6.1
The Australia-India Economic Cooperation and Trade Agreement (AI-ECTA) contains chapters that deal with a number of general provisions. These chapters cover transparency, exceptions, and administrative and institutional provisions, and are discussed in this chapter.
6.2
Chapter 10 of the AI-ECTA on transparency requires the publication of laws, regulations, procedures and administrative rulings of general application with respect to any matter covered by the AI-ECTA. It also deals with the substance of administrative proceedings, and review and appeal rights to final administrative actions.
6.3
Chapter 11 deals with general provisions and establishes exceptions to the application of certain provisions in the AI-ECTA. This means that in some cases Parties are permitted to introduce measures that limit certain aspects of trade between the two countries or are otherwise discriminatory. These cases, however, are tightly limited. The chapter contains provisions concerning security exceptions, direct taxation measures, balance of payments, disclosure of information, confidentiality and economic cooperation.
6.4
Chapter 12 contains administrative and institutional provisions. Primarily it establishes the Joint Committee and specifies its composition and responsibilities. Among other things, it is responsible for considering matters relating to the implementation of the AI-ECTA, as well as supervision of subordinate committees and working groups established elsewhere in the AI-ECTA. It has the power to issue interpretations of the AI-ECTA, which would be binding on Dispute Resolution Panels.
6.5
The AI-ECTA also contains a chapter on dispute settlement, Chapter 13. This chapter is a standard chapter in trade agreements, though the substance varies. The dispute settlement chapter deals with procedures where a Party considers the other Party is acting inconsistently with its obligations or has failed to carry out its obligations under the AI-ECTA. The key dispute resolution vehicle is a panel.
6.6
The dispute resolution provisions favour cooperation and consultation, and encourage consultation to be the first step in the dispute settlement process. As with other trade agreements, various provisions in the agreement are exempted from dispute settlement, and these are discussed in this chapter.
Transparency
6.7
International trade cannot occur without transparency because for goods and services to be traded, traders and governments need to know the rules. Exporters and importers must know the procedures and regulations that affect exports and imports as well as a range of other matters, like applicable tariffs and taxes, customs requirements, sanitary and phytosanitary (SPS) measures, and transportation regulations.
6.8
Transparency (also called ‘notification requirements’) is a requirement in all World Trade Organization (WTO) agreements. WTO agreements require parties to formally notify the WTO Secretariat of all laws and regulations affecting trade. WTO agreements also require WTO members to publish domestically all new or modified laws, regulations and guidelines on any matter affecting trade. Parties are required to make this information publicly available in a way that allows domestic stakeholders and other parties to become acquainted with the rules. Chapter 10 of the AI-ECTA on transparency is not discontinuous with WTO requirements.
Publication
6.9
Parties are to ensure that their laws, regulations, procedures, and administrative rulings of general application relating to the AI-ECTA are made available in the public domain including on an official website.
Administrative proceedings
6.10
Parties are to ensure their laws, regulations, and procedures are administered in a consistent and impartial manner, and that a person of the other Party affected by an administrative proceeding is provided reasonable notice of its initiation and a reasonable opportunity to support or defend their position.
Review and appeal
6.11
Parties are required to have judicial, quasi-judicial or administrative tribunals or procedures for the purpose of prompt review and, if warranted, correction of final administrative actions with respect to any matter covered by the AI-ECTA. Each Party is to ensure that parties to any proceedings are provided the right to a reasonable opportunity to defend or support their position, and that a decision is based on the evidence. Where a decision is made, it is to be implemented and is to govern the practice of the relevant entity.
Notification and provision of information
6.12
A Party is required to notify the other Party (in English), to the extent possible, of any actual measure that might materially affect the operation of the AI-ECTA, or substantially affect the other Party’s interests under the AI-ECTA.
6.13
On request of the other Party, a Party is to provide information and respond to questions pertaining to any actual measure.
General provisions and exceptions
6.14
Chapter 11 of the AI-ECTA largely addresses circumstances where a Party may legitimately deviate from provisions in the AI-ECTA.
