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Lessons for the T-FTA dispute settlement process from the SADC experience

29 July 2013

The South Africa-based Trade Law Centre (TRALAC) has published a Comment that reflects on the implications of the SADC experience of dispute settlement for the Dispute Settlement Mechanism that is to be established under the proposed Tripartite FTA (T-FTA) of COMESA, the EAC and SADC. The Comment raises a number of technical points with reference to Article 38 of the draft T-FTA Agreement and Article 4 of the T-FTA Annex 13 on dispute settlement, which commits member states in the first instance to cooperation and consultation in the resolution of disputes.

The Comment notes the need for automatic procedures for the establishment of dispute settlement panels and the importance of avoiding procedures which de facto grant the alleged violators power of veto over requests to establish a dispute settlement panel. It is argued that the current ‘consensus principle’, which has traditionally informed SADC decision-making processes (including the suspended SADC Tribunal), inevitably results in the establishment of such veto rights. The TRALAC analysis contrasts this with the WTO process whereby “a Member State which is the subject of a complaint cannot prevent the establishment of a Panel”.

It is maintained in the Comment that the implications of the current T-FTA draft provisions regarding notification of a pending dispute are unclear. It poses the question: “Will the Member State which is the subject of a complaint have powers to block the establishment of a Panel?” Currently the T-FTA Council, which is empowered to take decisions on the establishment of a dispute settlement panel, will include the participation of “both the complaining member State and the State to which a complaint relates”. It is argued that if T-FTA Council decisions have to be made on the basis of consensus, then “disputes may in fact never be settled through adjudication.”

The analysis calls for these procedural ambiguities “to be clarified expeditiously”, bearing in mind the “unfortunate fate of the SADC Tribunal” (see Agritrade article ‘ SADC FTA implementation shortcoming highlights scale of T-FTA challenge’, 22 July 2013).

Editorial comment

Establishing effective mechanisms to arbitrate on trade disputes that arise from non-implementation of regional trade agreement commitments is becoming an increasingly important issue in the Southern and Eastern African region. It is of particular importance in the food and agricultural sector, since non-implementation of agreed commitments and arbitrary application of agreed discretionary powers result in substantial economic losses to traders and producers of food and agricultural products. The absence of mechanisms to resolve disputes and enforce agreed rules not only undermines trade in food and agricultural products, but also undermines investment in food production for regional markets and the development of intra-regional supply chains.

It is therefore essential that credible and effective mechanisms for the resolution of disputes and enforcement of agreed commitments be established within regional trade agreements.

In terms of the settlement of trade disputes, it may be appropriate to establish different mechanisms for different types of dispute. For example, sanitary and phytosanitary (SPS) disputes will require a different level of technical and scientific inputs compared to, for example, disputes around the use of export bans or import restrictions. It would appear to be important to find ways to insulate trade dispute settlement mechanisms from broader political issues, which proved critical in undermining the functioning of the SADC Tribunal.


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