Old Wine, New Skins: NAFTA and the Evolution of International Trade Dispute Resolution

This Note examines NAFTA’s effort in meeting the needs of the moment (i.e., North American integration) and those of the future (i.e., hemispheric integration) regarding the issue of dispute resolution. Dispute resolution is key to any trade agreement; without an effective means of settling specific disputes and enforcing provisions generally, parties will have a little incentive to honor their trade commitments. Moreover, ineffective dispute resolution hurts smaller, less developed countries in agreements with larger, more developed countries, because the larger countries will be tempted to use their economic leverage to solve disputes to the disadvantage of the smaller ones. A strong, rule-based dispute resolution mechanism (DRM) protects the weaker nations from the excesses of the stronger ones. These concerns drive Canada and Mexico to seek reliable DRMs, especially since the alternative General Agreement on Tariffs and Trade (GATT) DRMs are considered inadequate.