International trade and investment dispute settlement in the Asia-Pacific region: inspiring the new Asian regionalism

ABSTRACT

The economic integration taking place among the Asia-Pacific countries is unique and transformative. The new Asian regionalism represents the collective power of the Asia-Pacific countries with ASEAN at its centre and a regime underpinned by hard law fostered by comprehensive trade and investment agreements. While ASEAN countries are committed to the ASEAN way of dispute settlement, the participation of the Asia-Pacific region in mega-regionals, such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Economic Partnership, has resulted in certain unique features with consultation, negotiation, and mediation forming an essential feature of dispute settlement within the Asia-Pacific region. While law is integral to the Asian regionalism, soft approaches including negotiation, conciliation, and mediation makes it distinctive, effective, and cohesive. This article examines how these evolving features of dispute settlement in trade and investment contribute to the Third Regionalism or the New Regional Economic Order.

KEYWORDS:

• Dispute settlement; Asian regionalism; WTO; regional trade agreements; investment treaties

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Notes

1 ASEAN Economic Community Blueprint 2025 (ASEAN Secretariat 2015).

2 Pasha L Hsieh, ‘Rethinking the RCEP in the Third Regionalism: Paradigm Shifts in World Trade Law?’ in Alvaro Santos, Chanthal Thomas, David Turbek (eds), World Trade and Investment Law Reimagined: A Progressive Agenda for an Inclusive Globalisation (Anthem Press 2019).

3 Tom Ginsburg, ‘Eastphalia and Asian Regionalism’ (2010) 44 University of California at Davis Law Review 859, 870–71; Julien Chaisse and Pasha Hsieh, ‘Rethinking Asia- Pacific Regionalism and New Economic Agreements’ (forthcoming).

4 Gunnar Myrdal, Asian Drama: An Inquiry into the Poverty of Nations (1968) Vol I, 694–70.

5 Guanghua Wan and Iva Sebastian, ‘Poverty in Asia and the Pacific: An Update’ (2011) Working Paper (267), Asian Development Bank Economics <https://www.adb.org/sites/default/files/publication/29051/economics-wp267.pdf> accessed 01 October 2022.

6 Asian Development Bank, ‘Trade, Foreign Direct Investment, and Openness’, Asia’s Journey to Prosperity: Policy, Market, and Technology Over 50 Years (Asian Development Bank, 2020), paras 9.1–9.7.

7 ibid.

8 Kwai Hang Ng and Brynna Jacobson, ‘How Global is the Common Law? A Comparative Study of Asian Common Law Systems’ (2017) 12 Asian Journal of Comparative Law 209.

9 Massimo Lando, ‘Enhancing Conflict Resolution “ASEAN Way”: The Dispute Settlement System of the Regional Comprehensive Economic Partnership’ (2022) 13 JIDS 98, 98–120.

10 Pasha L Hsieh and Bryan Mercurio, ‘ASEAN Law in the New Regional Economic Order: An Introductory Roadmap to the ASEAN Economic Community’ in Pasha L Hsieh and Bryan Mercurio (eds), ASEAN Law in the New Regional Economic Order (1st edn, Cambridge University Press 2019); See also Ingo Venzke and Li-ann Thio, The Internal Effects of ASEAN External Relations (Cambridge University Press 2016).

11 Thawatchai Suvanpanich, ‘Thailand’ in Stephan Wittich and Michael Pryles (eds), Dispute Resolution in Asia (2nd edn, Springer Netherlands 2002), 296–9.

12 Chulsu Kim, ‘East Asia in the WTO Dispute Settlement Mechanism’ in Alan Yanovich, Jan Bohanes and Yasuhei Taniguchi (eds), The WTO in the Twenty-first Century: Dispute Settlement, Negotiations, and Regionalism in Asia (1st edn, Cambridge University Press 2007).

