Eliminating NAFTA's chapter 19: A dealbreaker?

By Yves Faguy July 25, 201725 July 2017

Eliminating NAFTA's chapter 19: A dealbreaker?

 

Robert Fife and Steven Chase report today that Ottawa is insisting that removing Chapter 19 dispute-resolution panels from the NAFTA accord is a deal-breaker and is prepared to walk away from negotiations if the Trump administration keeps pressing its case on the issue.

Robert Wolfe, in a recent Policy Options piece, wonders whether Canada isn’t simply posturing:

It would be hard for Canada to accept absent an alternative, but no new system could be devised quickly. Canada fought hard for this provision, but has used the current rules only three times in the last decade. Is it worth much to Canada? The answer hinges on why its use has declined. If its existence restrains the use of trade protection measures against Canada (which could be why lobbies like the softwood lumber industry want it eliminated), then taking it away would be a bad idea. Alternatively, as cross-border supply chains grow in importance, maybe trade protection measures that are self-defeating are behind the decline. In sectors of homogenous upstream commodity trade, disputes may not be much of a constraint anyway — softwood may end in another long-term managed trade arrangement. In short, the Canadian strategy may be to make the Americans worry that chapter 19 is a landmine, while being prepared to exchange it for something more important, like relief from Buy American rules.

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