Incorporation of articles from the GATT 1994 and GATS
6.15
Chapter 11 incorporates and makes part of the AI-ECTA—in relation to the chapters on trade in goods (Chapter 2), rules of origin (Chapter 4), customs procedures and trade facilitation (Chapter 5), SPS measures (Chapter 6), and technical barriers to trade (Chapter 7)—article XX of the General Agreement on Tariffs and Trade 1994 (GATT 1994).
6.16
Article XX of the GATT 1994 contains exceptions to the requirements under the GATT 1994 to liberalise trade providing any of the specified measures are not applied in a discriminatory manner or function as disguised restrictions on trade. Parties are permitted to adopt a number of measures, including measures (subject to limitations):
necessary to protect public morals
necessary to protect human, animal or plant life or health
relating to the importation or exportation of gold or silver
necessary for a range of purposes such as customs enforcement, enforcement of monopolies, protection of intellectual property, prevention of deceptive practices
relating to the products of prison labour
imposed to protect national treasures of artistic, historic, or archaeological value
relating to conservation of exhaustible natural resources
related to some intergovernmental commodity agreements
restricting exports of domestic materials necessary to ensure essential quantities of materials to a domestic processing industry during periods when domestic prices of such materials is held below the world price as part of a government stabilisation plan
essential for the acquisition or distribution of products in general or local short supply.
6.17
Chapter 11 also incorporates and makes part of the AI-ECTA—in relation to the trade in services (Chapter 8) and temporary movement of natural persons (Chapter 9) chapters—article XVI of the General Agreement on Trade in Services (GATS).
6.18
Article XIV of the GATS contains exceptions to requirements under the GATS to liberalise trade in services so long as any of the specified measures are not applied in a manner that would be discriminatory or operate as a disguised restriction on trade in services. Parties are permitted to adopt a range of measures from article XIV, including measures considered necessary to:
protect public morals or maintain public order
protect human, animal or plant life or health
secure compliance with laws or regulations that are not inconsistent with the provisions of the GATS including dealing with deception or fraud, privacy protections or safety.
Security exceptions
6.19
Nothing within the AI-ECTA is to be construed to:
require a Party to provide information it determines to be contrary to its essential security interests
prevent a Party from taking any action which it considers necessary for the protection of its essential security interests, including actions relating to traffic in arms, ammunition and implements of war, supply of services for military establishments, national or international relations emergencies, fissionable and fusionable materials, and the protection of critical public infrastructure
prevent a Party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security.
Measures to safeguard the balance of payments
6.20
In the case of serious balance of payments and external financial difficulties, or under threat of such an event, a Party may:
in the case of trade in goods, adopt restrictive import measures
in the case of trade in services, adopt or maintain restrictions on trade in services on which it has undertaken specific commitments, including on payments or transfers for transactions related to such commitments.
6.21
However, the AI-ECTA also specifically:
… recognise[s] that particular pressures on the balance of payments of a Party in the process of economic development may necessitate the use of restrictions on trade in services to ensure, inter alia, the maintenance of a level of financial reserves adequate for the implementation of its programme of economic development.
6.22
The Department of Foreign Affairs and Trade explained the implications of this provision:
… the reference to ‘particular pressures on the balance of payments of a Party in the process of economic development’ clarifies that some countries face specific pressures on their balance of payments in light of their economic development processes, and that these pressures may justify restrictions on trade in services. The provision also makes clear that one of the types of services restriction that may be necessary (depending on the circumstances) are measures to maintain financial reserves adequate to implement a country’s development program. However, to make use of Article 11.4 India would still need to demonstrate that it faced serious balance of payments and external financial difficulties (or threats of the same).
…
… any restrictions adopted under Article 11.4(1) must also comply with the requirements listed in paragraph 2 such as not exceeding what is necessary to deal with the relevant circumstances, being temporary, being applied on a non-discriminatory basis, and avoiding unnecessary damage to the other Party’s commercial, economic and financial interests.
