Dispute Resolution Provisions of the Canada-United States Free Trade Agreement

Dispute resolution is a major focus of the recently signed Canada-United States Free Trade Agreement. This focus was heavily influenced by two factors. The first is a significant continuing concern about the dispute resolution procedures and mechanisms under the General Agreement on Tariffs and Trade (GATT). The second factor is the general Canadian perception that trade proceedings under United States law are substantially influenced by political concerns and that under a trade agreement, Canadian businesses would need some protection from United States trade regulation. The general dispute resolution provisions of the Free Trade Agreement, which are found primarily in Chapter 18, embody elements which have worked well in the past in resolving disputes between the United States and Canada. A much more detailed dispute resolution approach is found in Chapter 19 of the Agreement. This Chapter establishes a procedure for binational review of determinations by government agencies in the United States and Canada on dumping and subsidy complaints under domestic law. As Chapter 19 does not undertake to deal with underlying issues, particularly differences on national approaches to trade policy and subsidization of domestic industry, Chapter 19 is only an interim measure. The long-term success of the Free Trade Agreement may well depend on the commitment of the United States and Canada to resolve these important underlying questions.