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The New Face of CEFTA and its Dispute Resolution Mechanisms
Abstract
Amendments made to the Central European Free Trade Agreement (CEFTA) in 2006 mark significant developments in the economic integration of the Western Balkans. Among those amendments were changes to the Agreement's dispute resolution mechanism. This article analyzes the latest developments in economic integration in the Western Balkans and examines the nature and operation of the dispute resolution mechanisms used in CEFTA. Explanations for important changes to the dispute settlement process in CEFTA are suggested by examining the context of the members' economic, political, social and legal surroundings. The article surveys ongoing tendencies in the development of dispute resolution mechanisms in other regional trade agreements, in particular those utilized by the European Union (EU), as a means of exploring the rationale behind the new CEFTA. It argues that the EU practice—developed in EU association agreements with third countries—has inspired the 2006 amendments to the CEFTA dispute resolution mechanism.
... For example, in July 2016 the Secretariat sent an opening letter to the Republic of Serbia for its failure to comply with the Energy Community appropriate measures necessary in order to remedy the situation. At present, any dispute between CEFTA members arising out of competition issues and any dispute in which only one of the parties is also a WTO member must be resolved by the CEFTA internal dispute resolution mechanism (Biukovic 2008). 16 Georgia, Armenia, Norway and Turkey participate as observers. ...
This open access book provides answers to key open questions concerning competition policy in emerging economies, with a focus on South Eastern Europe. The contributions address two major issues. One is the design of competition policy and the national competition authorities that enforce it, including the topics of competition advocacy and state aid control; the other is the use of economic methods in competition law enforcement, especially in the cases of relevant market definition and merger control.
Many lessons learned in the countries of South Eastern Europe can be applied to the emerging markets of other regions. As such, the findings presented here will be highly relevant for officials and staff at national competition authorities, advisers to legislators shaping national competition policy, competition law professionals, and university students alike.
The second chapter of the book investigates the economic futures of the Western Balkans. For this purpose, the examination of the political aspects carried out in the previous chapter will prove very useful to explain some apparent contradiction as well as issues that are not directly captured by statistics and economic figures. One example: why, despite the overall macroeconomic stabilization, the WB6 are still lagging behind in the path to become high-income countries? My answer here is that it depends to a great extent on leaders and institutions, which are the key actors that can ultimately enable regional entrepreneurs and companies to establish a closer cooperation – subsequently becoming more productive and connected. Taking this consideration on board, the chapter is thus mostly concerned with identifying a number of essential dynamics that are expected to play (or keep playing) a critical role in shaping the regional economy for the upcoming years. Nevertheless, the first part of the chapter indulges on a modicum of economic indicators, so to provide a contextual background and comparative insights on the regional economic performance vis-à-vis the EU especially. In fact, we need first of all to locate the Western Balkan economies on the global markets “map” and to describe their main features.
El planteamiento de este libro es que en América Latina y el Caribe se configura un Nuevo Regionalismo Estratégico. Este proceso emerge al comienzo del siglo XXI en la forma de la Alianza Bolivariana-Tratado Comercial de los Pueblos (ALBA-TCP). Este libro propone que el nuevo regionalismo estratégico en América Latina y el Caribe está caracterizado por tres componentes. Primero, un énfasis en los elementos del viejo regionalismo estratégico, especialmente la creación de empresas estratégicas, productos y sectores, y las alianzas comerciales e industriales vinculadas al rol del Estado como un actor estratégico. Segundo, el concepto de multidimensionalidad más allá del ámbito económico y los elementos comunes emergentes que caracterizan el modelo socioeconómico del ALBA-TCP. Tercero, las políticas económicas articuladas alrededor del concepto de soberanía y la conformación de un accionar regional alrededor de estas políticas. Aplica esta teorización para explorar cómo el ALBA-TCP presenta alternativas a las crisis alimentaria, energética y financiera, y a un análisis de cómo estos procesos contribuyen a la transformación de la economía política internacional.
All countries in South East Europe introduced a national system of state aid control. The paper first analyses the legal requirements for introducing national state aid rules, stemming from the Stabilization and Association Agreements these countries concluded with the European Union, but also from the Central European Free Trade Agreement and the Energy Community Treaty. The analysis of the institutional design of the national state aid authorities reveals that the SEE countries largely chose to establish an authority with close links to the Government—either as a unit within the ministry of finance or ministry of economy, or as a collegial body formed by the representatives of different ministries, but only formally separated from the Government. Only the FYR Macedonia has chosen to design its state aid authority in a different manner, by entrusting the existing competition authority with the task of state aid control. Both types of institutional design are “inspired” by the models of state aid authorities that existed in the Central and East European countries in the pre-accession period. Regardless of the type of institutional design that a country opted for, the enforcement record of these authorities remains unsatisfactory. The paper concludes with an analysis of the reasons for the inefficiency of state aid control in SEE countries, which do not seem to directly result from the choice of the institutional model of the monitoring authority, since there is no substantive separation of the state aid authority from the Government structures that provide state aid.
