NAFTA chapter 19 and the development of international administrative law: Applications in antidumping and competition law

Journal of World Trade

Volumn 32, Issue 1, 1998, Pages 64-83

  Winham, Gilbert R ^a  

^a DALHOUSIE UNIVERSITY   (Canada)

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EID: 11544257372     PISSN: 10116702     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (76)

1. Understanding on Rules and Procedures Governing the Settlement of Disputes, included as Annex 2 of the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, 15 April 1994; Chapter 20, Institutional Arrangements and Dispute Settlement Procedures of the North American Free Trade Agreement, 17 December 1992.
2. Understanding on Rules and Procedures Governing the Settlement of Disputes, included as Annex 2 of the Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations, 15 April 1994; Chapter 20, Institutional Arrangements and Dispute Settlement Procedures of the North American Free Trade Agreement, 17 December 1992.
3. John H. Jackson World Trade and the Law of GATT (Bobbs Merrill, Indianapolis, 1969) at 402.
4. General Agreement on Tariffs and Trade (GATT) opened for signature 30 October 1947, Article VI:1.
5. The first code was signed following the Kennedy Round in 1967. The current code is the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, included as an annex in the Uruguay Round Final Act; see note 1, above.
6. It is often argued that antidumping practice constitutes an abuse of GATT principles. See J. Michael Finger The Meaning of 'Unfair' in United States Import Policy Minnesota Journal of Global Trade Vol. 1 (Fall, 1992) at 35-56.
7. Canada-United States Free Trade Agreement, 1 January 1989.
8. Chapter Nineteen: Binational Dispute Settlement in Antidumping and Countervailing Duty Cases.
9. Chapter Nineteen: Review and Dispute Settlement in Antidumping and Countervailing Duty Matters, see NAFTA, note 1, above.
10. I.M. Destler American Trade Politics, Second Edn., (Institute for International Economics, Washington, D.C., 1992) at 154.
11. Trade Act of 1974, Pub. L. No. 93-618, as amended.
12. Finger, note 5 above, at 35.
13. Gary N. Horlick and Geoffrey D. Oliver Antidumping and Countervailing Duty Law Provisions for the Omnibus Trade and Competitiveness Act of 1988 23 J.W.T. 3, June 1989, at 5.
14. Destler, note 9 above, at 141.
15. As note 13, above.
16. Agreement on Implementation cf Article VI of the General Agreement on Tariffs and Trade, 1 July 1967.
17. Trade Agreements Act of 1979, Pub. L. No. 93-39, as amended.
18. Matthew J. Marks Recent Changes in American Law on Regulatory Trade Measures World Economy Vol. 2 (February, 1980) at 427-440.
19. Rodney deC. Grey United States Trade Policy Legislation: A Canadian View (Institute for Research on Public Policy, Montreal 1982) at 6. Grey's interpretation was confirmed by Destler: "But in retrospect the most important single change was organizational, the shift of administrative responsibility for the unfair-trade remedies laws." Destler, note 9 above, at 150.
20. Gary Clyde Hufbauer and Joanna Shelton Erb Subsidies in International Trade (Institute for International Economics, Washington, D.C. 1984) at 2. Bhagwati concurs: "Perhaps the most compelling reason for the rise of unfair trade allegations is simply the outbreak of protectionist pressures in the early 1980s in the aftermath of the second oil shock and the worldwide recession...". Jagdish Bhagwati The World Trading System at Risk (Princeton University Press, Princeton, NJ, 1991) at 14-15.
21. Gary Clyde Hufbauer and Joanna Shelton Erb Subsidies in International Trade (Institute for International Economics, Washington, D.C. 1984) at 2. Bhagwati concurs: "Perhaps the most compelling reason for the rise of unfair trade allegations is simply the outbreak of protectionist pressures in the early 1980s in the aftermath of the second oil shock and the worldwide recession...". Jagdish Bhagwati The World Trading System at Risk (Princeton University Press, Princeton, NJ, 1991) at 14-15.
22. This procedure has been labelled "protection for Congress" in Destler, note 9 above, Chapter 2.
23. For example, writing about the pre-1974 period, Stanley Metzger has noted: "... [o]ne of the most striking aspects of countervailing duty administration in the United States is the almost total lack of procedural safeguards in official proceedings. Neither statute, nor regulations make any provision for hearings and the usual ancillary procedures according substantial elements of procedural due process to parties or countries affected by a countervailing duty imposition. The lack of procedural safeguards is peculiarly disturbing in view of the very great discretion delegated to the secretary of the treasury and, through him, to the Bureau of Customs". Stanley D. Metzger Lowering Nontariff barriers: U.S Law, Practice and Negotiating Objectives (The Brookings Institution, Washington, D.C., 1979) at 105.
