There are potential fundamental breaches of any agreement. In the dispute settlement system, you're anticipating the worst-case scenario. For the most part, it's meant to facilitate the natural commercial relations of the agreement.
If there's a point where something is not cured, at that point it's not automatic termination. Under the agreement, under the provision you read, the first step is consultation. Consultations are designed to facilitate a solution, and only after consultations if they couldn't facilitate a solution--meaning no agreement can be reached at that point--can a party choose to terminate. But termination is not automatic, and you're also missing the step of consultations before termination.