Why Canada and Mexico don't see eye to eye on NAFTA dispute settlement

September 13, 2018

Canada has signalled it's going to the wall to defend Chapter 19. Mexico City has a different priority.

When it comes to trade dispute settlement mechanisms, Canada and Mexico agree that NAFTA needs one. They just don't agree on which one is most worth saving.

The North American Free Trade Agreement has three chapters that lay out how to resolve disputes: 11, 19 and 20.

A curious aspect of the talks to date has been that Canada and Mexico both say they want to preserve a neutral mechanism to arbitrate disputes — but each is focused on saving a different chapter.

For Canada, Chapter 19 is a "red line" — one the Trudeau government has said repeatedly it will not cross. Donald Trump is at least part of the reason.

"We need to keep the Chapter 19 dispute resolution because that ensures that the rules are actually followed, and we know we have a president who doesn't always follow the rules as they're laid out," Prime Minister Justin Trudeau told an Edmonton radio station last week.

Chapter 19 gives NAFTA nations the ability to appeal to an expert panel when what they believe are unfair charges of dumping and subsidization lead to tariffs and countervailing duties.

It's been used successfully by Canada to push back against U.S. trade actions targeting Canadian softwood lumber and, most recently, glossy paper.

In fact, Canada has used Chapter 19 no fewer than 45 times — more than either of its NAFTA partners...

This has been excerpted from the 13 September 2018 edition of CBC News.


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Topic(s): 
Rules of Origin & Trade Agreements / Trade Agreements
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