U.S. Proposes Gutting Nafta Legal-Dispute Tribunals

  • Americans said to seek opt-out for investment protections
  • U.S. wants to cut back state-to-state panels to advisory role

Mexico, Canada Reject U.S. Demands in Nafta Talks

U.S. Nafta negotiators are proposing to essentially do away with the independent tribunals that oversee the trading and investment relationship, either by eliminating them altogether or substantially scaling back their roles, people familiar with negotiations say.

The U.S. has proposed its changes for two types of independent dispute settlement rules under the North American Free Trade Agreement -- so-called investor-state rules as well as provisions to settle state-to-state disputes at an independent panel.

For investor-state dispute settlement, presently laid out in Nafta’s Chapter 11, the U.S. wants a system where nations opt in, effectively allowing each country to decide if it will take part, the people said, speaking on condition of anonymity as talks continue. For the state-to-state disputes, contained in Chapter 20, the U.S. wants to replace them with non-binding advisory panels, the people said.

A spokeswoman for U.S. Trade Representative Robert Lighthizer declined to comment.

The U.S. has publicly said it wants to abolish altogether Chapter 19 panels, which examine anti-dumping and countervailing duty cases, and made a proposal to that effect in previous sessions before delivering the proposals on Chapters 11 and 20 in this round. The three chapters together make up Nafta’s existing dispute-settlement mechanisms.

The dispute protections are among the most critical issues for Canada and Mexico, who see them as an essential independent protection from having disputes get mired in U.S. courts.

The proposals are among the last of the biggest-profile U.S. demands as Nafta’s fourth round of talks continues in a Washington-area hotel through Oct. 17.

The others include a reduction of Canadian and Mexican access to U.S. procurement deals; an autos proposal to require more manufacturing in the U.S.; and a recurring five-year sunset clause that some observers say will be opposed by Congress and has little hope of being agreed to.

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