The United States and dispute settlement under the North American free trade agreement: Ambivalence, frustration, and occasional defiance

The North American Free Trade Agreement (NAFTA) and its two parallel agreements on labor and on the environment incorporate a broad and sometimes confusing variety of mechanisms for resolving the disputes that relate to the interpretation and application of certain NAFTA provisions in specific situations.Essentially, there are six distinct dispute resolution procedures within the larger NAFTA framework: those relating to foreign investment and investor-state disputes (Chapter 11), financial services (Chapter 14, a variation on Chapter 20), appeals of antidumping and countervailing duty (unfair trade) actions by administrative agencies (Chapter 19), interpretation and application of the agreement generally (Chapter 20), failure to enforce environmental laws (North American Agreement on Environmental Cooperation, or NAAEC), and failure to enforce labor laws (North American Agreement on Labor Cooperation, or NAALC). The latter two are not discussed herein because neither arbitral process has ever been seriously considered for utilization and it is thus impossible to measure U.S. attitudes toward them. Likewise, financial services disputes, using a variation of the Chapter 20 mechanism, are discussed only briefly because no disagreement over financial services has yet been referred to arbitration. It is evident that this impressive package was accepted with some ambivalence by the U.S. government;as we will see, each of these mechanisms was incorporated for a variety of mostly pragmatic and diplomatic, as well as legal, reasons.