13 Lando, ‘Enhancing Conflict Resolution “ASEAN Way”’ (n 9).

14 Abhijit Das, James J Nedumpara, and Shailaja Singh, ‘Introduction: WTO Dispute Settlement at Twenty: Insiders’ Reflections on India’s Participation’, in Abhijit Das and James J Nedumpara (eds), WTO Dispute Settlement at Twenty: Insiders’ Reflections on India’s Participation (1st edn, Springer Singapore 2016).

15 Japan Measures on Imports of Thrown Silk Yarn, GATT BISD 25S/107; Republic of Korea – Restrictions on Imports of Beef – Complaint by the United States, GATT BISD 36S/268.

16 Under the GATT Dispute Settlement Mechanism, Japan was a third party in 12 disputes, India in nine disputes, Indonesia in six disputes, Korea in five disputes, Singapore and Thailand in five disputes each. See WTO, ‘Dispute Settlement Reports Within the Framework of GATT 1947’ <https://www.wto.org/english/tratop_e/dispu_e/gt47ds_e.htm> accessed 3 October 2022.

17 Refers to Hong Kong, Taiwan, South Korea, and Singapore.

18 Wan and Sebastian, ‘Poverty in Asia and the Pacific: An Update’ (n 5).

19 Framework Agreement on Comprehensive Economic Co-Operation Between ASEAN and the People's Republic of China (entered into force 1 July 2003) <https://web.archive.org/web/20021107033935/http:/www.aseansec.org/13196.htm> accessed 01 October 2022.

20 Henry Gao, ‘How China Took on the United States and Europe at the WTO’ in Gregory Shaffer (eds), Emerging Powers and the World Trading System: The Past and Future of International Economic Law (Cambridge University Press 2021).

21 WTO, China – Value-Added Tax on Integrated Circuits, Notification of Mutually Agreed Solution (6 October 2005) WT/DS309/8.

22 Henry S Gao, ‘China’s Ascent in Global Trade Governance: From Rule Taker to Rule Shaker, and Maybe Rule Maker?’ in Carolyn Diree Birkbeck (ed), Making Global Trade Governance Work for Development Perspectives and Priorities from Developing Countries (Cambridge University Press 2011).

23 Mark Daku and Krzysztof J Pelc, ‘Who Holds Influence over WTO Jurisprudence?’ (2017) 20 Journal of International Economic Law 233.

24 WTO, ‘Disputes by Member’ <https://www.wto.org/english/tratop_e/dispu_e/dispu_by_country_e.htm> accessed 3 October 2022.

25 ibid.

26 WTO, India — Measures Concerning Sugar and Sugarcane, Report of the Panel (14 December 2021) WT/DS579/RWT/DS580/RWT/DS581/R; Jamie Smyth and Amy Kazmin, ‘India Faces WTO Investigation over Sugar Subsidies’ Financial Times (15 August 2019).

27 WTO, India – Tariff Treatment on Certain Goods in the Information and Communications Technology Sector, Report of the Panel (14 April 2023) WT/DS582/R.

28 WTO, United States – Anti-Dumping Duty on Dynamic Random Access Memory Semiconductors (DRAMS) of One Megabit or Above from Korea, Report of the Panel (19 March 1999) WT/DS99/R, ; WTO, Japan – Countervailing Duties on Dynamic Random Access Memories from Korea, Report of the Appellate Body (17 December 2007) WT/DS336/AB/R and Corr.1; WTO, United States – Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea, Report of the Appellate Body (20 July 2005) WT/DS296/AB/R.

29 WTO, Japan — Taxes on Alcoholic Beverages, Decision of the Arbitrators (14 February 1997) WT/DS8/15, WT/DS10/15, WT/DS11/13;WTO, Korea — Taxes on Alcoholic Beverages, Decision of the Arbitrators (4 June 1999) WT/DS75/16, WT/DS84/14; WTO, Philippines – Taxes on Distilled Spirits, Report of the Panel (20 January 2012) WT/DS396/R, WT/DS403/R.; WTO, India – Additional and Extra-Additional Duties on Imports from the United States, Report of the Appellate Body (17 November 2008) WT/DS360/AB/R.