24. Special Import Measures Act, R.s.c. 1985, c. S-15, as amended.
25. For example, in 1987 Rugman and Anderson charged that US trade law "is in a state of virtual anarchy". Alan M. Rugman and Andrew D.M. Anderson Administered Protection in America (Croom Helm, London, 1987) at 79.
26. Rep. Sam Gibbons, Chairman of the House Subcommittee on Trade, characterized the benefits of Chapter 19 as follows: "I am a great believer in judicial review and do not tend to diminish it...[Chapter 19] offers great advantages not only to the Canadians but to us. It ensures greater judicial review in Canada. Their judicial review is not as extensive as ours, not as encompassing as ours, and this agreement with this dispute settlement mechanism will expand the rights of American parties in the Canadian system to greater judicial review." Hearing before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice of the Committee on the Judiciary, US House of Representatives, 100th Congress, Second Session, 28 April 1988, at 99.
27. The standard of review in the United States is whether the agency's decision "is unsupported by substantial evidence on the record, or [is] otherwise not in accordance with domestic law". Tariff Act of 1930, as amended, 19 U.s.c. 1516a(b)(1)(B), 1988. The standard of review in Canada is whether the agency "(a) acted without jurisdiction, acted beyond its jurisdiction or refused to exercise its jurisdiction; (b) failed to observe a principle of natural justice, procedural fairness or other procedure that it was required by law to observe; (c) erred in law in making a decision or an order, whether or not the error appears on the face of the record; (d) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it; (e) acted, or failed to act, by reason of fraud or perjured evidence; or (f) acted in any other way that was contrary to law". Federal Court Act, S.C., ch. F-7 (1985), amended by ch. 8, 1990 S.C. (Can.).
28. Chapter 19 has been used heavily. By mid-year 1997, the Chapter 19 dispute settlement system under the Canada-US Free Trade Agreement and NAFTA combined had handled 76 cases, of which 9 were current, plus three Extraordinary Challenges. See Status Report: Completed NAFTA and FTA Dispute Settlement Panel Reviews (NAFTA Secretariat, Ottawa, July 1997).
29. For example, reflecting a widely-held view in 1988, Chairman of the House Subcommittee on Trade Sam Gibbons stated in reference to Chapter 19: "... but when you get past Canada and little Israel, there are not a whole lot of targets of opportunity out there that look attractive. For instance, people say we ought to execute one of these agreements with Mexico. Well, the people that do that don't understand Mexico very well. It would be extremely difficult to have one of these agreements with Mexico because our laws and procedures are so different. Fortunately for us and for the Canadians, our laws and procedures are substantively very similar. They came from the same roots of the old English common law. So while we have different names on different agencies and slightly different procedures, the impact is almost identical in Canada and here. Such is not the case with Mexico." Hearing, note 24 above at 98-99.
30. For example, see the conference discussion published under the tide: Forum: Binational Dispute Resolution Procedures Under the Canada-United States Free Trade Agreement - Experiences to Date and Portents for the Future. Washington, D.C. April 23, 1992. New York University Journal of International Law and Politics Vol. 24 (Fall, 1991) at 341-437.
31. Decreto por el que se Crea la Ley Reglamentaria del Articulo 131 de la Constitucion Politica de los Estados Unidos Mexicanos en Materia de Comercio Exterior, D.O., 13 January 1986; and Reglamento Contra Practicas Desleales de Comercio International, D.P., 25 November 1987.
32. Decreto por el que se Crea la Ley Reglamentaria del Articulo 131 de la Constitucion Politica de los Estados Unidos Mexicanos en Materia de Comercio Exterior, D.O., 13 January 1986; and Reglamento Contra Practicas Desleales de Comercio International, D.P., 25 November 1987.
33. US International Trade Commission Review of Trade and Investment Measures by Mexico, USITC Report No. 2275 (April, 1990), at 4-17.
34. Decreto, note 29 above, Article 11.
35. This was accomplished in Article 25 of Mexico's amended trade law, which provides for notification of agency actions in the Diario Oficial de la Federation. See United States of Mexico, Foreign Trade Act of 27 July 1993 (unofficial translation).
