Seeking Common Ground: Canada-U.S. Trade Dispute Settlement Policies in the Nineties

By Andrew D. M. Anderson | Go to book overview

by the CPs is one of the most troublesome parts of the current procedure, since the losing [CP] can generally block acceptance by refusing to join in a 'consensus' decision to accept. Of the findings approved, all but a few have gained compliance, although in some cases compliance took many years to achieve. Nevertheless, some of the cases of non-compliance are very significant and troublesome. [Emphasis added]

Canada and the United States have both hedged on GATT decisions. For example, the U.S. was told by a GATT Panel that its pass-though of subsidies on Canadian pork was in violation of GATT CVD procedures. According to Yerxa, the U.S. trade representative to the GATT at that time, ". . . [w]e have concluded that the panel's recommendations are not ripe for consideration at this time because the case that gave rise to this dispute is not yet completed under domestic law ( Toronto Star 1990a: B5)." (See the previous discussions on the pork dispute in this Chapter). Canada was also slow in adopting a GATT Panel report that called for it to eliminate import restrictions on ice cream and yogurt (see Chapter 4 of this book). Interestingly enough, the United States had received a GATT waiver in 1955 to discriminate in the import of agricultural products, which is part of the reason why Canada has been slow to oblige with the GATT request ( Jackson 1990: 14-15). In effect, at the present time, moral persuasion, whether under the Canada-U.S. FTA, NAFTA or the GATT, appears to be the only true non-military force encouraging nations to reach solutions or to abide by the solutions proposed for any trade disputes. It remains to be seen whether the new 1994 GATT rules, which eliminate the right to veto Panel judgments, will encourage Members to once again see the GATT as a viable place to solve "unfair" trade disputes.


Conclusions

The new Chapter Nineteen DSM is a second-best "economic" solution to overcoming the use of U.S. and Canadian "unfair" trade laws for protectionist purposes, since the Governments of Canada and the United States failed to negotiate the first-best economic solution of unrestricted access to the U.S. market and the elimination of the AD and CVD "unfair" trade laws. However, regardless of whether the Chapter Nineteen solution arrived at by the United States and Canada is a first-best or a second-best solution, the process still has to serve the broader interests of the Canada-U.S. FTA (subsequently NAFTA) which are the elimination of barriers to trade, including the potential for the "unfair" trade laws to be used for harassment purposes or for shelter by non- competitive firms and industries located in Canada or the United States (and now Mexico). Based on the Chapter Nineteen cases analyzed in this chapter, these mechanisms have not yet demonstrated any reason why they will

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