30 A recent example is Indonesia’s export prohibition and domestic processing requirement in respect of nicker ore. WTO, Indonesia – Measures Relating Raw Materials, Report of the Panel (12 December 2022) WT/DS 592/R.

31 WTO, Japan – Measures Affecting the Importation of Apples, Report of the Appellate Body (10 December 2003) WT/DS245/AB/R; Damien Neven and Joseph Weiler ‘Japan - Measures Affecting the Importation of Apples (AB-2003-4): One Bad Apple? (DS245/AB/R): A Comment’ in H Horn and P Mavroidis (eds), The WTO Case Law of 2003: The American Law Institute Reporters' Studies (The American Law Institute Reporters Studies on WTO Law 2003), 280–310.

32 WTO, Australia – Measures Affecting the Importation of Apples from New Zealand, Report of the Appellate Body (17 December 2010) WT/DS367/R.

33 WTO, United States – Import Prohibition of Certain Shrimp and Shrimp Products, Report of the Appellate Body (6 November 1998) WT/DS58/AB/R; WTO, United States – Import Prohibition of Certain Shrimp and Shrimp Products – Recourse to Art.21.5 of the DSU by Malaysia, Report of the Appellate Body (21 November 2001) WT/DS58/AB/RW.

34 WTO, Japan – Measures Affecting Agricultural Products, Request for Consultation by the United States (9 April 1997) WT/DS 76.

35 Chulsu Kim, ‘East Asia in the WTO Dispute Settlement Mechanism’, in The WTO in the Twenty-first Century: Dispute Settlement, Negotiations, and Regionalism in Asia (1st edn, Cambridge University Press 2007).

36 Gregory Shaffer and Henry Gao, ‘How China Took on the United States and Europe at the WTO’ in Gregory Shaffer (ed), Emerging Powers and the World Trading System: The Past and Future of International Economic Law (Cambridge University Press 2021).

37 See for example, WTO, United States – Sunset Review of Anti-dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS 244; WTO, United States – Measures relating to Zeroing and Sunset Review, WT/DS 322; WTO, United States, Anti-dumping and Countervailing Measures on Large Residential Washers from Korea, WT/DS 464; WTO, European Communities – Anti-dumping Duties on Imports of Cotton-type Bed Linen from India, WT/DS 141.

38 WTO, Korea – Import Bans, and Testing and Certification Requirements for Radionuclides, WT/DS495/AB/R and Add.1.

39 WTO, India – Tariff Treatment on Certain Goods, Request for consultations by Japan (14 May 2019) WT/DS584/1, G/L/1318; WTO, India – Tariff Treatment of Certain Goods in the Information and Communication Technology Sector, Request for consultations by Chinese Taipei (9 September 2019) WT/DS588/1, G/L/1323.

40 WTO, China – Anti-Dumping and Countervailing Duty Measures on Barley from Australia, Request for consultations by Australia (21 December 2020) G/ADP/D135/1, G/L/1382, G/SCM/D130/1, WT/DS598/1; WTO, China – Anti-Dumping and Countervailing Duty Measures on Wine from Australia, Request for consultations by Australia (28 June 2021) WT/DS602/1, G/L/1390 G/ADP/D137/1, G/SCM/D132/1.

41 See for example, WTO, Japan – Measures Related to the Export of Products and Technology to Korea, Communication from Korea (24 March 2023) WT/DS 590/5.

42 International Centre for Trade and Sustainable Development, Asian Participation in the WTO Dispute Settlement System (ICTSD Programme on International Trade Law, Information Note, 2012) <https://www.files.ethz.ch/isn/161226/asian-participation-in-the-wto-dispute-settlement-system.pdf> accessed 04 October 2022.

