Constitutionality of NAFTA dispute settlement system challenged

Constitutionality of NAFTA dispute settlement system challenged    The U.S. lumber industry is challenging the constitutionality of a dispute settlement system under the North American Free Trade Agreement.
   The NAFTA settlement system, also known as Chapter 19, allows bi-national panels of individuals to make binding decisions about the application of U.S. law to U.S. unfair trade findings.
   The U.S. lumber industry, represented by the Washington-based Coalition for Fair Lumber Imports, said the NAFTA settlement system’s actions are contrary to due process and other constitutional requirements. The coalition filed a 47-page complaint with the U.S. Court of Appeals for the District of Columbia Circuit on Sept. 13.
   “The Constitution does not permit these panels to be the final arbitor of whether U.S. law provides for relief from unfair subsidies and dumping for U.S. producers and workers,” said Coalition Chairman Steve Swanson in a statement. “The challenge is against the Chapter 19 dispute mechanism, not the NAFTA as a whole.”
   U.S. courts ordinarily decide appeals of findings that imports are subsidized or dumped. NAFTA Chapter 19 made findings regarding Canadian and Mexican imports that can be appealed only to panels of individuals, some of whom are not U.S. citizens and none of whom is accountable within the U.S. government, the coalition said.
   The coalition pointed out that nothing like Chapter 19 has been included in other trade agreements, such as the recent Dominican Republic-Central American Free Trade Agreement. The U.S. Justice Department also warned back in 1988 that the Chapter 19 system in NAFTA would raise constitutional questions.
   In recent years, the U.S. government has repeatedly found that Canadian lumber imports are subsidized and dumped and threaten economic harm to the U.S. lumber industry. The World Trade Organization has approved these findings, and countervailing and antidumping duties have been imposed on Canadian lumber imports since 2002.
   The coalition noted that a NAFTA dispute panel exceeded its authority when it directed the U.S. International Trade Commission to reverse a finding that unfair imports of Canadian lumber threaten U.S. industry. The U.S. government requested that one panelist be removed because of a conflict of interest, but this person stayed on the panel.
   “As NAFTA panels threaten to subvert application of the trade laws to unfair lumber imports, we must enforce our constitutional right to due process and accountable decision-making,” Swanson said.
   “All that the U.S. industry has ever requested is an end to Canadian lumber subsidies and dumping through open and competitive timber and log markets,” Swanson added. “The U.S. industry vigorously supports the U.S. government’s pursuit of free trade principles and a negotiated settlement based on reasonable Canadian commitments to timber policy reform. Until then, we will defend our rights to relief under U.S. law.”
   However, the leaders of both the U.S. and Canadian chambers of commerce oppose the U.S. lumber industry’s challenge to the constitutionality of the NAFTA dispute resolution process.
   “This would be a grave mistake,” said Canadian Chamber President Nancy Hughes Anthony and Thomas J. Donohue, president of the U.S. chamber, in a joint Sept. 9 statement. “The constitutionality of NAFTA’s Chapter 19 dispute resolution has been supported time and again by the highest U.S. authorities, including the Congress when it approved NAFTA and its predecessor, the Canada-U.S. Free Trade Agreement, which included very similar dispute resolution procedures.”
   They said “careful reviews” by the U.S. House Judiciary Committee, the Congressional Research Service, and American Bar Association agreed that these procedures are constitutional.
   Hughes and Donohue warned that the “stakes are high,” citing that the U.S.-Canada trade relationship generates $1.2 billion in cross-border trade daily. The 20-year dispute over Canadian softwood lumber imports now “threatens to sour the entire U.S.-Canada economic partnership, including the 96 percent of trade that moves friction free, to great cost of all our citizens,” the chamber presidents said.