TRADE DISPUTE RESOLUTION: WHAT ARE THE MECHANISMS?

Mary E. Burfisher, ERS/USDA

Terry Norman, Ag. & Agrifood Canada

Renee Schwartz, FAS/USDA

WHY ARE TRADE DISPUTE MECHAMISMS IMPORTANT?

Create orderly, rules-based system that facilitates trade

Protect the interests of all parties Prevent disputes from occurring or

escalating

DISPUTE RESOLUTION MECHANISMS FORMAL:

Legalistic, strictly specified rules of procedure and timetables; consultations, panel, win/lose outcomes

INFORMAL:Ad hoc processes defined by participants, consensus outcomes

FORMAL MECHANISMS

NAFTA Chapter 19 on AD, CVD NAFTA Chapter 20 on interpretation of

agreement National AD or CVD actions WTO dispute settlement process

Chapter 19 and 20 process

Consultations (ch. 19) or meeting of Commission (ch. 20) provide a venue for mediating a resolution

Arbitral panels are formed when consultation fails, legalistic process with a win/lose outcome

Appeal process: Decisions can be appealed (ch.19) or reconsidered (ch. 20)

Ch. 19 Actions

Panel reviews

Mexican AD on US HFCSUS refined sugar exports to CanadaUS AD on Canadian swine exports Mexican fresh cut flower exports to US

Disputes Settled under Ch. 20

Two disputes:

Canadian TRQ’s on poultry, dairy, barley and margarineU.S. safeguards on broom corn brooms from Mexico

NATIONAL AD OR CVD ACTIONS NAFTA members have independent

processes, but must abide by Chapter 19 disciplines

AD are imposed when imports sold at less than fair market value and domestic injury occurs

CVD are imposed to offset foreign subsidies if domestic injury occurs

WTO Panel Process

NAFTA members can pursue matters covered by both NAFTA and WTO, but can only use one venue at a time

Consultations provide opportunity to mediate a resolution

Panel is formed if consultations fail Outome is win/lose, and may be

appealed

WTO panels

Canadian fluid milk TRQ and certain milk pricing practices

Mexican HFCS duties

INFORMAL VENUES

Government to government negotiations Industry to industry negotiations Technical consultation/assistance

Governmental

Standing committees Committee on Agricultural Trade Nafta SPS Committee

U.S.-Canada ROU Understanding

U.S.-Mexico tomato agreement

PRIVATE INDUSTRY NEGOTIATIONS

Advisory Committee on Private Commercial Disputes regarding Agricultural Goods : Fruit and Vegetable Dispute Resolution Corp.

Northwest Cattle Project US-Mexican grape industry agreement

on labeling

Technical Consultation, Assistance

U.S.-Mexico Emerging Markets Project

NAFTA SPS Committee

CONCLUSIONS

Evolving mechanisms for trade dispute resolution help to prevent disputes from occurring or escalating

Voluntarism is foundation of both formal and informal mechanisms

Trade dispute resolution mechanisms cannot deal effectively with differences that were unresolved when negotiating the pact