6.23
Restrictions that are adopted or maintained on trade in services must:
be consistent with the International Monetary Fund (IMF) Articles of the Agreement
avoid unnecessary damage to commercial, economic and financial interests of the other Party
not exceed those necessary to deal with the serious balance of payments and financial difficulties
be temporary and phased out progressively as the situation improves
be applied in a non-discriminatory manner where the other Party is treated no less favourably than any country not party to the AI-ECTA.
6.24
Parties may give priority to economic sectors which are more essential to their economic development, however restrictions cannot be applied for the purpose of protecting a particular sector.
6.25
Restrictions that are adopted, maintained, or changed, require notification be sent to the other Party from the date such measures are taken. Furthermore, to the extent that restrictions do not duplicate WTO or IMF processes, Parties adopting or maintaining restrictions must enter into consultations with the other Party to review the measures.
Disclosure of information
6.26
A Party cannot be required to provide or allow access to information where the Party considers this would be contrary to the public interest, contrary to any of its legislation, impede law enforcement, or prejudice the legitimate commercial interests of particular enterprises.
Confidentiality
6.27
Parties, subject to their laws and regulations, are to maintain the confidentiality of information provided in confidence by the other Party. However, the article does not prevent a Party from using or disclosing confidential information in the context of judicial or quasi-judicial proceedings or where a Party is authorised under domestic law or regulation.
Cooperation
6.28
Parties acknowledge the importance of cooperation in implementing the AI-ECTA and enhancing its benefits, and recognise that cooperation activities undertaken shall seek to complement and build upon existing agreements or arrangements between the Parties.
6.29
Any cooperative activities, however, are subject to the availability of resources and the laws, regulations, and policies of a Party. Costs of cooperative activities would be mutually determined between Parties.
Administrative and institutional provisions
6.30
The Joint Committee is referenced in many chapters of the AI-ECTA—it is the ultimate committee to which subordinate committees report, and it serves in a dispute resolution function, including having the ability to issue interpretations of the AI-ECTA that are binding on a Dispute Resolution Panel. Chapters throughout the AI-ECTA contain provisions regarding the matters that may be referred to the Joint Committee.
Functions of the Joint Committee
6.31
The Joint Committee would:
assess, review and monitor the implementation and operation of the AI-ECTA
consider any matter relating to the implementation or operation of the AI-ECTA
consider ways to further trade and investment between the Parties, including improving market access
consider and recommend to the Parties any proposal to amend the AI-ECTA
supervise and coordinate the work of all subcommittees, subsidiary bodies and working groups
consider any other matter that may affect the operation of the AI-ECTA.
6.32
The Joint Committee could:
adopt decisions or make recommendations as envisaged in the AI-ECTA
seek to resolve differences or disputes regarding the implementation, interpretation or application of the AI-ECTA
issue interpretations of the AI-ECTA
establish, refer matters to, assign tasks to, delegate functions to, or consider matters raised by any subcommittee, subsidiary body, or working group
restructure, reorganise or dissolve any subcommittee, subsidiary body or working group, to improve the functioning of the AI-ECTA
unless otherwise provided in the AI-ECTA, determine the functions of the subcommittees, subsidiary bodies, or working groups
amend the Rules of Procedure and Code of Conduct (see below)
carry out any other such functions as may be agreed by the Parties.
Composition and meetings
6.33
The Joint Committee is to be composed of government representatives of the Parties at the level of Ministers or senior officials. The exact number and composition is not specified.
6.34
The Joint Committee would meet within one year of entry into force of the AI-ECTA. Afterwards, it would meet every two years unless the Parties agree otherwise. Meetings would be held alternately in the territories of the Parties unless the Parties agree otherwise.
6.35
A Party could request that the Joint Committee and any subcommittee, subsidiary body or working group established under the AI-ECTA, hold special sessions at an agreed date.
Rules of procedure and decision making
6.36
The Joint Committee and any subcommittee, subsidiary body or working group can establish its own rules of working procedures. However, during the first meeting, the Joint Committee would adopt Rules of Procedure and a Code of Conduct, which would govern the conduct of panels constituted under the dispute resolution chapter (see below).