43 Galwan incident refers to the skirmishes between Indian and Chinese forces in 2020 near the disputed Pangong Lake in the Ladakh and Tibetan region.

44 WTO, The continued relevance of special and differential treatment in favour of developing members to promote development and ensure inclusiveness, Communication from China, India, South Africa, et al. (4 March 2019), WT/GC/W/765/Rev.2.

45 WTO, India – Anti-Dumping Measures on Batteries from Bangladesh, Notification of Mutually Satisfactory Solution (23 February 2006) G/ADP/D52/2, G/L/669/Add.1, WT/DS306/3.

46 WTO, Country Information: Viet Nam <www.wto.org/english/thewto_e/countries_e/vietnam_e.htm> accessed 01 October 2022.

47 Gregory Shaffer and Henry Gao, ‘A New Chinese Economic Order?’ (2020) 23 Journal of International Economic Law 607, 609–10.

48 Michael Ewing-Chow, Alex WS Goh and Akshay Kolse Patil, ‘Are Asian WTO Members Using the WTO DSU ‘Effectively’?’ (2013) 16 Journal of International Economic Law 669, 675–705.

49 Gregory Shaffer, James J Nedumpara and Aseema Sinha, ‘India: An Emerging Giant’s Transformation and Its Implications’, in Gregory Shaffer (eds) Emerging Powers and the World Trading System: The Past and Future of International Economic Law (Cambridge University Press, 2021).

50 ibid.

51 Dukgeun Ahn, ‘Korea in the GATT/WTO Dispute Settlement System: Legal Battle for Economic Development’ (2015) Vol 6 Journal of International Economic Law 597.

52 WTO, Japan Member Information <https://www.wto.org/english/thewto_e/countries_e/japan_e.htm> accessed 3 October 2022.

53 WTO, Viet Nam Member Information <https://www.wto.org/english/thewto_e/countries_e/vietnam_e.htm> accessed 3 October 2022.

54 Stefan Szepesi, ‘Comparing EU Free Trade Agreements: Dispute Settlement’ (2004) European Centre for Development Policy Management <https://ecdpm.org/application/files/1816/5547/2862/IB-6G-Comparing-EU-Free-Trade-Agreements-Dispute-Settlement-2004.pdf> accessed 24 September 2022.

55 James Holbein and Gary Carpentier, ‘Trade Agreements and Dispute Settlement Mechanisms in the Western Hemisphere’ (1993) 25 Case Western Reserve Journal of International Law 531, 531–2.

56 Stephan W Schill and Geraldo Vidigal, ‘Reforming Dispute Settlement in Trade: The Contribution of Mega-Regionals’ (2016) International Centre for Trade and Sustainable Development <https://dare.uva.nl/search?identifier=ec9307bf-8012-4bcf-9225-7d3ef51db51c> accessed 28 September 2022.

57 The EU requested three other consultations under FTAs. See Free Trade Agreement between the European Union and its Member States and the Republic of Korea, ‘Report of the Panel of Experts Proceeding constituted under Article 13.15 Of The EU-Korea Free Trade Agreement’ (20 January 2021) <https://circabc.europa.eu/ui/group/09242a36-a438-40fd-a7af-fe32e36cbd0e/library/d4276b0f-4ba5-4aac-b86a-d8f65157c38e/details> accessed 30 September 2022; See also Christophe Bondy, ‘The EU-Korea FTA Labor Dispute: Comparing Labor Provisions Under the EU-Korea FTA and the KORUS FTA’ (2021) Lexology <https://www.lexology.com/library/detail.aspx?g=cb3811a2-1f3d-45a1-9517-b53b5ef37106> accessed 30 September 2022.

58 Claude Chase, Alan Yanovich, Jo-Ann Crawford, Pamela Ugaz, and World Trade Organization, ‘Mapping of Dispute Settlement Mechanisms in Regional Trade Agreements: Innovative or Variations on a Theme?’ (2013) WTO Working Paper ERSD-2013-07 <https://www.wto-ilibrary.org/content/papers/25189808/150> accessed 1 October 2022.

