As we all know, many years ago there was a problem with the U.S. blocking the appointment of a panel under NAFTA Chapter 20 (one key issue in this regard was the establishment of a roster; full details here). When I looked at Chapter 31 of the USMCA, my sense was that the problem was not fixed. But in this Inside US Trade article, I see that a Canadian government official is arguing that it was:
The negotiators also addressed dispute settlement provisions in the deal, with [Colin] Bird touting fundamental improvements to address the state-to-state “roster problem.” Under NAFTA, all three countries must agree on a list of potential panelists from which to choose in dispute settlement cases. But due to a provision that allowed the roster of panelists to expire every three years, it would often remain empty or incomplete, Bird explained.
The roster issue, under Chapter 20 of NAFTA, has been a significant concern for Lighthizer, according to lawmakers who have met with him recently to discuss the USMCA’s enforcement mechanisms.
“There is already an option in the agreement and that is to form these dispute resolution panels,” Rep. Ron Kind (D-WI) told Inside U.S. Trade last month. “And yet [Lighthizer] claims that the other side might not fill those panels and resolve disputes.”
...
But Bird said that problem was fixed by ensuring all countries were committed to “establishing their rosters prior to entry into force.”
“Those rosters, unlike the case for the original NAFTA, don’t expire until there is a replacement in place. So that particular issue is a dramatic improvement actually from NAFTA 1 to NAFTA 2,” he said.
As outlined in Article 31.8 of USMCA, “The Parties shall establish by the date of entry into force of this Agreement and maintain a roster of up to 30 individuals who are willing to serve as panelists. The roster shall be appointed by consensus and remain in effect for a minimum of three years or until the Parties constitute a new roster.”
Such language, Bird continued, represented a “hard commitment” from all sides on the issue.
“The ‘shall establish’ is a hard commitment. The minimum term is three years. It will be longer if no replacement is named. The two provisions are consistent. It would only be inconsistent if the term was a maximum of three years,” he clarified in an email to Inside U.S. Trade.
Here is Article 31.8, para. 1 of the USMCA:
Article 31.8: Roster and Qualifications of Panelists
1. The Parties shall establish by the date of entry into force of this Agreement and maintain a roster of up to 30 individuals who are willing to serve as panelists. The roster shall be appointed by consensus and remain in effect for a minimum of three years or until the Parties constitute a new roster. Members of the roster may be reappointed.
The first point to make is that the "shall establish" language is great, but I'm not sure how it can be enforced. Note that NAFTA Article 2009 said "The Parties shall establish by January 1, 1994 and maintain a roster ... " I will be excited if the parties do establish a roster, but given this history, I am a little skeptical.
Second, what exactly does Article 31.8 mean for how long the rosters remain in effect (assuming the roster is established in the first place)? When I first read the provision, my impression was that it meant there are two independent time-frames to take into account here: The roster will be in effect for a defined term of at least three years; then as a separate matter, if the parties constitute a new roster before the term ends, this will put an end to the defined term currently in effect and replace it with a new term. For example, the parties might set the term at, say, 10 years, and some time before that 10 year period ends (but after 3 years have elapsed), they might decide to constitute a new roster.
But the Canadians seem to be interpreting the provision differently. Perhaps they mean that the roster will stay in effect for the longer of the two conditions that are mentioned in the provision. Thus, if the parties set a 10 year term, the roster stays in place for 10 years, but if after 10 years no new roster has been constituted, the existing roster stays in place until a new one is constituted. Eventually, people on the roster would no longer be active, and thus at some point the roster will no longer function, but it could last for quite a while. That would certainly be an improvement on the current state of affairs, but I'm having trouble reading the provision that way. I want to believe that's how it will work, but I'm just not sure.
Or perhaps the Canadians mean there will be no defined term periods at all, and the official documents related to the roster will just say that it will "remain in effect for a minimum of three years or until the Parties constitute a new roster." If that's the case, then I can see how the Canadian interpretation makes sense, although that phrasing still leaves some doubt in my mind.
I'm curious to hear how others interpret this provision. Given what happened with Chapter 20, I think we have to watch this carefully.
