Abstract

In this article the author discusses the differences in the dispute resolution mechanisms between the North American Free Trade Agreement and the United States-Mexico-Canada Agreement. The author notes that while all three dispute resolution mechanisms from NAFTA are present in USMCA, two of the mechanisms have been extensively modified. The author is critical of the Trump Administration’s insistence on eliminating NAFTA’s Chapter 11 provisions on investor-state dispute settlements, leading to a severely weakened ISDS mechanism in USMCA. State-to-state dispute settlement (Chapter 20 under NAFTA) was also significantly modified. The third dispute resolution mechanism, a binational panel process that was covered in Chapter 19 of NAFTA, survived with only minor changes as insisted upon by Canada. As the most extensive changes were made to investor-state dispute settlements and state-to-state dispute settlements, the author analyzes these two dispute resolution mechanisms in detail. The author dissects the changes made to these dispute resolution mechanisms and provides insight into the rationale of the countries involved that led to the changes. The author concludes that with Canada’s refusal to sign on to Annex 14-D and a drastically diluted ISDS mechanism governing ISDs between the United States and Mexico, the most likely outcome under USMCA is that there will be a dramatic increase in Chapter 31 claims when the United States is involved and a heavy reliance on the CPTPP for claims between Mexico and Canada.