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The Settlement of Disputes Under the 1988 Canada-United States Free Trade Agreement

Published online by Cambridge University Press:  27 February 2017

J.-G. Castel
J.-G. Castel*
Affiliation:
Osgoode Hall Law School, York University, Toronto
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Extract

On January 2, 1988, the President of the United States and the Prime Minister of Canada signed the Canada-United States Free Trade Agreement (FTA). It was implemented by appropriate legislation in both countries and came into force on January 1, 1989. This Agreement is the most comprehensive of a series of projects and treaties on free trade between Canada and the United States over the last 135 years.

Type
Current Developments
Information
American Journal of International Law , Volume 83 , Issue 1 , January 1989 , pp. 118 - 128
Copyright
Copyright © American Society of International Law 1989

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References

1 H.R. Doc. No. 216, 100th Cong., 2d Sess. 297 (1988), reprinted in 27 ILM 281 (1988) [hereinafter FTA]. Note that some of its provisions will come into force progressively over a 10-year period. See Art. 401, Tariff elimination.

2 In the United States, see United States-Canada Free-Trade Agreement Implementation Act of 1988, Pub. L. No. 100–449, especially title IV, §§401–410, 102 Stat. 1851; in Canada, see Bill C-2, An Act to Implement the Free Trade Agreement between Canada and the United States of America, 34th Pari., 1st Sess. (1988) (royal assent, Dec. 30, 1988).

3 For a historical survey, see Farr, “Inner Meaning” of Free Trade, Int’l Persp., No. 4, July /August 1988, at 3.

4 FTA, Art. 102; see also Preamble.

5 Id., Arts. 105 and 501.

6 See also a few provisions scattered throughout the FTA: Art. 303 (consultation with respect to rules of origin for goods); Ann. 406.6 (consultation concerning the uniform application of rules of origin for goods); Ann. 406.7 (appeals relating to rules of origin); Ann. 406.9 (notification and consultation prior to major changes in the flow of trade); Art. 709 (consultation on agricultural issues); Ann. 705.4(10–19) (institutional procedures and arbitration panels re local support for wheat); Art. 1103 (emergency action, arbitration); Art. 1406 (services, denial of benefits); Ann. 1404.B, Art. 4 (tourism, consultation); Art. 1504 (temporary entry for business persons, dispute settlement); Art. 1608 (investment disputes); Art. 1704 (financial services, notification and consultation).

7 For an analysis of the settlement of disputes under the GATT, especially Articles XXII and XXIII, see Annex to the 1979 Understanding Regarding Notification, Consultation, Dispute Settlement and Surveillance [hereinafter 1979 Understanding], GATT, Basic Instruments and Selected Documents [hereinafter BISD], 26th Supp. 215 (1978–79); supplemented by the 1979 Understanding, id. at 210; and the 1982 Ministerial Declaration ori Dispute Settlement, BISD, 29th Supp. 13 (1982). The non-tariff-barriers agreements negotiated in the Tokyo Round also contain provisions for the settlement of disputes. Some of them follow more or less the model of the 1979 Understanding. Others contain new and more elaborate and rigorous procedures. Still others adopt specific procedures, although reference is also made to Articles XXII and XXIII. Finally, some lack detailed procedures. See generally J. Jackson, World Trade and the Law of GATT 164 (1969); O. Long, Law and Its Limitations in the GATT Multilateral Trade System (1985); R. Hudec, The GATT Legal System and World Trade Diplomacy (1975); R. Hudec, Adjudication of International Trade Disputes (1978); Hudec, The Legal Status of GATT in the Domestic Law of the United States, in 4 Studies in Transnational Economic Law 187 (1986); Hudec, GATT Dispute Settlement After the Tokyo Round: An Unfinished Business, 13 Cornell Int’l L.J. 145 (1980); Davey, Dispute Settlement in GATT, 11 Fordham Int’l L.J. 51 (1987).

8 FTA, Art. 2011 provides:

1. If a Party considers that the application of any measure, whether or not such measure conflicts with the provisions of this Agreement, causes nullification or impairment of any benefit reasonably expected to accrue to that Party, directly or indirectly under the provisions of this Agreement, that Party may, with a view to the satisfactory resolution of the matter, invoke the consultation provisions of Article 1804 and, if it considers it appropriate, proceed to dispute settlement pursuant to Articles 1805 and 1807 or, with the consent of the other Party, proceed to arbitration pursuant to Article 1806.

