Innovative mechanisms for resolving or avoiding inter-state trade disputes in an Asia-Pacific regional free trade agreement

Business Free trade Innovation Fair trading regulation Australia Pacific Area Asia

This article elaborates upon ideas contributed to a symposium considering the possible shape of an Asia Pacific Community, including future trade arrangements within an Asia Pacific Community.

It suggests some innovations in dispute settlement that could be considered for inclusion in such arrangements.

The author suggests some innovative mechanisms by focussing on the way in which trade agreements and the dispute settlement mechanisms influence the internal political position of governments.

The first mechanism would provide for a pre-quantification of the extent of retaliation that would be permitted should a complaint be successful. This mechanism would encourage respondent governments to focus earlier on weighing the potential loss of political support from exporters with any political support from import competing producers.

The second mechanism would provide for free publication of an expert economic report on the economic welfare cost to the respondent of maintaining the protectionist measure subject to the complaint. This mechanism could increase the political weight attributed by the respondent government to the overall economic effects of the controversial measure.

The paper further suggests that something similar to the second mechanism could be adopted as a separate transparency mechanism unrelated to dispute settlement. Such a mechanism might make it more likely that governments reform protectionist measures so as to avoiding the possibility of any legal dispute ever arising.

An edited version of this paper is forthcoming in (2011) Australian International Law Journal (forthcoming February 2012)

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