Chapter 19 of the U.S.-Canada Free Trade Agreement and the North American Free Trade Agreement: Implications for the Court of International Trade

Article excerpt

I. Introduction

This Article will address the ways in which the provisions of the United States-Canada Free Trade Agreement (FTA),(1) which took effect in 1989, and the North American Free Trade Agreement (NAFTA),(2) will affect the work and decisions of the Court of International Trade (CIT).

More specifically, it will discuss the binational panel review of antidumping and countervailing duty determinations by national administrative authorities, which is mandated by Chaper 19 of the FTA and of the NAFTA. This supranational appeals mechanism gives private litigants the option of choosing that forum rather than a review by the CIT or the other national courts of the signatories. In this respect, Chapter 19 binational panel review is unique.

Should the CIT be concerned about this development, or is the development to be welcomed as an internationalization of unfair trade practice jurisprudence with the prospects of cross fertilization and greater uniformity among the United States and its principal trading partners? How did this development come about? Does it indicate a trend or is it an aberration?

Recently, U.S. courts have been emphasizing a domestically focused interpretation of U.S. trade law, rather than one focused on international concerns or needs. Considering prominent U.S. legislators' criticism of an international panel's ability to determine the legalities of U.S. actions affecting international trade(3), will NAFTA's provisions regarding binational panel review face continued opposition from Congress?

This Article will try to answer some of these questions. However, in order to discuss these subjects intelligently, it is necessary to first look briefly at the genesis of Chapter 19 binational review. It is also necessary to understand the way in which Chapter 19 review operates, how the panels are formed and function, and the laws and rules that govern these panels. Having recently served as a chairman of a Chapter 19 binational panel, the author also hopes to bring some personal insights to the discussion.

II. Chapter 19 of the Free Trade Agreement

A. Genesis of FTA Chapter 19

one of the Canadians' chief objectives in entering into negotiations with the United States for a free trade agreement was to remove Canadian exports to the United States from the coverage of U.S. antidumping (AD) and countervailing duty (CVD) statutes.(4) There was concern that the increasing complaints against Canadian products under these statues were disrupting trade. Canadian provincial programs to attract and develop business - not unlike the programs of some U.S. states and localities - were coming under attack as involving countervailable subsidies.(5) If the United and Canada were to form a free trade area, why, asked the Canadians, should it not be free of antidumping and countervailing laws applicable only to external commerce, as is the case within the EC market and the interstate market of the United States? However, the U.S. negotiators had no such mandate. Negotiations nearby broke down over the issue.(6) Chapter 19 binational panel review was one of the most important elements of a compromise, which also involved the formation of a Working Group inter alia, to "seek to develop a substitute system of rules for dealing with unfair pricing and government subsidization."(7)

Thus, the binational panel review seems to have been envisioned as a temporary or stopgap measure until the parties, through their Working Group and consultations, reached a more permanent solution to the antidumping and countervailing duty problem with respect to U.S.-Canada trade.(8) Chapter 19 is to be in effect for a five-year period "pending the development of a substitute system of rules in both countries for antidumping and countervailing duties as applied to their bilateral trade."(9) If no agreement upon such a system has been reached by then, Chapter 19's provisions are to be extended for two more years. …