U.S.-Korea Free Trade Agreement: Potential Economy-wide ... - USITC

FTA Chapter 22–Institutional Provisions and
Dispute Settlement
Assessment
The Dispute Settlement chapter outlines guidelines for producing a conducive environment
for dispute settlement. The dispute-panel procedures of the U.S.-Korea FTA would require
that hearings be open and public, that the public has access to the legal submissions of the
parties to the panel, and that interested parties have the opportunity to submit views to the
panel. The major obligations of the FTA would be subject to the dispute settlement
provisions of the FTA. The dispute-settlement provisions emphasize the use of consultations
and trade-enhancing remedies to promote compliance. The enforcement mechanism includes
the potential use of monetary assessments, as well as trade retaliatory measures.
The dispute-settlement provisions of the U.S.-Korea FTA would provide parties a formalized
way to settle disputes concerning the major obligations of the FTA. The auto industry may
benefit from more expeditious dispute settlements, because of proposed alternative disputeresolution
procedures (new to this FTA) for disputes relating to automotive products as
presented in Annex B of this chapter.
Summary of Provisions
The first section of the chapter deals with the administration of the FTA. It would require
each party to designate one or more contact points to facilitate bilateral communication on
matters under the FTA. Such contact points would, on request, identify other offices or
officials responsible for the pertinent matter and assist in linking an official with a question
to the person who might answer it. Article 22.2 would set up the Joint Committee comprising
officials of each party and cochaired by the USTR and the Minister for Trade of Korea or
their designees. This committee would have a wide range of functions in supervising the
implementation and operation of the agreement, and play a part in dispute resolution for
covered matters. It could delegate responsibilities to ad hoc bodies, seek input from outside
experts, consider possible FTA amendments, interpret FTA provisions, and handle its own
procedures. It would meet at least once per year in as transparent a manner as possible,
seeking views of the public and taking into account the need for protection of confidential
information.
Under the provisions in this chapter, although the parties commit to consult and cooperate
on FTA matters, one party could invoke dispute settlement on a subject matter not excluded
by any FTA provision if it believes that the other has an FTA-inconsistent measure or has
failed to carry out an FTA obligation, or that a benefit it reasonably expected has not been
given. Where a dispute arises, the complaining party could choose the forum for settling the
matter. If a party requests consultations and the consultation fails to resolve the matter by a
prescribed deadline, either party could refer the matter to the Joint Committee, followed by
a request for a dispute settlement panel, if necessary. Once a panel constituted under the
chapter has supplied its final report, the report must be made public and the parties would
be obliged to agree on the resolution of the dispute in question, normally in a manner which
conforms with the determinations of the panel. If parties are unable to agree on a resolution,
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