), Regional Trade Agreements and the WTO Legal System (Oxford University Press, 2006), 349. David Morgan, 'Dispute Settlement Under PTAS: Political or Legal?' in Ross Buckley, Vai lo Lo and Laurence Boulle (eds), Challenges to Multilateral Trade: T7 Gnpact �f Bilateral, Preferential and Regional Agreements (Kluwcr Law International, 2008) 241, 245.

22 Jackson et al., supra n. 13, 527. 23 Ann Capling and Kim Richard Nossal, 'Blowback: Investor-State Dispute Mechanisms in International Trade Agreements' (2006) 19(2) Governance: An International Journal of Policy, Administration, and Institutions 151, 153. z4 North American Free Trade Agreement (Hereafter referred to as NAFTA), Art 1115. 25 Ibid, Art 1120.

zb Ethyl (1997), S.D. Myers (1998), Pope & Talbot (1999), Abitibi-Bowater (2009), Metalclad (1996), Karpa (1998), Corn Products International (2003), ADM/Tate & Lyle (2003), and Cargill (2005). See 'Table of NnFrn "Chapter 11" Foreign Investor-State Cases and Claims' (2010) http://www.citizen.org/documents/ NAFTA_investor_State_Chart_Nov_2010.pdf, 3 Nov. 2010. 27 Critics claim that it has not been used, as intended, to protect property rights against government measures "tantamount to expropriation" but has legalized a peculiar American conception of property rights, given foreign corporations rights not available to nationals, and even been used to attack a wide array of national government regulation aimed at the social, environmental and other public goods. For example as commented by Professor Abbott, while dispute settlement system of Chapter 11 went as far as establishing a legal framework which provides attractive financial guarantees to the investors, it has not built a framework strong enough to accommodate social policies. See, John J. Kirton and Virginia W. Maclaren (eds), Linkinq Trade Environment and Social Cohesion: Nafta Experiences, Global Challenges (Ashgate: Aldershot, 2002). See also, Frederick M. Abbott, The Political Economy of NAFTA Chapter Eleven: Equality Before the Law and the Boundaries of North American Integration' (2000) 23 Hastuvy Intemational and Comparative Law Review, 309. zx NAFTA, supra n. 24, Art 1904 (2). z9 Ibid., Art 1904 (1), and Annex 1901.2. On the date of entry into force of this Agreement, the Parties shall establish and thereafter maintain a roster of individuals to serve as Panellists in disputes under this Chapter. The roster shall include judges or former judges to the fullest extent practicable. The Parties shall consult in developing the roster, which shall include at least 75 candidates. Each Party shall select at least 25 candidates, and all candidates shall be citizens of Canada, Mexico or the United States. 30 A. Ortiz Mena, 'Dispute Settlement under NAFTA' in E. Chambers and P. Smith (eds), NnrTA in the New Millennium (Centre for US-Mexican Studies, 2002) 427. See also, NAFTA Art 1904, which states that "each Party shall replace judicial review of final anti-dumping and countervailing duty determinations with bi-national Panel review." 3� Jackson et al., supra n.13, 532. 3z The latest decision was made on 18 January, 2011 on Welded Pipe (USA-MEX-2007-1904-03). See, Decisions and Reports (21 December 2010) NAFTA Secretariat http://www.nafta-sec-alena.org/en/Decisions AndReports.aspx?x=312, 30 Dec. 2010.

33 Overview of the Dispute Settlement l'rovisions (19 January 2010) NAFTA Secretariat http://www.nafta-sec- alcna.org/en/view.aspx7xs226, 13 Jul. 2010. 34 Mark Sher, 'Chapter 20 Dispute Resolution under NAFTA: Fact or Fiction?' (2003) 35 George Washington International Lao Review 1007. 35 NAFTA, supra n 24, Articles 2003-2011. 1 . '6 Ibid., Articles 2006, 2007, 2009-2011, 2016-2019. 3� Ibid., Articles 2010 and 201 1 . 38 CI7A-UsA-1995-2008-O1, USA-MEx-2008-01, and UsA-MEX-1998-2008-01. 3'' Ignacio Garcia Bercero, 'Dispute Settlement in European Union Free Trade Agreements: Lessons Learned?' in Lorand Bartels and Federico Ortino (eds), Regional Trade Agreements and the Wro Regal System (Oxford University Press, 2006), 384. 40 EC-Chile FTA. Title vim Dispute Settlement, Articles 181-189. 4' Bilateral Relations (1 February 2008) European Commission http://ec.europa.eu/trade/creating-opportunities/ bilateral-relations/countries/chile/, 11 Nov. 2010.

