NAFTA\u27s Double Standard of Review

Chapter 19 of the North American Free Trade Agreement (NAFTA) replaced court review of U.S. antidumping and countervailing duties with binding review by special binational panels of trade experts. It requires these panels to apply the same standard of review that U.S. courts use in trade remedy cases. Despite the centrality of this requirement to the Chapter 19 panel system, these panels have not adhered to this mandate. Chapter 19 panels overturn U.S. agency rulings much more often than the courts. In fact, they apply two different standards of review: exacting scrutiny where foreign producers and governments appeal, and near-absolute deference to agencies when U.S. industries appeal. In contrast, panels have shown great deference to Canadian agency determinations (which almost invariably find dumping exists) and favor Canadian industries seeking duties as often as foreign producers seeking their reduction or elimination. Previously suggested explanations - that Chapter 19 appeals involve different facts, that U.S. courts are inept, or that U.S. industries have captured U.S. agencies - fail to explain these phenomena. Rather, these discrepancies result from conflicting views about trade laws within the U.S. government, the relatively greater incentive of the Canadian government to control the Chapter 19 process through panel appointments and political action, and a procedural structure that makes it easy for panelists to override the U.S. legislative process. Proponents of free trade have, with some reason, warmly received Chapter 19. These discrepancies, however, may reduce the credibility of international dispute settlement and impede negotiations of other agreements