NAFTA dispute mechanism in jeopardy following U.S.-Mexico deal

The Canadian Pork Council is a strong supporter of Chapter 19 and industry leaders believe that NAFTA 2.0 should include a chapter on how to settle disputes. | File photo

Over the last three decades, the dispute resolution mechanism of the North American Free Trade Agreement has been used about 120 times.

Of those cases, about 15 were related to the agri-food sector, including decisions on the trade of beef, pork, live swine, durum wheat and raspberries.

The dispute resolution section of NAFTA, often called Chapter 19, has been particularly important for Canada’s pork industry. Since 1989, when the Canada-U.S. Free Trade Agreement took effect, there’s been seven cases involving live swine and chilled and frozen pork, based on data from the NAFTA Secretariat.

Consequently, the Canadian Pork Council is a strong supporter of Chapter 19 and industry leaders believe that NAFTA 2.0 should include a chapter on how to settle disputes.

“It does, overall, make the entire deal stronger,” said Gary Stordy, CPC director of corporate and government relations. “It’s not just for agriculture. It’s for any company or commodity … or in any product’s interest, to have that (chapter) in place.”

Chapter 19 is now in jeopardy because of the tentative trade agreement between the U.S. and Mexico, announced August 27.

The bilateral deal, according to media reports, may eliminate Chapter 19 from NAFTA or substantially weaken the dispute resolution process.

Federal Foreign Minister Chrystia Freeland, who rushed to Washington, D.C., this week for high pressure negotiations on the three country NAFTA deal, has said that maintaining the dispute mechanism is a top priority. The U.S. would like to rip Chapter 19 from NAFTA because some see it as an infringement on America’s sovereignty.

The dispute resolution mechanism is a tool to review “the fairness of anti-dumping and countervailing duties,” the National Post reported.

For Canada, Chapter 19 is a check on U.S. power.

“It’s quite important for a couple of reasons,” said Chris White, president and chief executive officer of the Canadian Meat Council. “It’s the independence. You’ve got a bi-national panel that looks at it. That takes a lot of the political dimensions out of it…. If you look at the scale we’re competing against with the Americans … (it’s important because) we know we’re disadvantaged at the outset.”

If Freeland and the federal government do agree to a new NAFTA without a Chapter 19, Canadian companies and industries would have to rely on the World Trade Organization and U.S. courts to challenge American duties and barriers to trade.

“Both of those … they can be fairly lengthy ways of solving a problem,” Stordy said.

“Chapter 19 is of interest to our sector, just because we’ve gone through situations where it actually helped.”

Freeland and Prime Minister Justin Trudeau have taken the position that the federal government will walk away from the NAFTA talks rather than sign a bad deal.

The question then becomes: if there’s no Chapter 19, is NAFTA 2.0 a bad deal?

White said that’s difficult to answer because there may be provisions in the Mexico-U.S. deal that would compensate for the loss of the dispute resolution process.

“(But) the industry would be concerned if Chapter 19 was taken out completely, and there were no provisions to offset (it’s) removal.”


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