59 Vitaliy Pogoretskyy, ‘The Arbitration Panel Report in Ukraine – Export Prohibition on Wood Products: Lessons from the ‘Pegasus’ of International Adjudication’ (2021) 22 The Journal of World Investment & Trade 732.

60 ibid; James J Nedumpara, ‘Dispute Settlement in International Trade Agreements: Prospective Pathways’ (2022) 15(7/8) GTCJ 261.

61 Most of such core obligations including national treatment, prohibition on quantitative restrictions, and freedom of transit are included in the Trade in Goods chapter of the FTA, which are subject to dispute settlement provisions.

62 ASEAN, ‘Regional Comprehensive Economic Partnership’ (3 October 2016) <http://asean.org/?static_post=rcep-regional-comprehensive-economic-partnership> accessed 23 September 2022.

63 General Agreement on Tariffs and Trade (30 October 1947) 55 U.N.T.S. 187, superseded by Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations (15 April 1994), 1867 U.N.T.S. 14, 33 I.L.M. 1143.

64 Lando, ‘Enhancing Conflict Resolution “ASEAN Way’” (n 9).

65 Diane Desierto, ‘The Regional Comprehensive Economic Partnership (RCEP)’s Chapter 19 Dispute Settlement Procedures’ (EJIL: Talk!, 16 November 2020) <https://www.ejiltalk.org/the-regional-comprehensive-economic-partnership-rceps-chapter-19-dispute-settlement/> accessed 22 September 2022.

66 Art 19.3 RCEP states that Chapter 19 ‘shall apply’ to the classes of disputes identified thereunder ; See also Art 7.16, Art 7.11 and Art 17.9 of RCEP.

67 Geraldo Vidigal, ‘Living Without the Appellate Body: Multilateral, Bilateral and Plurilateral Solutions to the WTO Dispute Settlement Crisis’ (2019) 20 The Journal of World Investment & Trade 862.

68 Understanding on Rules and Procedures Governing the Settlement of Disputes (15 April 1994) U.N.T.S. 401, 33 I.L.M. 1226 [hereinafter DSU].

69 ibid, Art. 16.

70 Michael Ewing-Chow and Ranyta Yusran, ‘The ASEAN Trade Dispute Settlement Mechanism’ in Geir Ulfstein and others (eds), The Legitimacy of International Trade Courts and Tribunals (Cambridge University Press, 2018) 365; Hao Duy Phan, ‘Towards a Rules-Based ASEAN: The Protocol to the ASEAN Charter on Dispute Settlement Mechanisms’ (2013) 5 Arbitration Law Review 254, 258.

71 Sungjoon Cho and Jürgen Kurtz, ‘Legalizing the ASEAN Way: Adapting and Reimagining the ASEAN Investment Regime’ (2018) 66 The American Journal of Comparative Law 233.

72 Natalia Gallardo-Salazar and others, ‘The Pacific Alliance and the CPTPP: Alternatives for the Settlement of Disputes before the WTO?’ (2021) Derecho PUCP 39.

73 ibid.

74 Comprehensive and Progressive Trans-Pacific Partnership (entered into force 30 December 2018), Article 19.17 (13).

75 Joost Pauwelyn and Krzysztof Pelc, ‘Who Guards the “Guardians of the System”? The Role of the Secretariat in WTO Dispute Settlement’ (2022) 116 American Journal of International Law 534.

76 Julien Chaisse and Rahul Donde, ‘The State of Investor-State Arbitration: A Reality Check of the Issues, Trends, and Directions in Asia-Pacific’ (2018) 51 The International Lawyer 47.

77 Tony Dymond, Cameron Sim, and Tiffany Chan, ‘Dispute Settlement Mechanisms under the CPTPP and the RCEP’ (2022) Global Arbitration Review <https://globalarbitrationreview.com/review/the-asia-pacific-arbitration-review/2023/article/dispute-settlement-mechanisms-under-the-cptpp-and-the-rcep> accessed 26 September 2022.

