The Trump team will likely demand removal of NAFTA’s binational panel system in Chapter 19 during the impending renegotiation of the agreement, a position that could lead to a breakdown in the talks, states a new C.D. Howe Institute Verbatim. In “NAFTA Renegotiations – A Different Route to Settle Trade Disputes,” author Lawrence L. Herman urges the government to pursue a strategy that prevents the Americans – or Canadians – from withdrawing from the trade deal in its entirety in the event of an impasse on dispute resolution.
Canadian exporters can challenge the dumping and subsidy determinations of US agencies via the Chapter 19 binational panels, which can remand those decisions to these agencies for misinterpreting US law, instead of having to appeal through US courts. But this system is under political attack in the United States, and will likely be on the table in NAFTA renegotiations.
One alternative for the Canadian government to consider is to reinvigorate the State-to-State dispute resolution system under NAFTA Chapter 20, as a replacement for the Chapter 19 panel review process, with some re-jigging to add special provisions to deal with trade remedy disputes such as the ongoing softwood lumber battle.
The result would be that, instead of Canadian exporters having to challenge US trade agency determinations under Chapter 19, any dispute with the Americans in dumping and subsidy cases would be taken over by the Canadian government. The legal case and the cost burden would be shifted from the private to the public sector.
For more information contact: Lawrence L. Herman, Senior Fellow, C.D. Howe Institute and Counsel, Herman & Associates: 416-865-1904 or email: kmurphy@cdhowe.org.
The C.D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. Widely considered to be Canada's most influential think tank, the Institute is a trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review.