'2 Agreement Establishing an Association between the European Community and its Member States, of the one Part, and the Republic of Chile, of the other Part, Art 184 (2). 13 Ibid., Art 185. 44 Ibid., Art 188 (11). °s Ibid., Art 189 (3). 46 Ibid., Art 129 (3). Ibid. °e Singapore-Australia Free Trade Agreement (2003) Department of Foreign Affairs and Trade, Australia Government http://www.dfat.gov.au/trade/negotiations/australia_singapore agreement.htn�l, 21 Nov. 2010. 49 Singapore-Australia FTA, Chapter 16 Dispute Settlement, Articles 3 & 4. sn Andrew D. Mitchell and Tania Voon, 'The Australia-United States Free Trade Agreement' in Simon Lester and Bryan Mercurio (ed), Bilateral and Regional Trade Agreements: Case Studies (Cambridge University Press, 2009). 51 According to Article 14 (3) of this Agreement, in the circumstance where the claim between a party and an investor of the other party is unable to be resolved by consultation, the following three alternatives are available: (i) the courts or administrative tribunals of the disputing Party; (ii) the International Centre for Settlement of Investment Disputes for conciliation or arbitration pursuant to Articles 28 or 36 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, established in Washington on 18 March 1965; and (iii) arbitration under the rules of the United Nations Commission on International Trade Law.

52 'Bilateral and Regional Trade Agreements' (Australian Government Productivity Commission, November 2010) http://www.pc.gov.au/_data/assets/pdf_file/0010/104203/trade-agreements-report.pdf, 13.18, 6 Jan. 2011. (Hereafter referred to as Productivity Commission Report). s3 Thailand-Australia FTA (July 2004), Article 917; Australia-Chile FTA (March 2009), Article 10.16; and Asi:nN-Australia-New Zealand FTA (January 2010), Article 21. Australia-US FTA and Australia-New Zealand Closer Economic Relations do not have such provision. s� Agreement on Trade in Goods of the China-AsEAN FTA was signed in November 2004; China-Costa Rica FTA was signed in April 2010. ss They are Agreement on Investment of the China-ASEAN FTA (2009), Article 14; China-Pakistan PTA (2009), Article 54; China-Singapore FTA (2008), Article 84; China-Peru FTA (2009), Article 139; and China-New Zealand (2008), Chapter 11, Section 2. China-Chile FTA does not include 'Investment' sector and thus no dispute resolution on investment. See, China-Chile FTA, Article 120. 56 The Free Trade Agreement betueeti New Zealand and China (2 July 2010) New Zealand Ministry of Foreign Affairs and Trade http://chinafta.govt.nz/1-The-agreement/index.php, 3 Oct. 2010. 5� New Zealand-China FTA, Art 153.

5X WT/DS270 Certain Measures Affecting the Importation of Fresh Fruit and Vegetables; WT/DS271 Certain Measures Affecting the Importation offresh Pineapple; WT/DS287, Quarantine regime for Imports; and DS367 Measures Affecting the Importation of Apples from New Zealand. 59 WT/DS119 Anti-dumping Measures on Imports of Coated Woodfree Paper Sheet, and WT/DS217 Continued Dumping and Subsidy Offset Act of 2000.

611 WT/DS265 Export Subsidies on Sugar; WT/DS106 Subsidies Provided to Producers and Exporters of Automotive Leather, WT/DS35, Export Subsidies in respect of Agricultural Products, and WT/DS217 Continued Dumping and Subsidy Offset Act of 2000. 61 WT/DS 169, Measures Affecting Imports of Fresh, Chilled and Frozen Beef; WT/DS270 Certain Measures Affecting the Importation of Fresh Fruit and Vegetables; and WT/DS91, Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products. 62 WT/DS178 Safeguard Measures on Imports of Fresh Chilled or Frozen lamb from Australia. 63 WT/DS290 Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs. 6't WT/DS21, WT/DS35, WT/DS91, WT/DS119, and WT/DS287. 65 WT/DS252 United States of America - Dcfinitive Safeguard Measures on Imports of Certain Steel Products. fifi WT/DS309 Value-Added Tax on Integrated Circuits. (,7 WT/DS358, WT/DS359, DS362, WT/DS363, and WT/DS368. 6R WT/DS368, Preliminary Anti-Dumping and Countervailing Duty Determinations on Coated Free Sheet Paper from China; WT/DS407 Provisional Anti-Dumping duties on Certain Iron and Steel Fasteners from the European Union; WT/DS379 Definitive Anti-Dumping and Countervailing Duties on Certain Products from China; WT/DS397 Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China and WT/DS405 Anti-Dumping Measures on Certain Footwear from China. 69 WT/DS339/340/342 Measures Affecting Imports of Automobile Parts; WT/DS358/359 Certain Measures Granting Refunds, Reductions or Exemptions from Taxes and other Payments; WT/DS387/388/390 Grants, Loads and other Incentives. 70 WT/DS362 Measures Affecting the Protection and Enforcement of Intellectual Property Rights, and WT/DS363 Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products. 71 WT/DS372/373/378 Measures Affecting Financial Information Services and Foreign Financial Information Suppliers, and WT/DS394/395/398 Measures Related to the Exportation of Various Raw Materials. 72 WT/DS392 Certain measures Affecting Imports of Poultry from China.

