Saving NAFTA Chapter 19: Was it worth it?
Canada’s trade dispute track record at odds with government’s enthusiasm to save binational review panels in USMCA. Many Canadians, including dairy farmers, metalworkers and consumers facing higher drug prices, may come to see saving NAFTA Chapter 19 as a hollow victory, according to a new report from the Canadian Centre for Policy Alternatives.
Canada’s success using NAFTA’s Chapter 19 dispute settlement mechanism is modest at best, the report finds, and the binational review panels have been incapable of resolving bigger Canada-U.S. trade disputes. The new study questions whether salvaging Chapter 19 in the just-concluded U.S. Mexico Canada Agreement (USMCA) was worthwhile.
“Chapter 19’s almost iconic status in Canada, especially among long-time NAFTA supporters and past negotiators, should not escape empirical scrutiny,” says Scott Sinclair, trade policy researcher at the CCPA and author of the report. “The record shows that despite Canada’s portrayal of Chapter 19 as a crowning achievement of NAFTA, it was flawed from the beginning.”
Since 1994, Canadian exporters have succeeded in getting trade relief in 12 complaints under NAFTA Chapter 19. Only seven of these wins were directly attributable to the Chapter 19 process, and the last of these occurred nearly 15 years ago, the study notes. In the five other successful cases, Canadian exporters won interim relief from panel decisions, but the trade disputes were ultimately resolved independently of the Chapter 19 panel process.
Other findings from the study include:
- Canadian exporters have brought 54 complaints against the U.S. trade authorities, but more than half (30) were terminated before any panel decision was reached;
- Delays in the binational panel process have increased well beyond the prescribed 315-day limit for a first decision, rising to an average of 1,219 days for the period from 2009 to 2013;
- Final panel decisions have taken even longer—up to 4.5 years in the 2002 softwood lumber dispute, which was ended by the 2006 Softwood Lumber Agreement.
NAFTA Chapter 19’s flawed track record suggests that the price paid to protect it was too high. It would have been more beneficial for Canada to have yielded less ground in other areas under negotiation, including market access for supply managed agriculture, monopoly protections for U.S. pharma companies, and relief from Trump’s “national security” tariffs on aluminum and steel.