36. For example, provisions for an administrative record are contained in Article 138 of Mexico's amended trade regulations. See Regulations to the Law on Foreign Trade, 30 December 1993.
37. Constitution of Mexico, Arts. 103, 107. See Hector Fix Zamudio A Brief Introduction to the Mexican Writ of Amparo California Western Law Journal Vol. 9 (1979) at 306.
38. Constitution of Mexico, Arts. 103, 107. See Hector Fix Zamudio A Brief Introduction to the Mexican Writ of Amparo California Western Law Journal Vol. 9 (1979) at 306.
39. NAFTA Panel Rejects Mexican Antidumping Ruling on U.S. Steel Imports Inside U.S. Trade, Vol. 13:36, 8 September 1995.
40. It is possible that the Mexican government may have been attracted to Chapter 19 as a means to stimulate domestic reform in public administration and legal practice.
41. Article 1906 of the FTA provided that Chapter 19 would remain in effect for five years, plus a two-year extension, during which Parties were expected to develop a substitute system of antidumping and countervailing duty rules that would presumably obviate the need for binational panel review. The NAFTA contained no such provision.
42. E.g. Gary Clyde Hufbauer and Jeffrey J. Schott Western Hemisphere Economic Integration (Institute for International Economics, Washington, D.C., 1994).
43. Chapter 19 is controversial in the United States, and in August 1995, nine Senators from the Senate Finance Committee forwarded a letter calling on the Clinton Administration not to extend the panel system to any other country, including Chile. It is unclear what impact this opposition will have on US trade policy, or on NAFTA accession policy. See Dole, Finance Committee Members Warn Against NAFTA Panel System, Inside U.S. Trade, Vol. 13:34, 25 August 1995.
44. U.S.-Canada Free Trade Agreement: Factors Contributing to Controversy in Appeals of Trade Remedy Cases to Binational Panels (US General Accounting Office, Washington, D.C., June 1995) at 30.
45. US trade lawyer Paul Rosenthal has taken this position, arguing that: "Allowing foreign nationals to make decisions on whether US agencies have complied with the will of Congress is a clear infringement on US sovereignty." See Rosenthal A NAFTA Scorecard: Chapter 19 Panels Reviews and the Future of NAFTA, paper presented at the International Trade Update, Georgetown University Law Center, Washington, D.C., 13-14 November 1997. An alternative position, likely more consistent with the position of the US Government, is that Chapter 19 alters the form but not the fact of judicial review, and does not diminish US sovereignty because it has not altered a pre-existing right of private parties to judicial review.
46. Steger and Robichaud, former General Counsel and Counsel of the Canadian International Trade Tribunal, note that: "...it is clear that binational panels are proving to be effective in encouraging better decisions by the investigating authorities. As a result of remands and the possibility of review, investigating authorities are learning to be more detailed and precise in their analysis of the facts and are paying more attention to careful legal reasoning in their decisions." Debra P. Steger and Joel J. Robichaud Chapter 19 of the Canada-U.S. Free Trade Agreement: The First Five Years, Paper prepared for a Symposium on International Trade, Universidad Nacional Autonoma de Mexico, Mexico City, Mexico, 18 October 1993.
47. E.g. see statement of Rep. Sam Gibbons: "... they [Canadians] have a greater trust for our courts than they do have for our administrative process, as I would guess we probably have a greater trust for their courts than we would for the administrative process. The administrative process tends to follow, from time to time, the whims of politics and the whims of winning and losing." Hearing, note 24 above, at 102.
48. John H. Jackson Managing the Trading System: The World Trade Organization and the Post-Uruguay Round GATT Agenda in Peter B. Kenen (ed.) Managing the World Economy: Fifty Years after Bretton Woods (Institute for International Economics, Washington, D.C., 1995) at 131-151, 147.
49. As note 44, above.
50. Sylvia Ostry Government and Corporations in a Shrinking World (Council on Foreign Relations, New York, 1990).
51. As note 46, above, at 40.
52. Ostry notes that by 1989, 28 countries had adopted antidumping duty laws and regulations, and that such legislation provided escape from structural adjustment reforms mandated by the World Bank. As note 46, above, at 41.
53. Article XVI:4 of the Marrakesh Agreement Establishing the World Trade Organization, Final Act, note 1, above.
54. For example, Colombia established an antidumping regime in 1990, and had two cases in 1991, three in 1992, and eight in 1993. See Gabriel Ibarra Applying a New Antidumping Regime: The Experience of Colombia 28 J.W.T. 1, February 1994, 43-57, at 55.