73 WT/DS368. Preliminary Anti-Dumping and Countervailing Duty Determinations on Coated Free Sheet Paper from China. WT/DS379 Definitive Anti-Dumping and Countervailing Duties on Certain Products from China; WT/DS397 Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China and WT/DS405 Anti-Dumping Measures on Certain Footwear from China. " They are WTO/DS309, WTO/DS358, WTO/DS359, WTO/DS372, WTO/DS373, WTO/DS378. 'S Australia-China Free Trade Agreement Negotiations: Eleventh Round of Negotiations (27 June 2008) Department of Foreign Affairs and Trade, Australia http://www.dfat.gov.au/geo/china/fta/ 080627_subscriber_update.html, 12 Sep. 2010. �6 See, WT/DS368, Preliminary Anti-Dumping and Countervailing Duty Determinations on Coated Free Sheet Paper from China; WT/DS379 Definitive Anti-Dumping and Countervailing Duties on Certain Products from China; WT/DS397 Definitive Anti-Dumping Measures on Certain Iron or Steel Fasteners from China, and WT/DS405 Anti-Dumping Measures on Certain Footwear from China.

�� 'Abbott and Union Condemn Imports Dumping', The Sydney Moming Herald (Sydney), 16 February 2011 http://news.smh.com.au/brcaking-news-national/abbott-and-union-condemn-imports-dumping-20110216- Iaw00.htn�l. See also, Cheating on Free Trade Tlireatens Commitment to a Global Marketplace (16 February 2011 ) The Australian Workers' Union littp://www.awu.net.au/550246 -5.litnil, 18 Feb. 2011. �8 So far, 15 rounds of talks have been held. However, nothing conclusive seems to have resulted. �9 'China Wants Urgency in Australia Free-trade Talks', Khaleej Times 30 October 2009 http:// www.menafn.com/qn ncws_story s.asp?Storyld=1093279990, 4 Oct. 2010. Australia-China Free Trade Agreeme/1r Negotiations: Eleventh Round of Negotiations (27 June 2008) Department of Foreign Affairs and Trade, Australia http://www.dfat.gov.au/geo/china/fta/080627 _subscriber_update.html, 12 Sep, 2010. 81 James McCall Smith, 'The Politics of Dispute Settlement Design: Explaining Legalism in Regional Trade Pacts' (2000) 54(1) International Organization 137,144.

H2 Randall Peerenboom, China's Long March Toward Rule of Law (Cambridge University Press, 2002). 83 Zhao Xiuwen and Lisa A. Kloppenberg, 'Reforming Chinese Arbitration Law and Practices in the Global Economy (2005-2006) 31 University of Dayton Law Review 421: 422. 14 Arbitration Law of the People's Republic of China (17 April 2006) China Daily http://www.chinadaily.com.cn/ bizchina/2006-04/17/content 569263.htm,2 2 Nov. 2010.

