Nafta Trade Remedy Legal System Study

For more than half a century, regional trade agreements and arrangements have been developing at a speed beyond MTS founders' expectation. North America Free Trade Agreement (NAFTA hereafter), which was established on January 1, 1994, is one of the most representative. It is not only the first regional free trade agreement between developed countries and a developing country, but also the most successful one.The trade remedy system has a very important position in NAFTA. By the end of March, 2007, 121 cases concerning trade remedy measures have been brought forward, occupying 98% of all the cases that NAFTA has heard. Among them, the American antidumping and countervailing case against softwood lumber from Canada brings about many frontier questions, such as the relationship between the WTO dispute settlement system and that of NAFTA, the legality of NAFTA's trade remedy system under GATT 1994, the issue of taking antidumping and countervailing measures at the same time, the issue of cross-cumulating of injury caused by dumping and subsidy and the issue of zeroing practice of dumping margin. These questions contain both procedural and substantial issues and have interested me during all my doctoral study period. I have therefore chosen some of the questions as the study objects of my doctoral dissertation.My dissertation consists of an introduction, five chapters and a conclusion, each part organized with its own logic.The introduction mainly covers the purposes and objects of the study, the current domestic and international situations of the research and the methodology I have adopted in this dissertation.Chapter one focuses on the mode that NAFTA adopts with respect to trade remedy legal systems. NAFTA comes from CUSFTA. Consequently, it is necessary to study the background information concerning CUSFTA's coming into being and the negotiations concerning its trade remedy legal system. Historical research method is adopted when analyzing the profound political and economical backgrounds that led to the appearance of CUSFTA and NAFTA; comparative research method is used when analyzing the transition of the trade remedy system from CUSFTA to NAFTA. At the same time, cases heard by the CUSFTA trade remedy dispute settlement body are studied in detail with statistical method. Through the analysis, we can draw the following conclusions: (i) the NAFTA trade remedy system is the result of the political and economic competition between the United States and Canada; (ii) it is also the result of Canada's effort to keep the United States from abusing antidumping measures and the result of the USA's effort to maintain its own trade remedy legal system; (iii) Canada has succeeded in taking advantage of the CUSFTA's dispute settlement mechanism related to trade remedies and has realized its anticipative objects. With the mode of NAFTA's trade remedy system, according to the WTO statistics, there are 139 effective regional trade agreements notified to the GATT and WTO from GATT1947 to March 1, 2007. Most trade remedy measures of the above regional trade agreements are studied in a comparative way and the following conclusion is drawn: most regional trade agreements aiming at establishing custom unions (CU) have abolished all their trade remedy measures within the region while agreements aiming at establishing free trade areas (FTA) have either preserved all the trade remedy measures in the areas, or have abolished one or two trade remedy measures. As a free trade area agreement, NAFTA adopted the method used by most free trade agreements, i.e. preserving the antidumping, countervailing and safeguard measures.Chapter two focuses on the safeguard measure system of NAFTA. As mentioned above, most free trade agreements have preserved the safeguard measure systems within the areas, yet different modes are formed based on different concrete regulations. After comparative study of most regional trade agreements notified to the WTO, I came to the following conclusion: (i) global safeguard measures adopted by most free trade agreements are allowed by NAFTA; (ii) NAFTA does not give up regional safeguard measures, that is, bilateral actions. Section one is about the global safeguard measures adopted by NAFTA. Detailed analysis is made as to the applicable objects of the global safeguard measures allowed by NAFTA, different treatment to NAFTA's contracting and non-contracting parties and conditions for exempting a contracting party from safeguard measures, etc. After the analysis, I came to the conclusion: though applicable, WTO safeguard measures are modified in NAFTA, exempting the contracting parties under certain circumstances from safeguard measures. However, this conclusion leads to another question: do the global safeguard measures adopted by NAFTA violate the non-discrimination principle of the WTO safeguard measures? Section two discusses bilateral safeguard measures adopted by NAFTA. The application and rationality of bilateral safeguard measures are analyzed around the transition period. The conditions for applying and the forms of bilateral safeguard measures, and the bilateral safeguard measures concerning textiles in NAFTA are also analyzed. The conclusion is that bilateral safeguard measures taken before and after the transition period are rational. Section three is about the dispute settlement concerning NAFTA's safeguard measures. Antidumping measures, countervailing measures and safeguard measures have different dispute settlement system in NAFTA. Chapter 20 of NAFTA applies to disputes arising from safeguard measures. The characteristics of the dispute resolution mechanism in Chapter 20 are analyzed in detail and cases that have been brought forward are studied. The conclusion is that the dispute resolution mechanism concerning NAFTA's safeguard measures put more emphasis on political resolution.Chapter three focuses on anti-dumping and countervailing system adopted by NAFTA. A comparative study of most free trade agreements notified to the WTO is made to find the mode of antidumping and countervailing system adopted by NAFTA. Then it reveals the uniqueness of the anti-dumping and countervailing system adopted by NAFTA, i.e. NAFTA has no unified anti-dumping and countervailing rules, but applies anti-dumping and countervailing laws respectively. Section one and two discuss anti-dumping and countervailing system adopted by NAFTA. The anti-dumping and countervailing issues have been comprehensively provided in Chapter 19 of NAFTA. According to the analysis of legal application of NAFTA's anti-dumping