Dispute settlement under free trade agreements : the proposed Australia-China free trade agreement

This article focuses on what would be an appropriate framework for dispute settlement to be adopted in the forthcoming Australia-China free trade agreement (ACFTA) currently being negotiated. It proceeds in five parts. Part II examines the role of ADR and litigation under the WTO dispute settlement system to see how far these approaches have influenced dispute settlement under the presently existing FTAS. Part III investigates why existing FTAs have not adopted the WTO dispute settlement model, but have instead adopted a variety of alternative approaches of their own, including the multiple dispute procedures under the North American FTA (NAFTA), quasi-judicial approach under EU-Chile FTA, and ad-hoc arbitral tribunal under Singapore-Australia FTA and New Zealand-China FTA. To usefully employ the experience of these earlier models to ACTFA, Part Iv looks at the kind of trading disputes that Australia and China have encountered under the WTO, and how they were resolved, i.e. whether by invoking the formal WTO procedure, or by ADR methods such as consultation and arbitration. On the latter, evidence shows that a large proportion of disputes which Australia or China had been parties to were settled by "mutually agreed solution", i.e. by consultation or mediation. Part V explains why ADR is preferred over litigation in resolving disputes arising under ACFTA. Based on the view of maximising the use of consultation and mediation preceding arbitration, a dual dispute settlement mechanism with a general dispute settlement procedure for common-subject disputes such as anti-dumping, and a special procedure for WTO-plus matter disputes, such as investment, would appear to be the most appropriate under the proposed ACFTA. Part VI concludes.