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State-to-state dispute settlement chapter summary

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The state-to-state dispute settlement system in the Canada-United States-Mexico Agreement (CUSMA) - an improvement on Chapter 20 of the original NAFTA - provides for a transparent and clear mechanism for the resolution of disputes between Canada, the United States and Mexico regarding the interpretation and application of the Agreement. Almost all of the obligations in the Agreement, including those related to labour and the environment, are subject to this dispute settlement system.

The state-to-state dispute settlement mechanism places emphasis on resolving disagreements through cooperative means (such as consultations), recognizing that formal dispute settlement processes can be time-consuming and resource-intensive. However, if these cooperative means fail, the chapter provides for the creation of arbitral panels, consisting of independent candidates having the appropriate qualifications, to assess whether a party has violated its obligations. If an arbitral panel finds that a party has failed to implement its obligations under the Agreement, that party must remove the violation. If the violation is not removed, the winning party is automatically entitled to suspend benefits of equivalent effect (such as increased import duties).

Technical summary of negotiated outcomes: State-to-state dispute settlement

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