78 Claudia T Salomon and Sandra Friedrich, ‘Investment Arbitration in East Asia and the Pacific: A Statistical Analysis of Bilateral Investment Treaties, Other International Investment Agreements and Investment Arbitrations in the Region’ (2015) 16 JWIT 800.

79 Since the adoption of the Model BIT in 2016, India has entered into certain stand-alone investment treaties, for example, India – Belarus BIT (2018); India – Brazil BIT (2020); Jürgen Kurtz, ‘The Australian Trade Policy Statement on Investor-State Dispute Settlement’ (2011) 15 ASIL Insights <https://www.asil.org/insights/volume/15/issue/22/australian-trade-policy-statement-investor-state-dispute-settlement> accessed 24 September 2022.

80 White Industries Australia Limited v. The Republic of India (White Industries), <https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/378/white-industries-v-india> accessed 25 September 2022.

81 ibid.

82 Vodafone International Holdings BV v. India (I) (PCA Case No. 2016-35) <https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/581/vodafone-v-india-i->.

83 Cairn Energy PLC and Cairn UK Holdings Limited v. The Republic of India (PCA Case No. 2016-7) https://investmentpolicy.unctad.org/investment-dispute-settlement/cases/691/cairn-v-india.

84 Chaisse and Donde (n 76).

85 ibid.

86 Malcolm Langford, Daniel Behn, and Ole Kristian Fauchald, ‘Backlash and State Strategies in International Investment Law’ in Tanja Aalberts and Thomas Gammeltoft-Hansen (eds), The Changing Practices of International Law (1st edn, Cambridge University Press, 2018).

87 UNCITRAL Report of Working Group III (Investor-State Dispute Settlement Reform) on the work of its forty-third session (7 October 2022) A/CN.9/1124.

88 Stephan W Schill, ‘Changing Geography: Prospects for Asian Actors as Global Rule-Makers in International Investment Law’ (2016) 3 Columbia Centre on Sustainable Development, No. 177, <https://academiccommons.columbia.edu/doi/10.7916/D8M32VXV> accessed 28 September 2022.

89 United Nations Conference on Trade and Development, ‘Transparency in IIAs: UNCTAD Series on Issues in International Investment Agreements II’ <https://unctad.org/system/files/official-document/unctaddiaeia2011d6_en.pdf> accessed 29 September 2022.

90 Julien Chaisse et al., ‘Drafting Investment Law: Patterns of Influence in the Regional Comprehensive Economic Partnership (RCEP)’ (2022) 25 Journal of International Economic Law 110; Xu Qian, ‘Phoenix from the Ashes: CPTPP Meaning for Asia-Pacific (and Global) Investment’ (2020) 15 Asian Journal of WTO and International Health Law and Policy 567; Luke Nottage, ‘The TPP Investment Chapter and Investor-State Arbitration in Asia and Oceania: Assessing Prospects for Ratification’ (2016) 17 Melbourne Journal of International Law 313; Claudia T Salomon and Sandra Friedrich, ‘Investment Arbitration in East Asia and the Pacific: A Statistical Analysis of Bilateral Investment Treaties, Other International Investment Agreements and Investment Arbitrations in the Region’ (2015) 16 The Journal of World Investment & Trade, 800, 807–8.

91 Tony Dymond, Cameron Sim, and Tiffany Chan, ‘Dispute Settlement Mechanisms under the CPTPP and the RCEP’ (2022) <https://globalarbitrationreview.com/review/the-asia-pacific-arbitration-review/2023/article/dispute-settlement-mechanisms-under-the-cptpp-and-the-rcep> accessed 26 September 2022.

92 Mely Caballero-Anthony, ‘Mechanisms of Dispute Settlement: The ASEAN Experience’ (1998) Contemporary South East Asia 38.