The article evaluates and attempts to draw some lessons from the recent initiatives aimed at stimulating regional cooperation among transition economies in Northern, Central, and South-Eastern Europe. Although these initiatives varied significantly in their scope, objectives, and domain of activity, the author highlights the common elements and discusses both their major achievements and greatest weaknesses. The author then relates these initiatives to the recent theoretical debate on regionalism, the main conclusions in the empirical literature, and the most important policy issues concerning current integration processes and eu enlargement. The role of subregional economic cooperation among transition economies is examined within the context of the problems posed by the variable speed integration policies of the European Union. The general conclusion is that the overall experience of regional cooperation among European transition economies has, on balance, been positive, though clear limitations and many unresolved questions remain. (For acronyms see page 323.)
Supranational adjudication in Europe is a remarkable and surprising success. Europe's two supranational courts -- the European Court of Justice (ECJ) and the European Court of Human Rights (ECHR) -- issue dozens of judgments each year with which defending national governments habitually comply in essentially the same manner as they would with domestic court rulings. These experiences stand in striking contrast to those of many international tribunals past and present. Can the European experience of supranational adjudication be transplanted beyond Europe? Professors Helfer and Slaughter argue that the effectiveness of the ECJ and the ECHR is linked to their power to hear claims brought by private parties directly against national governments or against other private parties. Such "supranational" jurisdiction has allowed the European courts to penetrate the surface of the state, to forge direct relationships not only with individual citizens but also with distinct government institutions such as national courts. Over time, this penetration and the deepening relationships between supranational jurists and domestic legal actors have led to the evolution of a "community of law," a web of nominally apolitical relations among subnational and supranational legal actors. The simple provision of supranational jurisdiction, however, is not a guarantee of effective adjudication. Drawing on the observations of scholars, practitioners, and judges, Professors Helfer and Slaughter develop a "checklist" of factors that enhance the effectiveness of supranational adjudication. They distinguish among those factors that are within the control of member states; those that are within the control of the judges themselves; and those that may be beyond the control of either states or judges. Isolating the factors in this way provides both a rough metric for evaluating the effectiveness of other supranational tribunals and a potential set of prescriptions for judges on those tribunals seeking to enhance their institutions' effectiveness. After developing the checklist, Professors Helfer and Slaughter use it to analyze the United Nations Human Rights Committee (UNHRC). Although the UNHRC was established expressly as a committee of experts rather than a court, analysis of its recent practice reveals that it is becoming increasingly "court-like." Moreover, within the constraints imposed by severely limited resources, UNHRC members are independently following many of the checklist prescriptions for increased effectiveness. The next step is for the organization to enter into a sustained dialogue with its European counterparts, harmonizing its decisions with theirs in some areas while consciously preserving its own distinctive jurisprudence in others. Structured and regular interaction between these tribunals would add additional voices to an emerging transjudicial conversation, potentially laying the foundation for a global community of law.
This article considers whether there is any scope for multilateral subregional cooperation initiatives involving Central and East European (CEE) states possibly to become something more than mere supplements to the EU accession endeavour Given the ongoing uncertainties about where the real limits of EU expansion lie, and the at best long‐term membership prognosis of even some of the current candidate states, this question is not entirely theoretical. The first part of the article argues that with the exception of the Central European Free Trade Agreement (CEFTA) none of the current subregional groupings qualify as even hypothetical alternatives to the EU and, accordingly, the rest of the article concentrates on CEFTA. The main verdict is that while CEFTA cooperation has been an important component of the EU pre‐accession process, the constraints to both CEFTA's further internal and external development are such that it is unlikely to move to a redefined role in the future.
