Is There a NAFTA Chapter 19 Compromise?

The U.S. wants to "eliminate" NAFTA Chapter 19; Canada and Mexico want to keep it. It's hard to find a compromise between these two positions, but I gave it a shot with this proposal: 

Regardless of whether Chapter 19 was justified initially, a long time has passed since then, and it is worth examining whether the original problems Canada sought to address still exist. With that in mind, the parties could commit to two related items as part of the NAFTA renegotiation.

First, they could do a thorough investigation of how Canadian, Mexican and U.S. courts have been carrying out their review of anti-dumping and countervailing duty determinations (and compare those reviews to the Chapter 19 ones).

Canada's concerns about court reviews stem from the 1980s, but the current situation is unclear. These courts are still hearing appeals of determinations related to all other countries, so there is plenty of material to look at. 

In this regard, a commission of experts from all three countries could study a number of items: the outcomes of domestic court reviews; the quality of these courts' reasoning; and the timeliness of the decisions. This would provide an evidentiary basis for evaluating the Chapter 19 process, to see if it is still needed. 

The commission could make recommendations for improvements to the domestic court review process, including related to judges' training in this specialized area. If there is a problem with domestic courts, the ideal solution would be to fix that problem for all countries, rather than to bypass the process for just a couple of them.

Second, the parties could plan for the possible expiration of Chapter 19 after a defined period of time (five or 10 years is reasonable). This expiration could happen automatically, or it could be tied to the expert commission's report.

For example, upon the issuance of the report, Chapter 19 could be set to expire unless all three NAFTA parties voted to keep it; or each party could be given the ability to opt out.

It is also worth emphasizing that the real problem with anti-dumping and countervailing duties may be the underlying statutes and regulations, rather than domestic courts. A review of the policies set out there, and the agencies' application of them, may be the most productive course of action.

In this regard, Article 1907 of the Canada-U.S. Free Trade Agreement provided for the establishment of a working group that would develop a substitute system for dealing with "unfair" pricing and government subsidies.

In other words, it was intended to take on the problems more directly than the binational panel system did. As part of the NAFTA renegotiation, this idea could be revived and the working group reconstituted. 

Obviously, this won't make either side completely happy (which is why it is called a compromise), but maybe there's just enough in here for both sides that if Chapter 19 is one of the last items on the negotiating table, something along these lines could be the solution.