Dispute Settlement Under the U.S.-Peru Trade Promotion Agreement: An Overivew [August 12, 2011]   [open pdf - 257KB]

"The U.S.-Peru Trade Promotion Agreement (PTPA) follows current U.S. free trade agreement (FTA) practice in containing two types of formal dispute settlement: (1) State-State, applicable to disputes between PTPA Parties, and (2) investor-State, applicable to claims by an investor of one State Party against other State Party for breach of a PTPA investment obligation. A Party in a State-State dispute found to have violated a PTPA obligation is generally expected to remove the complained-of measure; remedies for non-compliance include compensation and the suspension of PTPA concessions or obligations (e.g., imposition of a tariff surcharge on the defending Party's products), with the defending Party having the option of paying a fine to the prevailing Party or, in some cases, into a fund that may be used to assist the defending Party in complying in the case. […] The fact-finding review could possibly lead to a State-State dispute proceeding if the United States considers that Peru has acted inconsistently with the agreement and efforts to settle the dispute through consultations are unsuccessful. To establish a PTPA violation, the United States must demonstrate that Peru has failed to adopt or maintain a law, regulation, or practice in a manner that affects trade or investment between the Parties. In addition, one case has been brought under the PTPA investor-State dispute settlement mechanism. In April 2011, a U.S. firm filed an arbitral claim alleging that Peru had violated its PTPA investment obligations in its treatment of a metallurgical smeltering and refining operation run by the claimant's affiliate in Peru."

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