This article identifies various duties of cooperation both in political and legal settlement strategies. A general, customary law-based duty of cooperation with a view to settlement, comprising a duty to negotiate, is inherent in the obligation to settle disputes peacefully. On the other hand, a general ‘political exhaustion doctrine’ does not exist. In diplomatic third party-based settlement, we find specific, i.e. procedural, obligations of cooperation. With regard to adjudication, the evolution of treaty law has seen the cooperational act of submission given at an increasingly early stage. The doctrine of non-frustration of adjudication functions as a corollary to the duties of cooperation. In international criminal justice, manifold duties of cooperation are binding erga omnes partes. The cooperational duties are placed in the context of two antagonistic trends in dispute settlement. One is the rise of adjudication which is found, for instance, in the creation of new courts. On the other hand, new and varied political means are resorted to, and justified by novel arguments, such as alternative dispute resolution (ADR). The international law of dispute settlement may be envisaged as a network of obligations. The hierarchical strand of the network is dominant where (quasi-)compulsory jurisidiction exists. Yet horizontal Westphalian elements persist. Finally, the network image applied to dispute settlement visualizes the oscillation of international law between Westphalianism and Constitutionalism.
States entering into international agreements have at their disposal several tools to enhance the strength and credibility of their commitments, including the ability to make the agreement a formal treaty rather than soft law, provide for mandatory dispute resolution procedures, and establish monitoring mechanisms. Each of these strategies - referred to as `design elements` - increases the costs associated with the violation of an agreement and, therefore, the probability of compliance. Yet even a passing familiarity with international agreements makes it clear that states routinely fail to include these design elements in their agreements. This article explains why rational states sometimes prefer to draft their agreements in such a way as to make them less credible and, therefore, more easily violated. In contrast to domestic law, where contractual violations are sanctioned through zero-sum payments from the breaching party to the breached-against party, sanctions for violations of international agreements are not zero-sum. To the extent that sanctions exist, they almost always represent a net loss to the parties. For example, a reputational loss felt by the violating party yields little or no offsetting benefit to its counter-party. When entering into an agreement, then, the parties take into account the possibility of a violation and recognize that if it takes place, the net loss to the parties will be larger if credibility-enhancing measures are in place. In other words, the design elements offer a benefit in the form of greater compliance, but do so by increasing the cost to the parties in the event of a violation. When deciding which design elements to include, the parties must then balance the benefits of increased compliance against the costs triggered in the event of a violation.
This article uses the CEFTA experience to explore interactions between subregional integration and the EU pre-accession process. It covers the following issues. What contributions did CEFTA make to the EU membership endeavour? In which ways did the EU membership drive impact on the subregional cooperation process? Were restrictions on the form of integration applied (basic trade liberalisation in the CEFTA case) a conscious choice or are there inbuilt limits to subregional integration pursued in the EU pre-accession context? What factors influenced the institutionalisation and widening issues? Does the CEFTA experience offer any lessons for other subregional integration exercises, including those already underway - as in the West Balkans - or purportedly on the agenda - as in the 'United Economic Space' planned by certain former Soviet states? The discussion is organised as follows: introduction/preliminaries; the origins of CEFTA; the evolution of CEFTA cooperation; outcomes of CEFTA cooperation; the future of CEFTA. (Informaworld)
This paper explains why the use of mandatory dispute resolution clauses is the exception rather than the rule in international agreements. On one hand, these clauses increase the sanction for violation of the agreement and thereby increase the probability that the parties will comply. On the other hand, dispute resolution clauses impose a loss on the parties when violations occur. States, therefore, must balance the credibility and compliance benefits of a mandatory dispute resolution provision against the joint costs imposed by those provisions in the event of a violation. The paper develops a series of predictive and normative results based on the trade-off. For example, dispute resolution clauses are more likely in low-stakes than high-stakes agreements, in multilateral rather than bilateral agreements, and when tribunals are more accurate. The paper also offers support for the view that money damages (or other zero-sum transfers) should be encouraged in international dispute resolution. Copyright 2002 by the University of Chicago.
This paper deals with convergence effects of regional trade agreements. The international literature presents three main motifs to support free trade agreements: stabilisation, avoidance of the hub-and-spoke trade structure, and the training ground argument. This paper analyses Romania's performance as a CEFTA member from the third perspective: has CEFTA acted as a training ground for EU accession? Statistical analysis, based on a variety of indicators seems to invalidate this argument. In the absence of structural reforms, trade liberalisation may enhance trade volumes but it will not necessarily prepare the economies involved to perform better in a more competitive environment.
This article examines the industrial reintegration of central and eastern Europe into the broader European economy in the context of the emerging world economy. Since the Cold War, Europe’s economic heterogeneity has sharply increased, making it comparable to Asia. And Europe as a whole must adapt to a global economy of three regional centres and industrial strategies implemented through International Production Networks (IPNs). The article asks whether policies favoring IPNs that link east and west can reconcile eastern industrial development with western prosperity and employment. Thus the eastward enlargement of the European Union, which has been driven primarily by security concerns, can also improve the region’s competitiveness in global markets.
