While the WTO’s dispute settlement regime also offers disputing parties an opportunity to use mediation as a means of resolving the dispute, the record of the WTO has shown that mediation has hardly been used. One might ask, therefore, why mediation would work for APEC? There are some compelling reasons to support the use of mediation for resolving disputes among APEC member economies. They will be discussed below.
First of all, the DMS is a result o f a compromise between the two camps of the APEC members: the Eastern and Western economies. APEC members who represent the Eastern economies are those of the Asian origin, for example the ASEAN member countries and China. The Western economies encompass APEC members who are not of the Asian origin, such as the United States, Canada, Australia and New Zealand.
Differences in terms of culture, religion, legal and political environment, and economic development have played an important part in the selection of an appropriate method for the APEC’s dispute resolution mechanism.
In general, the Eastern economies adopt the so-called “Asian ways of doing things” philosophy as guidance for their modus operandi. f/X A long history of the ways
62 ASEAN members who are members o f APEC include: Brunei, Indonesia, Malaysia, the Philippines, Singapore, and Thailand.
63 The “ASEAN way” or sometimes “Asian way” was understood to connote the utilisation o f “consensus and consent, rather than rule and compulsion”. See Simon S.C. Tay, ‘The Way Ahead for Asia’, in Simon S.C. Tay and Daniel C. Esty, eds., Asian Dragons and Green Trade: Environment, Economics and International Law, (Singapore: Times Academic Press, 1996), 189-199 at 197. Also see Michael Haas, The Asian Way to Peace: A Story fo r Regional Cooperation, (New York: Praeger, 1989), 2-5. He notes
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Asian nations live their lives shows that they have tried to avoid confrontation as much as possible. Evidence of this is the fact that although ASEAN has already established a dispute settlement mechanism, members o f ASEAN have never resorted to using it.64 Matters which imply a conflict of interests between ASEAN members are to be resolved amicably.65 Other evidence suggesting that Asian nations are not in favour of resolving their disputes by adjudicatory means can be seen from the practice of GATT or the WTO which often shows that the Western nations are more likely to initiate the dispute settlement procedures than their Asian counterparts.66 Perhaps, this may explain the fact that Asian members of APEC, particularly China, Indonesia, South Korea and Singapore, fully support the formation of the DMS rather than other methods of dispute resolution.67
However, from the perspective of the Western members of APEC, the idea of using diplomacy as a means of resolving a dispute might not sit well with their cultures.
These economies tend to prefer the use of an adjudicatory technique for resolving their disputes - hence, a rule-based dispute settlement system, like that of GATT or the
that the Asian way developed after the World War II when Asian nations recognised that the international relation approach o f the Western counties was not suitable for them. It is a “cultural theory o f international cooperation”, (at 21). See also, Paul J. Davidson, The Legal Framework fo r International Economic Relations: ASEAN and Canada, (Singapore: Institute o f Southeast Asian Studies, 1997), 31-32.
He noted that the ASEAN way is derived from the Malay concept o f musyawarah and mufakat. The former is “the process o f decision making through discussion and consultation”. The latter is a traditional approach involving “intensive informal and discreet discussions behind the scenes to work out a general consensus which then acts as the starting point around which the unanimous decision is finally accepted in more formal meeting”.
64 From a personal communication with Dr Vitit Muntrabhom, Faculty o f Law, Chulalongkom University, Bangkok, Thailand. From the history o f ASEAN, the first mention o f the dispute settlement system came 10 years after the inception o f ASEAN. Provisions regarding dispute settlement among the ASEAN members are contained in the Declaration o f ASEAN Concord, and the Treaty o f Amity and Co
operation o f 1976. It was not until 1996 that the ASEAN members agreed on a Protocol on Dispute Settlement Mechanism which is to govern the settlement o f disputes arising out o f ASEAN economic agreements. For more details on the ASEAN Protocol on Dispute Settlement Mechanism, see Paul J.
Davidson, op. cit., 153-165.
65 For example, the 1976 Declaration o f ASEAN Concord stipulates that “Member states, in the spirit o f ASEAN solidarity, shall rely exclusively on peaceful processes in the settlement o f intra-regional differences”. Another example can be seen from the 1976 Treaty o f Amity and Co-operation which provides more binding and treaty-like provisions in Chapter IV - the Pacific Settlement o f Dispute. Under this Chapter, Art. 13 states that “parties shall at all times settle disputes among themselves through friendly negotiations”; and Art. 15 further provides that other steps may be taken only “in the event no solution is reached through direct negotiations”.