55. See Thomas M. Boddez and Michael J. Trebilcock Unfinished Business: Reforming Trade Remedy Laws in North America (C.D. Howe Institute, Toronto, 1993).
56. Bronckers concurs with the judgment that the standard of review in the WTO Antidumping Code is weak, noting that the Agreement "... sets forth a unique deferential standard with which the WTO is to review national antidumping decisions". Marco C.E.J. Bronckers WTO Implementation in the European Community: Antidumping, Safeguards and Intellectual Property 29 J.W.T. 5, October 1995, 73-95, at 73. For further discussion, see Philip A. Akakwam The Standard of Review in the 1994 Antidumping Code: Circumscribing the Role of CATT Panels in Reviewing National Antidumping Determinations Minnesota Journal of Global Trade Vol. 5:2 (Summer, 1996) at 277-310.
57. Bronckers concurs with the judgment that the standard of review in the WTO Antidumping Code is weak, noting that the Agreement "... sets forth a unique deferential standard with which the WTO is to review national antidumping decisions". Marco C.E.J. Bronckers WTO Implementation in the European Community: Antidumping, Safeguards and Intellectual Property 29 J.W.T. 5, October 1995, 73-95, at 73. For further discussion, see Philip A. Akakwam The Standard of Review in the 1994 Antidumping Code: Circumscribing the Role of CATT Panels in Reviewing National Antidumping Determinations Minnesota Journal of Global Trade Vol. 5:2 (Summer, 1996) at 277-310.
58. The standard of review in the United States and Canada is cited in note 25 above. Mexico has adopted a similar standard of review as the United States for antidumping cases. Case law in the United States prevents a reviewing court from substituting its judgment on interpretation of evidence for that of the administrative agency, and similar provisions exist in Canada. The conclusion is that there is not as much variance in the NAFTA and WTO standards of review as there is in the law that is being applied.
59. These guarantees are made explicit in the commitments Mexico accepted in NAFTA Annex 1904.15 (Schedule of Mexico), and are summarized at notes 32-33 above and accompanying text.
60. Sylvia Ostry and Gilbert R. Winham The Post-Uruguay Round Trade Agenda in S. Ostry and G.R. Winham (eds.) The Halifax G-7 Summit: Issues on the Table (Centre for Foreign Policy Studies, New York, 1995) at 59-84.
61. See Clair Wilcox A Charter for World Trade (Macmillan, Halifax, N.S., 1949) and Diane P. Wood The Internationalization of Antitrust Law: Options for the Future, Depaul Law Review Vol. 44:4 (Summer, 1995) at 1289-1299, 1295.
62. See Clair Wilcox A Charter for World Trade (Macmillan, Halifax, N.S., 1949) and Diane P. Wood The Internationalization of Antitrust Law: Options for the Future, Depaul Law Review Vol. 44:4 (Summer, 1995) at 1289-1299, 1295.
63. Alan Wm. Wolff Comment in Kenen, note 43 above at 154.
64. NAFTA also has a chapter on competition policy, but the commitments are minimal, and enforcement is excluded by Article 1501:3, which states: "No Party may have recourse to dispute settlement under this Agreement for any matter arising under this Article."
65. Competition Policy in the New Trade Order: Strengthening International Cooperation and Rules, Report of the Group of Experts (European Commission, Brussels, 12 July 1995).
66. Positive comity involves a request by one country to another to take action against a practice that is outside the jurisdiction of the requesting country.
67. Wood, note 56 above, at 1297-98.
68. Jackson, note 44, above, at 146.
69. Eleanor M. Fox Toward World Antitrust and Market Access American Journal of International Law Vol. 91:1 (January, 1997) at 1-25.
70. As note 63, above, at 23-24.
71. Wood, note 56 above, at 1298.
72. As noted in note 5 above, antidumping practices are often criticized as illiberal, and therefore might be considered a poor procedural model for other policy areas. However, it is the law more than the administrative procedures of antidumping that gives rise to criticism.
73. Article 13 of the Uruguay Round Antidumping Agreement requires WTO Members to provide for judicial review of final antidumping determinations.
74. Carter has noted: "The growth of government by public administrators is the most important political innovation in modern times." Lief H. Carter Administrative Law and Politics: Cases and Comments (Little, Brown and Co., Boston, 1983) at 4.
75. William F. Fox Understanding Administrative Law (Matthew Bender, New York, 1986) at 1.
76. See Rosenthal (note 41, above, at 11) for a principled argument opposing the further development of international administrative law as described herein.