2. The provisions of paragraph 1 shall not apply to Chapter Nineteen and Article 2005 [cultural industries].

9 Id., Art. 1801(1–3).

10 Id., Art. 1803.

11 Id., Art. 1804.

12 Id., Art. 1805. The Commission, which is not a supranational independent authority but a binational politicized nonpermanent institution, has wide-ranging management responsibilities that include supervising the implementation of the Agreement, overseeing its further elaboration and considering any matter that affects its operation. Id., Art. 1802(1). Its powers of notification, consultation, arbitration, negotiation and decision with respect to highly contentious and politically sensitive issues will make decisions by consensus almost impossible.

13 Id., Art. 1806(1)(a).

14 Id., Art. 1103 (e.g., emergency or escape clause actions pursuant to Art. XIX of the GATT).

15 Id., Art. 1806(1)(b).

16 Id., Art. 1806(3).

17 Art. 1807.

18 Id., Art. 1807(8).

19 Id., Art. 1807(9). Note that under the FTA, contrary to GATT practice, consent of the defendant is not required before a panel is established by the Commission. See 1979 Understanding, supra note 7, para. 11.

20 FTA, Art. 1806(1).

21 Id., Art. 1807(1).

22 Id., Art. 1807(4).

23 Id.

24 GATT, Oct. 30, 1947, 61 Stat. (5), (6), TIAS No. 1700, 55–61 UNTS, Art. XXIII.

25 W., Art. XXIII(2).

26 See 1979 Understanding, supra note 7, paras. 13–14.

27 FTA, Arts. 1906–1907.

28 Id., Art. 1902(1).

29 Canada and the United States are parties to the international antidumping code (Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade, Apr. 12, 1979, 31 UST 4919, TIAS No. 9650) and the Agreement on subsidies and countervailing duties (Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement on Tariffs and Trade, Apr. 12, 1979, 31 UST 513, TIAS No. 9619).

30 Where the petitioner was the recipient of subsidies.

31 See the controversy between the United States and the European Economic Community over the common agricultural policy, analyzed by Hudec in Transcending the Ostensible: Some Reflections on the Nature of Litigation Between Governments, 72 Minn. L. Rev. 211 (1987).

32 The Agreement merely incorporates existing legal standards from the GATT.

33 Existing legislation is not subject to review to ascertain whether it conforms with the GATT provisions.

34 FTA, Art. 1902.

35 Id., Art. 1903.

36 Id., Arts. 1904, 1911.

37 Id., Art. 1801(1).

38 Id., Art. 1904(9).

39 Id., Art. 1904(14). Note that the GATT codes have time limits.

40 Id., Art. 1801(1).

41 Id., Art. 1904(5).

42 Id., Art. 1904(7).

43 Id., Ann. 1901.2(1) and (2).

44 Id., Ann. 1901.2(2).

45 Id., Art. 1904(13) and Ann. 1904.13.

46 Id., Art. 1909.

47 See Arts. 17 and 18 of the Agreement, supra note 29.

48 See Art. 15 of the Agreement, supra note 29.

49 U.S. Const. Art. III, §1: “The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.” For a good review, see Statement of Professor Andreas F. Lowenfeld before the Committee on the Judiciary of the United States Senate on the United States-Canada Free Trade Agreement Binational Dispute Settlement Mechanism (May 20, 1988). See also H.R. Rep. No. 816(IV), 100th Cong., 2d Sess. (1988).

50 See, e.g., The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972); Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974); and Mitsubishi Motor Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (where the claim was made and rejected that due process required adjudication before a U.S. court established under Article III).

51 Called the “appointment clause.”

52 FTA, Ann. 1901.2(1).

53 E.g., the body established under the Treaty Relating to the Boundary Waters and Questions Arising Along the Boundary Between the United States and Canada, Jan. 11, 1909, 36 Stat. 2448, TS No. 548.

54 British North America Act, 1867, 30 & 31 Vict., ch. 3, §§96–100, as amended. According to these sections, a tribunal is invalidly constituted unless its members (1) are appointed by the federal Government in conformity with §96; (2) are drawn from the bar of the province in conformity with §§97 and 98; and (3) receive salaries that are fixed and provided by the federal Parliament in conformity with §100. The better view is that these sections do not apply to federal courts. See generally P. Hogg, Constitutional Law of Canada 150 ff. (2d ed. 1985).