6.37
Work can be carried out through any means considered appropriate. Meetings would be co-chaired by representatives from both Parties.
6.38
All decisions by the Joint Committee, subcommittees, working groups and subsidiary bodies are to be taken by mutual agreement.
Dispute settlement
6.39
The dispute settlement chapter (Chapter 13) contains rules and procedures for resolving disputes that may arise between the Parties in relation to their commitments under the AI-ECTA. This chapter is a common element in free trade agreements (FTAs) and according to the National Interest Analysis, is based on the rules and procedures for dispute resolution under the WTO. In keeping with Australia’s FTA practice, some provisions of the AI-ECTA are excluded from the scope of the dispute settlement chapter.
6.40
The dispute settlement provisions generally come into effect when a Party considers that:
a measure of the other Party is inconsistent with its obligations under the AI-ECTA
the other Party has failed to carry out its obligations under the AI-ECTA.
Cooperation and consultation
6.41
The dispute resolution chapter reflects a disposition towards cooperation: the Parties are to endeavour to agree on the interpretation and application of the AI-ECTA and make every attempt, through cooperation and consultations, to arrive at a mutually agreed solution where matters arise.
6.42
The AI-ECTA allows a Party to request consultations on any matter (set out in writing) within the scope of the dispute settlement provisions and requires the responding Party to reply in writing within 10 days of receipt. Parties must enter into consultation no later than 30 days from receiving the request, or within 15 days of receipt of the request in the case of perishable goods. Consultation is to be confidential and without prejudice to further or other proceedings.
6.43
The Parties are required to make every effort to reach a mutually agreed solution through consultations and shall provide sufficient information to enable a full examination of the matter and treat any confidential information exchanged as confidential.
6.44
The Parties may reach a mutually agreed solution at any time with respect to any dispute within the scope of the chapter. If this occurs during panel proceedings, the Parties are to notify the agreed solution to the panel. Once notification is received, the proceedings of the panel would terminate.
Dispute settlement without recourse to dispute settlement provisions
6.45
Parties may voluntarily undertake alternative methods of dispute resolution: good offices, conciliation or mediation. Any such proceedings are to be confidential and without prejudice to further or other proceedings, and if Parties agree, such proceedings can continue while a dispute proceeds for resolution before a panel under the AI-ECTA.
Choice of forum
6.46
Where there are substantially equivalent right and obligation provisions under another international agreement to which the Parties are party, including the WTO Agreement, the complaining Party may select the forum in which to settle the dispute.
Panels
Request for the establishment of a panel
6.47
A complaining Party may request, via written notification, the establishment of a panel to examine a matter if either:
the responding Party does not enter into consultation within 30 days, or 15 days for perishable goods
the Parties fail to resolve the matter through consultations within 60 days, or 30 days for perishable goods.
Composition of panels
6.48
A panel consists of three panellists unless otherwise agreed.
6.49
Where a Party makes a request for the establishment of a panel, Parties are to enter into consultations on the composition of the panel. Each Party is to appoint one panellist (who may be a national of the Party) and provide the other Party with a list of up to four nominees for appointment as the chair. The chair is not to be a national, resident, or employed by either Party, or have dealt with the dispute in any capacity.
6.50
If agreement on the composition of a panel cannot be reached within 45 days:
a Party can request the remaining panellist/s be appointed by draw of lot from the list of nominees for chair
if there is more than one panellist, including a chair to be selected by draw of lot, the chair would be selected first.
6.51
Where a Party fails to submit its list of up to four nominees, the chair is to be appointed by random draw of lot from the nominees submitted by the other Party. This means a Party cannot delay the establishment of a panel by refusing to submit a list of nominees for chair.
6.52
The same provisions above generally apply in situations where a panellist resigns or becomes unable to act, and with composition where a panel is reconvened.
