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Alliance for Trade Enforcement Says Dispute Settlement Critical in IPEF

The Alliance for Trade Enforcement, a coalition of trade associations and business groups, says the Indo-Pacific Economic Framework for Prosperity needs effective dispute settlement to fulfill its promise for American exporters.

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“The Indo-Pacific Economic Framework holds the potential to set important new standards in an economically dynamic and strategically important region of the world for the United States,” AFTE Executive Director Brian Pomper said.

In a white paper released Oct. 14, the alliance described what it thinks the IPEF needs for an effective dispute settlement process, beginning with a consultation period with a deadline. If the consultation doesn't succeed, the parties should have the opportunity to dispute the issue in front of an independent, objective body. The arbitration procedures could be modeled on the USMCA and, to the extent applicable, the WTO system, it said. "Historically, arbitration procedures under multilateral and plurilateral trade agreements have been underpinned by the threat of withdrawing concessions. If the IPEF does not include tariff concessions, parties would be unable to threaten to 'withdraw' such concessions," the paper said. "However, the IPEF arbitration procedures could still permit aggrieved parties to increase tariffs to induce respondents to bring their measures into compliance with the agreement."

The paper also said supply chain coordination could be paused until the complainant was satisfied with the offending party's compliance. "In some circumstances where an arbitration model is not possible, the parties could consider a mediation model, whereby an independent third party can guide discussions and negotiations, allowing each party to have its say, but avoiding a litigious procedure," it said. "As a framework that is unprecedented in its scope and priorities, the IPEF may provide an excellent opportunity to test this new type of dispute settlement format."