13. Settlement of State-To-State and Unfair Trade Disputes Under the USMCA

Like the North American Free Trade Agreement (NAFTA), the United States–Mexico–Canada Agreement (USMCA or NAFTA 2.0) incorporates three distinct mechanisms for dispute settlement, for state-to-state disputes, review of national administrative determinations in unfair trade matters (antidumping and subsidies), and conflicts between investors and host governments. This chapter addresses the first two, focusing on the limited but not insignificant changes in the USMCA compared to NAFTA. With state-to-state disputes, the USMCA makes several significant modifications (demanded by the Democratic Congress a year after the USMCA was originally signed), designed to make it much more difficult for a recalcitrant state (e.g., the United States) to block the panel process by refusing to appoint arbitrators/panels. In agreeing to continue NAFTA’s unfair trade dispute review, the USMCA parties decided against major modifications (perhaps because of time pressures in August and September 2018), foregoing inter alia any effort to reform NAFTA’s flawed extraordinary challenge procedure or otherwise improve a mechanism that remains unique to NAFTA and the USMCA.