The North American Integration Regime and its Implications for the World Trading System

This article examines the complex relationship between the institutions and legal rules of the NAFTA and the World Trade Organization. The juridical relationship between the NAFTA and WTO Agreement is of considerable interest from the standpoints of policy and technical analysis of legal norms. As a matter of policy, a decision by NAFTA negotiators whether to accord legal priority to the NAFTA or WTO would appear to involve a choice whether to accord a greater degree of attention and concern to more narrow regional economic and political interests, or to broader multilateral interests. In light of the importance that trade policy makers have ascribed to the potential for conflict between the regional and multilateral integration models, NAFTA negotiators might have been expected to make a clear choice in this hierarchy of interests. Evidence from the text of the NAFTA and from the early NAFTA dispute settlement panel reports suggests that no such overarching policy determination was made or that, if it was made, the determination was implemented in an uncertain manner. The uncertainty surrounding the relationship between the NAFTA and WTO Agreement may reflect the dynamic political tensions faced by the NAFTA negotiators, tensions that continue to influence the formation and implementation of policy in the NAFTA Parties. On one side, the NAFTA was and is portrayed by its proponents as a means of accelerating integration on the North American continent in a way that is consistent with the political and social interests of a variety of disparate groups, including the business community, labor unions and environmentalists. The NAFTA is politically justified by its attention to interests that are more difficult to address at the WTO multilateral level. If the results of NAFTA negotiations are placed beneath WTO Agreement norms, then in theory this attention to regionally-specific interests might be jeopardized by the superiority of more generalized WTO norms. There are, therefore, political and social motivations for advocating priority for the NAFTA. On the other side, NAFTA negotiators were and remain well aware of concerns among GATT-WTO Members about efforts by particular countries and regions to gain advantages by extending regional preferences. NAFTA negotiators would be hesitant to make a clear statement of regional legal preference that might galvanize opposition to the agreement, or that might jeopardize future multilateral negotiations. NAFTA negotiators may well have maintained a preference for multilateralism among themselves, yet nevertheless have been reluctant to clearly express such preference in the NAFTA because this might be found objectionable by interest groups within the region whose support was required to assure successful conclusion of the agreement. Though the NAFTA-WTO hierarchy of norms is uncertain, and while such uncertainty is bound to lead to or exacerbate future NAFTA disputes, the political and social forces that impelled the initial state of ambiguity have not dissipated. While interests in political stability and economic efficiency might be enhanced through the clarification of this matter by the NAFTA Parties through the adoption of a clarifying amendment or an inter-governmental understanding, the Parties may be in no more favorable position to agree on such a clarification in the year 2000 than they were in 1993.