This paper addresses the final steps to global free trade - what they might look like, what sort of political economy forces might drive them, and what the WTO might do to help. Two facts form the point of departure: (1) Regionalism is here to stay; world trade is regulated by a motley assortment of unilateral, bilateral and multilateral trade agreements; (2) this motley assortment is not the best way to organise world trade. Moving to global duty-free trade will require a multilateralisation of regionalism. This paper presents the political economy logic of trade liberalisation and uses it to structure a narrative of world trade liberalisation since 1947. The logic is then used to project the world tariff map in 2010, arguing that the pattern will be marked by fractals - fuzzy, leaky trade blocs made up of fuzzy, leaky sub-blocs (fuzzy since the proliferation of FTAs makes it impossible to draw sharp lines around the Big-3 trade blocs, and leaky since some FTAs create free trade 'canals' linking the Big-3 blocs). The paper then presents a novel political economy mechanism - spaghetti bowls as building blocs - whereby offshoring creates a force that encourages the multilateralisation of regionalism. Finally, the paper suggests three things the WTO might do to help multilateralise regionalism. Copyright 2006 The Author Journal compilation 2006 Blackwell Publishing Ltd.
The fifth enlargement of the EU has necessitated various adjustments to the pan-European trade and integration framework. This article discusses ways in which the Central European Free Trade Agreement (CEFTA) has been affected by this process. What was CEFTA's role in the EU pre-accession process? How did CEFTA downsizing affect trade arrangements between the enlarged EU and the remaining CEFTA members? Also, how realistic is the idea that the end of CEFTA's role in central Europe could be a prelude to its revitalization as a vehicle for multilateralization of trade arrangements in the south east European setting? Copyright 2006 Blackwell Publishing Ltd.
In recent years two parallel trends have emerged in the organizationof international trade. The first development is the rise ofregionalism, with a host of new integration initiatives drawn alonggeographical lines. More than thirty regional accords were officiallynotified to the General Agreement on Tariffs and Trade (GATT) between1990 and 1994 alone, a total exceeding that of any previous five-yearperiod. The second is a distinct but less widespread move towardlegalism in the enforcement of trade agreements. To an unusual extenttrading states have delegated to impartial third parties the authorityto review and issue binding rulings on alleged treaty violations, attimes based on complaints filed by nonstate or supranational actors.Separately, the two trends have garnered scholarly attention, sparkingcomparative analysis of regional versus multilateral arrangements anddebates regarding the politicaldynamics of judicializationwithinindividualpacts, especiallyin Europe. The intersection of these twotrends, however, remains little examined.
Slovakia respondent, no panel established and mutually agreed solutions notified under Art.3(6) of the DSU)
- Wto
WTO, "Dispute Settlement: Dispute by Country", available at <http://www.wto.org./english/
tratop_e /dispu_e/dispu_by_country_e.htm>. See, in particular, "Czech Republic-Measure
Affecting Import Duty on Wheat from Hungary", WT/DS148 (1998) (Hungary complainant,
Czech Republic respondent, no panel established nor settlement notified); "Romania-Import
Prohibition on Wheat and Wheat Flour", WT/DS240 (2001) (Hungary complainant, Romania
respondent, Hungary withdrew request for establishment of a panel); "Slovakia-Safeguard
Measure on Imports of Sugar", WT/DS235 (2001) (Poland complainant, Slovakia respondent,
no panel established and mutually agreed solutions notified under Art.3(6) of the DSU); "Slovak Republic-Measure Affecting Import Duty on Wheat from Hungary", WT/DS143 (1998)
(Hungary complainant, Slovakia respondent; no panel established nor settlement notified);
Czech Republic complainant, Hungary respondent; consultations requested, no panel established nor settlement notified)
"Hungary-Safeguard Measure on Imports of Steel Products from the Czech Republic", WT/
DS159 (1999) (Czech Republic complainant, Hungary respondent; consultations requested, no
panel established nor settlement notified); "Croatia-Measure Affecting Imports of Live Animals
and Meat Products", WT/DS297 (2003) (Hungary complainant, Croatia respondent; consultations requested, no panel established nor settlement notified); "Czech Republic-Additional
Duty on Imports of Pig-Meat from Poland", WT/DS289 (2003) (Poland complainant, Czech
Republic respondent; consultations requested, no panel established nor settlement notified).