66 See Brendan P. McGivem, supra, note 2.
67 See further in James Cameron and Tanya White, supra, note 3, where the authors note that Hong Kong has rejected the idea o f DMS, and preferred to use the WTO instead.
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WTO, is more preferred. For example, evidence can be seen from the table below (Table 4) which shows that the United States, with 61 cases, has initiated the panel proceedings under Art. XXIII o f GATT more than any other Asian countries.
Table 4: GATT Dispute Settlement Procedures Initiated by APEC Members between 1947-1994
Initiating Member from APEC
Consultations Under Art. XXII
of GATT
Consultations Under Art.
XXIII of GATT
U nited States 27 61
C anada 7 18
A ustralia 7 13
Chile 10 9
New Z ealand 4 3
Japan 2 3
H ong K ong 1 2
M exico 0 2
Thailand 1 1
The Philippines 0 1
Brunei 0 0
Indonesia 0 0
Korea 0 0
M alaysia 0 0
Singapore 0 0
N o te: A dapted from W TO, A n alytical Index: G uide to G A T T L aw a n d P ractice, volum e 2, (Geneva: W TO , 1995).
Given the fact that the Asian economies represent more than a half of the APEC’s membership, mediation seems to be the right choice o f technique for resolving the disputes among APEC members. Mediation is a compromise between the Asian and the Western ways o f doing things. It would also support the sense o f community which APEC has tried to build.68 It is evident that the DMS would be useful for APEC members as it would provide an alternative forum for dispute settlement in the Asia- Pacific rim. Members of APEC who are not yet members o f the WTO, like China,
68 A PEC Secretariat, Im plem enting the A P E C Vision, op. cit., at 13.
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Taiwan and Russia would clearly benefit from the creation of the DMS as they have no right to use the WTO’s dispute settlement mechanism.69
Additionally, given that APEC has not yet translated its commitments into hard- law instruments, it is unforeseeable in the near future that APEC would be willing to formulate its own rules on dispute settlement based on the model of the WTO DSU.
Indeed, as the more formal methods of dispute resolution, like arbitration, require rules governing their process and procedures, it would not be appropriate for APEC to create an arbitration process or the panel process like that of the WTO.70
Secondly, mediation entails a dispute resolution process which is geared towards the finding of a consensual solution which is acceptable to all parties to the dispute. It does not involve the same degree of formality as required by other methods of dispute resolution. The entire operation of mediation depends on the willingness and voluntariness of the parties to settle their dispute and implement the outcome. This might raise a concern about the effectiveness of the DMS. However, this concern might be argued otherwise. Rather than acting as disadvantages, informality, flexibility and voluntariness arguably could give advantages to the successful resolution of the dispute between APEC members. Firstly, the parties are not subject to any particular rules or procedures unless they are set up for themselves Parties could thus discuss a wider range of issues or tools for implementation. Unlike the WTO’s dispute settlement regime, matters which could be brought before the DMS are not limited only to the issues under the rubric of the WTO. Socio-economic issues such as environmental protection, competition, labour and human rights could therefore be resolved before the DMS. The ability to successfully resolve disputes involving these socio-economic issues is important for APEC in the light of the growing tension between APEC
n i
members caused by those issues in the recent years. Secondly, as the disputing parties must voluntarily agree on the use of mediation, it is likely that they will try to find a solution - so that mediation would not be a waste of time - and implement the outcome accordingly - as the parties have formulated such an outcome themselves. Thirdly,
69 APEC Secretariat, A Vision fo r APEC, op. cit., at 40.
70 APEC Secretariat, Achieving the APEC Vision, op.cit., at 23.
71 APEC Secretariat, Implementing the APEC Vision, op. cit., at 12.
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APEC’s mediation would “offer an intermediate channel between bilateral negotiation and the ‘win or lose’ confrontations of the WTO”. 77 In other words, a successful mediation would put the disputants in a “win-win” situation.
One should note, however, that the potential of the DMS to resolve disputes between APEC members might be undermined as there still exists some issues which remain unclarified. Firstly, what is still lacking from the operational aspect o f the DMS is guidance as to whether the DMS and the WTO’s dispute settlement mechanism could be used conjunctively. This issue needs some further clarification, expecially in the light o f environmental matters which both APEC and the WTO arguably could have co
jurisdiction. The guiding principles given by the EPG, as expounded previously, only provide that all matters under the scope of APEC could be resolved by the DMS.
