Vincent BEYER

Dispute Settlement in FTAs and the WTO – Are We Comparing Apples and Oranges?

Vincent Beyer
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Maison de la Paix, Petal 1, Room 847

International lawyers are obsessed with the judicial settlement of disputes. As a consequence, the analysis of dispute settlement mechanisms (DSMs) in preferential trade agreements (PTAs) often pursues a line of inquiry that ranks them from least to most judicial – from least WTO-like to most WTO-like. The academic bias in favor of conflict has resulted in the virtual absence of scholarship on the relationship between DSMs in PTAs and the WTO from the perspective of complementarity. Nowadays, empirical evidence shows that despite the increasingly dense web of PTAs with strong dispute settlement mechanism, the WTO remains the preferred forum. Moreover, not only are DSMs in PTAs rarely used, they seem to result in an overall decrease in trade disputes between PTA partners.

An inquiry that abandons the obsession with judicial dispute settlement and conflict and shifts its focus to include diplomatic dispute settlement and complementarity leads to an alternative understanding of PTA DSMs. They do not, and in practice never did, serve as a substitute for WTO dispute settlement. Instead, PTAs complement the WTO by offering a truly different method of diplomatically settling disputes in a setting that is less formal and less adversarial that the multilateral forum created by WTO.

Moving forward, it may be beneficial to further enhance this advantage of PTAs by favoring stronger alternative dispute settlement mechanisms in future agreements. For developing countries, often less experienced in judicial dispute settlement, this could also imply an opportunity to settle disputes in an environment that is more conducive to mutually agreed outcomes. Thus, instead of puzzling over the underutilization of PTA DSMs, the academic discourse would be enriched by a line of inquiry that focuses on complementarity rather than conflict. This way, scholarship could move away from a biased mindset that is fixated on judicial dispute settlement in PTAs and stop comparing apples and oranges.