Agreeing on how to disagree
Ottawa not only aims to keep dispute resolution provisions, but hopes to beef them up
OTTAWA— It’s ironic that one of the biggest disputes in redrafting a new North American free trade pact is how to resolve disputes. Then again, perhaps not. Trump says the deal is a “disaster,” “unfair,” “catastrophic” and “the worst deal ever.” Canada says it’s been an “extraordinary success.”
Trump says American workers and industries have been the biggest losers in NAFTA and his hit list of “trade objectives” includes eliminating a key dispute resolution mechanism altogether. Canada says Americans have been well-served by the deal overall, and Ottawa wants not only to keep the dispute resolution provisions but to beef them up, perhaps even add chapters on labour and environmental safeguards to the main deal, making them enforceable.
In fact, there are three dispute settlement provisions now in NAFTA:
Chapter 11 (investor-state) allows corporations to sue national govern- ments over unfair treatment or legislative practices. The remedy is a monetary payout. Canada wants to keep this provision to protect the ability of governments, including provinces and municipalities, to regulate in the public interest, say, to protect rules to protect public health or the environment. Ottawa looks to the Canada-European Union free trade deal as a model. That deal (when it comes into force next month) would submit disputes to a permanent tribunal instead of ad hoc panels.
Chapter 19 (state-to-state) allows for a binational panel (rather than a domestic court) to review antidumping and countervailing duties to determine if they were applied consistently with the laws of the country applying them. The remedy is an adjustment to duties charged, even a refund. The U.S. wants to kill it outright and use U.S. courts instead, having lost ground in challenges to Canada’s softwood lumber and agricultural quota-management systems under this provision. Canada wants to keep it.
Chapter 20, the general dispute settlement mechanism which allows one NAFTA country to challenge an- other NAFTA country before a panel for failure to comply with NAFTA commitments. Remedy is the right to retaliate by removing NAFTA preferential treatment if a breach of commitments is found and not corrected. A rarely used NAFTA section.
Getting a handle on who is the winner or loser under these provisions, however, is decidedly a mug’s game.
Canada in dispute
Chapter 11 (Investor-State) The nationalist Council of Canadi- ans claims Canada has faced 38 Chapter 11 challenges, two-thirds of them over environmental protections, making Canada “the most sued country in the developed world,” saying at the moment Canada is facing $2.6 billion in cases.
In fact, Global Affairs Canada lists 39 challenges, some of which were withdrawn or may not have gone to formal arbitration.
Chapter 19 (State-State) Canadian officials say the numbers show Canada has had some success, winning 15 out of 19 challenges against American anti-dumping or countervailing duty orders, while four of those cases were decided in favour of the U.S.
Chapter 20 Canada has been involved in six Chapter 20 cases, all with the U.S. and all of which occurred before 2002. Only one of those cases went to a panel: the 1996 Agricultural Tariffs case the U.S. brought against Canada, which Canada won. The other cases were settled or suspended.