The United States-Mexico-Canada Agreement: Settlement of Disputes

Abstract

The North American Free Trade Agreement (NAFTA) incorporated three distinct dispute settlement mechanisms. These address:

1) investor-state disputes (ISDS) between foreign investors and host states;

2) binational panel review of national administrative agency rulings under domestic anti-dumping (AD) and subsidy/countervailing duty (CVD) laws; and

3) state-to-state disputes challenging another party’s application or interpretation of the agreement.

The United States-Mexico-Canada Agreement (USMCA) incorporates the same three mechanisms, only one of which, ISDS, is extensively modified. This article addresses the individual mechanisms and the context under which the negotiations took place, emphasizing the elimination of ISDS coverage for U.S.-Canada disputes and the limitations placed on such disputes between the United States and Mexico. The lack of improvements to NAFTA's deeply flawed state to state dispute resolution system is also discussed.

Keywords: Mexico, NAFTA, USMCA, dispute settlement