Resolving Disputes: NAFTA, Chapter 19, and Trade

Resolving Disputes: NAFTA, Chapter 19, and Trade

September 5, 2018 2:57pmET

Prime Minister Justin Trudeau told reporters yesterday that Canada will “hold firm” on NAFTA’s Chapter 19 dispute settlement system. And as talks continue with the United States this afternoon, Foreign Affairs Minister Chrystia Freeland repeated the pledge in Washington.

The Trump administration, meanwhile, has called for elimination of the Chapter 19 mechanism since the beginning of NAFTA talks last summer.

Chapter 19: What It Does

Chapter 19 of NAFTA empowers independent panels to issue binding decisions for cross-border disputes over unfair trading practices such as dumping or countervailing duties.

This 2017 CPAC video explains Chapter 19 and the dispute resolution process:

More than 100 decisions relating to Chapter 19 and other provisions have been handed down over the course of the agreement. Disputes have ranged from softwood lumber, steel products, and kitchen appliances to baby food, beer, and sugar.

Canada has often been successful at Chapter 19 panels. But Ottawa lost its most recent challenge, in 2015: U.S. duties on glossy paper used for flyers and newspaper inserts.

American opponents of Chapter 19 panels, such as the U.S. Lumber Coalition, have argued they violate the U.S. Constitution and national sovereignty.

Without Chapter 19, a Canadian complaint about U.S. trade practices would rely on the American court system.

Chapter 19: The History

Dispute resolution formed a major part of the original Canada-U.S. free trade negotiations in the 1980s — and U.S. hesitation for such a measure nearly prevented an agreement in October 1987. In the end, Chapter 19 became part of the Free Trade Agreement that preceded NAFTA.

Here’s how former prime minister Brian Mulroney remembered those tense days in a 2013 CPAC interview:

-Andrew Thomson