On January 1, 1989 the Canadian government began to implement the
free trade deal that it had completed with the Government of the
United States on October 4, 1987. Before signing the Canada-U.S.
Free Trade Agreement (FTA) the Canadian government had sought
exemption from the use by the United States of its 'unfair' trade
law system of anti-dumping (AD) and countervailing duties (CVDs).
While the U.S. 'unfair' trade law system is presumed to be based on
principles agreed to in the General Agreement on Tariffs and Trade
(GATT), economists, and other scholars, have contended that the
system is not being applied properly; by reducing the harm caused
by the margin of the foreigners' subsidy or dumping practices.
Instead, it is being used to provide shelter to U.S. based
corporations and industries seeking import relief, where shelter
represents a type of administered trade protection, since the
actions are undertaken and paid for by the U.S. government. This
abuse came to represent a serious problem for Canadian producers in
the1980s, who are extremely reliant on exports to the United
States. To an increasing degree they believed they had become the
target of U.S. trade law actions by their U.S. competitors. The
United States was, however, not prepared to eliminate its 'unfair'
trade law system for Canada, but instead, agreed to the setting up
of two dispute settlement mechanisms (DSMs) where Canadian and
American citizens could sit on binational panels to hear the final
review of complaints lodged against the administrative agencies
actions in either country on AD and CVD cases under Chapter
Nineteen of the FTA or on general trade disputes under Chapter
Eighteen of the FTA. This book critically examines the development
and implementation of these two DSMs over the January 1, 1989 to
August 15, 1994 period. It also provides a broader analysis of the
issues surrounding the problems of the application of the 'unfair'
trade laws, by examining the Canada-U.S. FTA's DSM systems against
the present use by Canada and the United States of the procedures
available under the 1979 GATT Subsidies Code. It also examines the
changes that have been made in the 1994 GATT Subsidies Code and the
North American Free Trade Agreement (NAFTA) which has incorporated,
with revisions, Chapter Eighteen and Nineteen as Chapter Twenty and
Nineteen of the NAFTA, respectively, and extended access to these
mechanisms to Mexico. This book primarily focuses on the
application of CVDs and the adverse international affects of
governments subsidies practices, though many of the issues raised
are also applicable to the application of AD duties and the private
subsidization activities of firms. The book finds that, first; the
Chapter Nineteen DSM may provide some short-term benefits to
Canadian producers, but for ensuring the long-run 313stability of
Canadian producers access to their U.S. markets, including the
eradication of harassment by U.S. based producers using the
'unfair' trade laws, Canada still needs to push for major changes
to the CVD and AD processes in the NAFTA mandated Working Groups.
Second, if Chapter Eighteen, or now Twenty of the NAFTA, is going
to best serve the interests of Canadian, American and Mexican
citizens, then it is going to have to be seriously revised to take
into account some type of consumer welfare criterion. As NAFTA is
presently written it has a strong bias, carried over from the
Canada-U.S. FTA, toward producer interests which may detract from
the long run interests of consumers in the NAFTA area. The ability
of groups who seek redress for the closing of markets in the NAFTA
area by the three Parties to the Agreement is very weak at the
present time.
General
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