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? n Create orderly, rules-based system that facilitates trade n Protect the interests of all parties n Prevent disputes from occurring or escalating

DISPUTE RESOLUTION MECHANISMS n FORMAL: Legalistic, strictly specified rules of procedure and timetables; consultations, panel, win/lose outcomes n INFORMAL: Ad hoc processes defined by participants, consensus outcomes

FORMAL MECHANISMS n NAFTA Chapter 19 on AD, CVD n NAFTA Chapter 20 on interpretation of agreement n National AD or CVD actions n WTO dispute settlement process

Chapter 19 and 20 process n Consultations (ch. 19) or meeting of Commission (ch. 20) provide a venue for mediating a resolution n Arbitral panels are formed when consultation fails, legalistic process with a win/lose outcome n Appeal process: Decisions can be appealed (ch.19) or reconsidered (ch. 20)

Ch. 19 Actions n Panel reviews Mexican AD on US HFCS US refined sugar exports to Canada US AD on Canadian swine exports Mexican fresh cut flower exports to US

Disputes Settled under Ch. 20 n Two disputes: Canadian TRQ’s on poultry, dairy, barley and margarine U.S. safeguards on broom corn brooms from Mexico

NATIONAL AD OR CVD ACTIONS n NAFTA members have independent processes, but must abide by Chapter 19 disciplines n AD are imposed when imports sold at less than fair market value and domestic injury occurs n CVD are imposed to offset foreign subsidies if domestic injury occurs

WTO Panel Process n NAFTA members can pursue matters covered by both NAFTA and WTO, but can only use one venue at a time n Consultations provide opportunity to mediate a resolution n Panel is formed if consultations fail n Outome is win/lose, and may be appealed

WTO panels n Canadian fluid milk TRQ and certain milk pricing practices n Mexican HFCS duties

INFORMAL VENUES n Government to government negotiations n Industry to industry negotiations n Technical consultation/assistance

Governmental n Standing committees Committee on Agricultural Trade Nafta SPS Committee n U.S.-Canada ROU Understanding n U.S.-Mexico tomato agreement

PRIVATE INDUSTRY NEGOTIATIONS n Advisory Committee on Private Commercial Disputes regarding Agricultural Goods : Fruit and Vegetable Dispute Resolution Corp. n Northwest Cattle Project n US-Mexican grape industry agreement on labeling

Technical Consultation, Assistance n U.S.-Mexico Emerging Markets Project n NAFTA SPS Committee

CONCLUSIONS n Evolving mechanisms for trade dispute resolution help to prevent disputes from occurring or escalating n Voluntarism is foundation of both formal and informal mechanisms n Trade dispute resolution mechanisms cannot deal effectively with differences that were unresolved when negotiating the pact