However, it has been noted that the purpose o f creating the DMS is not to “duplicate or compete” against the WTO’s dispute settlement system. H'X Does this mean that the DMS cannot be used to resolve matters concerning the WTO’s issues at all? But if a dispute could be resolved in a forum which could better resolve such a dispute, would it not be advisable to resolve the dispute there? Trade and environment disputes could arguably fall into such a category o f dispute. This issue will be discussed in more detail in the next section.
Indeed, what is needed in order to resolve the APEC/WTO conflict of laws problem is a set of some guiding principles, articulating the determination of the jurisdiction and the choice of law in each case. As a suggestion, one model which APEC could use as guidance in this regard is NAFTA. More details on this issue will be given in the next chapter.
Secondly, according to DMEG, APEC should not create a new institution for the purpose of dispute mediation. This might raise concerns about the workload and, consequentially, the efficiency of the DMS administrator. As there has been no mention of who is the DMS administrator, it is assumed that the APEC Secretariat will take on this role. Given that the APEC Secretariat in Singapore employs only a small number of
72 Ibid., at 13.
73 Ibid., at 12.
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staff in comparison to other international organisations such as the WTO, it is foreseeable that the work of the Secretariat will be overloaded. As a solution, it might be advisable to establish a group of APEC officials, perhaps a couple of staff, who would deal with the administration of the DMS. In the long run, this would benefit the operation of the DMS if it proved to be successful and frequently in use.
Thirdly, although there have been some guidelines on the DMS, it has been argued that the DMS still lacks precision in its definition. At one point, DMEG had already attempted to define the DMS. It defined “disputes”, in a narrow sense, as differences regarding the implementation or enforcement of rights and obligations, or, in a broader sense, as differences regarding policies or objectives not subject to agreed rules. “Mediation” was defined as avenues to facilitate the parties directly involved to reach a mutually satisfactory resolution of a dispute, rather than to avenues such as arbitration or adjudication that involve the imposition of third-party dispute settlement.
As for “service”, DMEG referred to a forum or procedure, but does not necessarily involve a formal mechanism or institution.74 Despite the efforts of DMEG, these definitions appear somewhat vague, imprecise and superficial.
Some commentators have further observed that despite the EPG has set out what the DMS should be, viz. handling issues beyond that under the WTO, featuring shuttle diplomacy, a mediator being chosen voluntarily, and so forth, it has failed to provide the exact type o f mediation envisioned for the DMS. It also did not state whether the mediation would be binding, confidential, or would allow parties to choose their own representatives. Furthermore, importantly, the EPG did not strictly keep the meaning of
“mediation”, it seems that the EPG has combined other aspects of alternative dispute
• j e
resolution into mediation as well. The EPG has suggested that a second stage of the DMS process is the establishment of a special review panel, should the mediation fail.
The EPG has gone even further to describe what the panel stage would entail and the time-frame for the panel stage.76 Indeed, the confusion over the real nature of the DMS,
74 APEC Experts’ Group on Voluntary Consultative Dispute Mediation, Report form the Vancouver Meeting, op. cit.
75 James Cameron and Tanya White, supra, note 3, at 127.
76 The EPG has suggested that the panel should be requested within 60 days o f the end o f the mediation process. The panel should be established within 30 days o f the request. In any case, the whole panel
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in my opinion, has opened the door for further interpretation concerning the use o f the med-arb technique as discussed earlier. As such, could the panel of mediators assume the role of the special review panel? Or, does a new panel need to be constituted?
Moreover, if the EPG intended that the panel stage should also be an integral part o f the DMS, should it not include the elaboration of the panel stage in its mediation guidelines? These issues need to be clarified by APEC before the confusion about the DMS could be eradicated. Unfortunately, the work on the DMS with respect to the resolution of the dispute between APEC governments has not been developed further by DMEG. DMEG seems to emphasise on promoting the understanding of the WTO’s dispute settlement mechanism and the exchange of the practical experience of APEC members in using such a mechanism. In order to encourage a smooth operation o f the DMS, DMEG should seriously consider the formulation of the more precise DMS guidelines and make them part of APEC’s instruments.
In any case, one must remember that the DMS is only in its infancy and evidently falls far short of being fully developed. From an opportunity to attend the DMEG meeting in Bangkok, in 1998, and some interviews with DMEG delegates, it can be concluded that the concept of the DMS is surprisingly still unclear, even to the DMEG delegates themselves. It is hoped that the clarification of the DMS will be provided once the DMS issue is discussed at the CTI meeting some time in 1999.
5.5. The Potential of the DMS for Resolving Trade and Environment