K5 Ashley Tsacalos, Australia: Embracing ADR - the Emerging Trend in Govemment (18 February 2010) http://www.mondaq.corn/australia/article.asp?articleid=94246, 22 Nov. 2010. 16 Alert- Civil Procedure Act Amendments (23 February 2011 ) Minter Ellison http://\vw\v.mint:ere!lison.com/ public/connect/lnternet/Home/LegaI%2BInsightsl Alerts/NA-CiviIProcedureAct/- 26 Feb. 2011. 1 . s� Legal Leaders: Mirhelle Sindler - Settling down u�ith disputes (7 October 2010) Lawyers Weekly http:// www.lawyersweckly.com.au/blogs/profiles/archive/2010/10/07/legal-leaders-michelle-sindler-settling-down- with-disputes.aspx, 22 Oct. 2010. xx The Hon Justice Clyde Grout and David Fairlie, 'The New Framework for International Commercial Arbitration in Australia' (2009) http://www.iama.org.au/pdf/2NewFrameworkforlnternationalConunercial ArbitrationinAustralia.pdf, 21,11 Aug. 2010. 89 Stern Hu, Rio Tinto executive, together with his three colleagues, Liu Caikui, Ge Minqiang and Wang Yong, all Chinese nationals, received a sentence of 10 years for bribery and stealing business secrets 29 March, 2010. See Ann Kent, 'When Laws Fail to Protect' (2010) 34(4) Alternative Law Journal Volume. 1)0 See generally, Vivienne Bath, Tlx Chinese legal system and the Stern Hu case (28 March 2010) East Asia Forum http://www.eastasiaforuiii.org/201(.)/03/28/the-chiiiese-legal-systeni-and-the-stcrn-hu-casc/, 30 Aug. 2010. See also, Kent, Ibid.

91 Vivienne Bath, The Stem Hu trial - Results andfollow-up on the verdict (5 April 2010) East Asia Forum http://www.eastasiafbrum.org/2010/04/05/the-stem-hu-trial-%e2%80%93-results-and-follow-up-on-the-verdict/, 30 Aug. 2010. 9z The number of the roster varies, depends on the size and area of the FTA. For example, Article 21 (7) of Australia-US FTA provides a contingent list of 10 individuals as potential arbitrators to constitute a 3-arbitrator panel. A list of 15 individuals is required in EC-Chile FTA from which 3 arbitrators are selected (Article 185). A roster of up to 30 members is established in NAFTA to compose a panel with 5 arbitrators (Articles 2009, 2011). Based on the existing Ftns that Australia and China are a party to, we suggest a roster of 10 individuals for a 3-arbitrator panel under ACFTA.

93 Joost I'auwclyn, 'Legal Avenues to 'Multilateralising Regionalism': beyond Article xxiv' in Richard Baldwin and Patrick Low (eds), Multilateralizing Regionalism: Challenges for the Global Trading System (Cambridge University Press, 2009) 368, 386. y4 See e.g. Articles 8.4 and 10.7.2 of the Republic of Korea-US FTA state Sps, AD and countervailing duties disputes between these two countries must be brought to the WTO. y5 NAFTA, supra n. 36, Art 2005. 4 provides, for example, that where a dispute relates to Sps or standards, the respondent has a right to insist that the dispute be brought under NAFTA. 9(, New Zealand-China FTA Art 185(2); Australia-US FTA Art 21.4 (1). 9� Pauwelyn, supra n. 93, 385. 98 See, e.g. Art 185 (3) of New Zealand-China FTA which provides that 'Once the complaining Party has requested a particular forum, the forum selected shall be used to the exclusion of other possible fora'. Similar provision can also be found in Australia-US FTA Art 21.4.

99ReviewofBilateralandRegionalTradeAgreements.:Supplementarysubmissionto theAustralianProductivityCommission (2010) Department of Foreign Affairs and Trade, Australia http://www.pc.gov.au/data/assets/ pdf file/0016/102652/subdrO98.pdf, 14, 8 Dec. 2010. �oo Ibid., 13. 101 Pauwelyn, supra n.93, 389. 102 Investor-State Disputes: 1'revention and Alternatives to Arbitration (2010) United Nations Conference on Trade and Development http://www.unctad.org/en/docs/diaeia20091 en.pdf, 23.

m3 Productivity Commission Report, supra n. 52, 317. 104 Ibid, 266, 105 Productivity Commission Urges Caution on Free Trade Agreements (December 14, 2010) The Australian http:// / www.theaustralian.com.au/national-affairs/productivity-commission-urges-caution-on-free-trade-agreements, 266, 11 Jan. 2011. 106 'Latest Developments in Investor-State Dispute Settlement' (United Nations, 2010) http://www.unctad.org/ en/docs/webdiaeia20103 en.pdf, 2. 107 Singapore-Australia FTA (signed 17 February 2003, in force 28 July 2003), Thailand-Australia FTA (signed 4-6 July 2004, in force 1 January 2005), and New Zealand-China FTA (signed 7 April 2008, in force 1 October 2008). zoos Australia joined the Uncitral in 1975 while China joined in 1987. The ICSID came into force in Australia and China in 1991 and 1993 respectively. See, http://wwv.uncitral.org/uncitral/en/uncitral_texts/ arbitration/NYConvention_status.html; See also, http://icsid.worldbank.org/ICSID/FrontServlet?request Type=ICSIDDocRH&actionVal=ShowDocument&language=English.

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