Qualifications of panellists
6.53
Panellists are required to:
have expertise or experience in law, international trade, other matters covered by the AI-ECTA, or the resolution of disputes arising from international trade agreements
be chosen on the basis of impartiality, objectivity, reliability, sound judgment and independence
not be employed by, affiliated with, or take instructions from either Party
not have dealt with the matter in any capacity
disclose to the Parties information which may give rise to justifiable doubts about their independence or impartiality
comply with the Code of Conduct (adopted by the Joint Committee at its first meeting).
6.54
The AI-ECTA also provides that if a Party believes a panellist is in violation of any of these requirements, the Parties are to consult and, if they agree, the panellist is to be replaced by a new panellist.
Functions and proceedings of panels
6.55
The AI-ECTA establishes the functions of the panel which, broadly, are:
making an objective assessment of the matter before it (provisions establish how this is to occur)
(unless agreed otherwise) to operate under the specified terms of reference that require the presentation in a written report of the findings of law and fact, determinations, and if jointly requested by the Parties, recommendations.
6.56
Unlike the Free Trade Agreement between Australia and the United Kingdom of Great Britain and Northern Ireland (AUKFTA), the AI-ECTA is silent on how the panel is to make its decisions, though the AI-ECTA allows for separate or dissenting opinions to be presented in reports on matters not unanimously agreed by a panel. The AUKFTA specifies a panel’s findings are to be made by consensus or majority vote. Panels established under the AUFKTA also have the power to rule on their own jurisdiction.
Rules of Procedure and Code of Conduct
6.57
A panel may adopt additional rules of procedure that do not conflict with Chapter 13, the Rules of Procedure and Code of Conduct (which are adopted by the Joint Committee—see above).
6.58
The Rules of Procedure specify matters, including the number and location of hearings; opportunities to provide submissions; the publication of submissions, oral statements, and responses to requests or questions; ability to seek information or technical advice from experts; and confidentiality.
6.59
The default for hearings of a panel under the AI-ECTA is that they be closed to the public, unless the Parties agree otherwise. This is in contrast to the equivalent provision in the AUKFTA where, unless agreed otherwise, hearings are open to the public to observe, providing confidential information is protected.
Reporting
Reports of a panel
6.60
The panel is to assume full responsibility for the drafting of the reports, and they are to be drafted without the presence of the Parties. Provisions require the panel to issue an initial report within certain timeframes, and specify the content of the report. Parties may submit comments on the initial report. The panel may reconsider and modify its initial report after considering comments submitted by Parties or on the basis of further examination. The final report is to include reasons for any modifications to the report and a discussion of any written comments made by Parties to the initial report.
6.61
Where an obligation under the AI-ECTA is identical or substantially identical to an obligation under the WTO Agreement, the panel is required to consider any relevant interpretation established in the rulings of the WTO Dispute Settlement Body.
6.62
The AI-ECTA establishes timeframes for the panel to issue an interim and final compliance report.
Implementation of final report
6.63
The final report is binding on the Parties and is not subject to appeal.
6.64
Where the final report contains a determination that the measure is inconsistent with the obligations of the AI-ECTA, or the responding Party has failed to carry out its obligations under the AI-ECTA, the responding Party must bring the measure into conformity with the AI-ECTA.
6.65
Various provisions specify requirements for the responding Party to notify the complaining Party of its intentions with regard to complying with the panel report, including actions it proposes to take; whether such implementation can take place immediately; and if the Party is unable to immediately implement, identifying the ‘reasonable period of time’ needed to implement proposed actions.
Reasonable period of time
6.66
If Parties cannot agree on a reasonable period of time for implementation, a Party may request the chair of the panel determine a reasonable period of time, which should not exceed 15 months. However, a reasonable period of time can be longer or shorter, depending upon certain circumstances.
Suspension or termination of proceedings
6.67
The Parties may agree that a panel suspends its work at any time for a period not exceeding 12 consecutive months. Where the work of the panel is suspended for more than 12 consecutive months, the authority for the establishment of the panel shall lapse unless otherwise agreed by the Parties. The Parties may agree to terminate the proceedings before a panel by jointly notifying the chair.