and countervailing system and the dispute settlement mechanism in Chapter 19 of NAFTA, the following conclusion is drawn: (i) there is no unified substantive and procedural anti-dumping rules and countervailing rules in NAFTA; (ii) NAFTA provides unique dispute settlement mechanism specially applied to anti-dumping and countervailing system, that is, the Binational Panel Review (BPR) mechanism. The government or citizens of a contracting party can require the establishment of a Binational Panel to review the final decision made by anti-dumping and countervailing investigation body of the other contracting party. The initial purpose of such review is to replace the domestic judicial review of contracting parties in some circumstances. Section three is about the implementation and reform of Chapter 19 of NAFTA. Statistical method and comparative research method is used when analyzing the working circumstance of the Binational Panel provided in Chapter 19 of NAFTA. At the same time, the attitude and response of the United States and Canada to the dispute settlement mechanism provided in Chapter 19 of NAFTA is analyzed in detail. The following conclusion is drawn: (i) Canada is the biggest beneficiary of the dispute settlement mechanism provided in Chapter 19 of NAFTA; (ii) the dispute settlement mechanism provided in Chapter 19 of NAFTA does not as sufficient and convenient as that in CUSFTA period, reform is imminent; (iii) The United States respond to dispute settlement mechanism provided in Chapter 19 of NAFTA actively.Chapter four focuses on the relationship between NAFTA's dispute settlement mechanism and that of the WTO. The motive to study this issue was arising from the jurisdiction overlap problems occurred in recent years between the dispute settlement mechanism of the WTO and that of NAFTA. This chapter contains two sections. Section one discusses the attitude of WTO and regional trade agreements toward the choice of dispute settlement forum, the legal basis of the dispute settlement forum choice of NAFTA contracting parties, and the circumstance of such choice. The following conclusion is drawn by comparative research and empirical research method: (i) regional trade agreements give the conflicting parties right to choose the dispute settlement forum, but WTO does not have such provision; (ii) the choice to settle dispute in WTO of NAFTA's contracting parties has legal basis; (iii) the contracting parties and their citizens submit some anti-dumping and countervailing disputes to WTO and NAFTA simultaneously. Section one and two are about the cases submitted to WTO and NAFTA successively and their jurisdiction. With respect to the issue about successively submission of disputes arising from the same incident to WTO and NAFTA, its nature, problems and the harmonization of jurisdiction between NAFTA dispute settlement body and that of the WTO is fully analyzed mainly by empirical analysis of the typical cases. According to the analysis, the following conclusion is drawn: (i) the action of NAFTA's contracting parties to submit cases arising from the same incident successively dose not cause jurisdiction confliction; (ii) WTO should amend the DSU and bring into the "choice of forum" clause provided in regional trade agreements; (iii) the WTO and regional dispute settlement forum should apply the principle of judicial economy in each period of trial, including jurisdiction. Chapter five focuses on the use of NAFTA's beneficial experience as a reference for trade remedy system in regional trade agreements between China and WTO members and non-WTO members. This chapter reveals the research purpose of this dissertation. The purpose of a in-depth study on NAFTA's trade remedy system is to improve the WTO system and regional trade agreements on one hand, and on the other hand to provide reference for China's choice on trade remedy system mode in regional trade agreements. Section one introduces the free trade agreements that China has already signed and those in ongoing negotiations, and analyzes the modes of trade remedy system adopted in the signed regional trade agreements. The conclusion is that the regional trade agreements between China and other contracting parties are free trade agreements. In addition to CEPA, all free trade agreements between China and other contracting parties have allowed to adopt all the regional trade remedy measures. Section one also focuses on the beneficial experience of NAFTA as a reference for trade remedy system in regional agreements between China and other contracting parties. The safeguard measures, anti-dumping and countervailing system in regional agreements between China and other contracting parties are analyzed in detail, and compared with relevant provisions of NAFTA. Section two discusses dispute settlement mechanism concerning trade relief measures in free trade agreements between China and other contracting parties. It analyzes the provisions on choice of forum in existing free trade agreements between China and other contracting parties, and the dispute settlement procedure of each free trade agreement between China and other contracting parties and improvement of such procedure. The conclusion is that some dispute settlement provisions in China-Chile free trade agreement and Pakistan-China free trade agreement are worthy of reference by other regional trade agreements. The last section is about the future choice of trade remedy system in regional trade agreements between China and other contracting parties. According to the preceding analysis, it directs China toward the regional trade remedy system which is beneficial to each contracting party in the future, and expects to realize the purpose of regional free trade as soon as possible and gain a win-win situation between the contracting parties by appropriate trade remedy system.The conclusion of this dissertation focuses on an important question, that is, in theory and practice, there are different views on trade remedy system, especially on anti-dumping system, the pros and cons is uncompromising. With no intention to make economic analysis of trade remedy system, all the research is based on general theories, that is, the anti-dumping and countervailing system is legal tools created to counteract unfair competitive practices. The final conclusion is that the contracting parties of regional trade agreements have the right to take Countermeasures for injury caused by unfair trade practices and a surge in imports within the region. The adoption of trade remedy measures in regional trade complies with the fundamental purpose of WTO.