Within the framework of the Agreement between Mexico, the United States and Canada (USMCA), the three countries scheduled the first meeting of the Environment Committee for next June 17.
On this, the United States Trade Representation (USTR) reported that this meeting will be virtual and private.
However, after the government-to-government meeting, the Environment Committee will hold a public session.
The T-MEC, which replaced NAFTA when it entered into force on July 1, 2020, is based on NAFTA and the most recent practice of trade agreements, subjecting the labor and environmental obligations of the T-MEC to a settlement mechanism of controversies that governs most of the other provisions.
An innovative feature is the sanctions established in the USMCA to address certain situations to the rapid response labor mechanism.
Although the USMCA countries could try to raise claims for failure to act in good faith with respect to other dispute resolution mechanisms, the Agreement does not expressly allow such a claim, so the dispute panels could reach different conclusions regarding to whether they can consider such claims.
The T-MEC takes a similar approach to meeting environmental obligations, although it does not create a panel-based dispute resolution system in addition to the Chapter 31 mechanism.
On the other hand, the Environment Chapter foresees two mechanisms based on cooperation.
First, it encourages dispute resolution through cooperative activities to address situations where a party fails to enforce its environmental laws “through a sustained or recurring course of action or inaction in a way that affects trade or investment.”
Additionally, the United States and Canada have initiated two Chapter 31 disputes with each other that involve other obligations.
Although all of these controversies are in the early stages, the way in which they proceed may shed light on the effectiveness of the dispute resolution mechanisms involved, according to an analysis by the US Congress.
No dispute proceedings related to environmental provisions have yet been initiated.
The effectiveness of dispute resolution mechanisms in trade agreements, including their functionality and scope, has long been a topic of interest to US lawmakers.
Part of this interest comes from experiences with the general inter-state dispute resolution mechanism of the former North American Free Trade Agreement (NAFTA) and the Agreement’s separate dispute resolution mechanisms for labor and environmental obligations specified in side agreements.
NAFTA’s collateral agreements on labor and the environment focused primarily on cooperative mechanisms to resolve disputes, and limited disputes that could lead to trade countermeasures (eg, higher tariffs) to only one type of claim: a “persistent pattern of non-compliance “To” effectively enforce.”
Although many observers and policymakers credit NAFTA for raising labor and environmental standards, others argue that the provisions of the Agreement were weak and largely unenforceable.