Compliance review
6.68
If there is a disagreement regarding the responding Party’s compliance with the implementation of the final report, a Party may request the panel reconvene to decide the matter. The panel is required to make an objective assessment of the matter and is to set out in its report:
a descriptive section summarising the submissions and arguments of the Parties
findings on the facts of the dispute
reasons for its findings.
Suspension of concessions or other obligations
Compensation and suspension of concessions or other obligations
6.69
If the responding Party does not comply with provisions in the final report, the complaining Party can request compensation negotiations.
6.70
If no agreement on compensation is reached within 30 days or the complaining Party considers the responding Party has failed to observe the terms of agreed compensation, the complaining Party can provide written notice identifying the level of concessions or other obligations that it intends to suspend, equivalent to the level of nullification or impairment. Suspension of concessions or other obligations are not to exceed the level of nullification or impairment and are to be restricted to concessions or other obligations accruing under the AI-ECTA.
6.71
The responding Party can request, within a set timeframe, that the panel reconvenes to make findings where the responding Party either:
objects to the level of suspensions proposed on the basis that it exceeds the level of nullification or impairment
considers that it has complied with the terms and conditions of any compensation
claims that the complaining Party has failed to follow the principles established for suspension of concessions or other obligations (article 13.16(3)).
6.72
The reconvened panel is to present its decision to the Parties no later than 60 days after the receipt of the request. Any suspension of concessions or other obligations is to be consistent with the reconvened panel’s decision.
Review after compensation or suspension of benefits
6.73
Any compensation or suspension of concessions or other obligations is to be temporary until such time as the responding Party has complied with the final panel report or the Parties have reached a mutually agreed solution. Provisions relate to compliance notification requirements and timeframes for the termination of suspension of concessions or other obligations. Where the Parties disagree on compliance, a Party may request the panel reconvenes to examine the matter.
6.74
If the reconvened panel decides that the notification steps achieve compliance with the final report, the suspension of benefits or application of the compensation is to be terminated. If the reconvened panel decides that the notification steps do not achieve compliance with final report, the suspension of benefits or application of the compensation may continue.
Non-application or modifications of dispute settlement provisions
6.75
The table below provides a summary of chapters or provisions of the AI-ECTA where the dispute resolution chapter has been specifically dis-applied (that is, there is no recourse to Chapter 13 for the resolution of matters arising under the chapter), partly applied and/or modified.
Table 6.1: Non-application or modification of dispute settlement provisions
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3—Trade remedies
Article 3.11—No recourse for any matter arising under Section A (anti-dumping, subsidies and countervailing measures) or Section B (global safeguard measures).
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6—SPS measures
Article 6.16—No recourse for any matter arising under the chapter.
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7—Technical barriers to trade
Annex 7A.4 (pharmaceuticals)—No recourse for any matter arising under the annex.
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8—Trade in services
Article 8.22(3)—Subsidies—No recourse for any request made or consultations held under the article, or any other dispute arising under the article.
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8—Trade in services
Annex 8A.14 (dispute settlement)—Panels established pursuant to Chapter 13 (dispute settlement) to examine matters relating to disputes on prudential issues and other financial matters shall have the necessary expertise relevant to the specific financial service under dispute.
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8—Trade in services
Annex 8D.1 (foreign investment framework)—A decision or requirement under Australia’s Foreign Investment Framework shall not be subject to dispute settlement under Chapter 13 (dispute settlement).
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8—Trade in services
Annex 8D.2 (foreign investment framework)—A decision or requirement under India’s Foreign Investment Framework shall not be subject to dispute settlement under Chapter 13 (dispute settlement).
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9—Temporary movement of natural persons
Article 9.7(2)—No recourse to dispute settlement under Chapter 13 regarding a refusal to grant temporary entry unless:
the matter involves a pattern or practice, and
the natural persons affected have exhausted all available administrative remedies regarding the particular matter.
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Side letters—Post-study work visas
Paragraph 6—No recourse to dispute settlement under Chapter 13 regarding any matter arising under or related to the understandings in the letters unless the matter involves a pattern of practice and the natural persons affected have exhausted all available administrative remedies regarding the particular matter.
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