On 4 September 2019, a NAFTA binational panel established under Chapter 19 of the NAFTA issued a decision remanding the injury determination of the U.S. International Trade Commission (ITC) in the Softwood Lumber from Canada anti-dumping and countervailing duty investigation. This is the ninth binational panel decision in the long-running Softwood Lumber dispute, with seven decisions previously being issued under the NAFTA and two decisions under the precursor to the NAFTA, the Canada-US Free Trade Agreement (CUSFTA). There was also one Extraordinary Challenge Committee proceeding under Chapter 19 of the CUSFTA, which is a special procedure that was invoked by the United States to challenge the decision of a Softwood Lumber binational panel.
The binational panel process is unique to North America. In contrast to the state-to-state dispute settlement provisions in other trade agreements that assess compliance with the international rights and obligations set out in those agreements, this process replaces the domestic judicial review procedures in Canada, Mexico and the United States with binational panels for matters relating to anti-dumping and countervailing duty determinations. Rather than assessing compliance with the international rights and obligations under the NAFTA, a binational panel assesses whether determinations are “in accordance with the anti-dumping or countervailing duty law of the importing Party” — in this instance the law of the United States.
Five panelists make up a binational panel. They are normally chosen from rosters of qualified individuals that are created by each of the NAFTA countries. In this instance, the panelists selected were three Canadians and two Americans, with an American Chairing the panel. The panel’s decision was unanimous.
The panel assessed the “injury” determination of the ITC, the two major components of which are (i) the adverse impact on the U.S. domestic softwood industry, and (ii) the existence of a causal linkage between the dumped and subsidized imports and the adverse impact. The panel remanded back to the ITC for its reconsideration the following 12 elements of its determination, directing the ITC to:
The panel found that the ITC’s findings of adverse impact and causation were lawful and supported by substantial evidence in light of its determinations regarding the above remanded elements. However, the panel further directed that if the ITC reaches a different finding or conclusion on a particular issue in any of the foregoing remands, then it must determine and explain what effect such reconsideration has on its adverse impact and causation analyses.
The ITC has 90 days to submit a Redetermination on Remand that addresses the above-referenced issues. The panel can then review the revised determination and either affirm it or issue a further remand on some or all of the elements of the revised determination. There were multiple remands in the two previous binational panel proceedings on ITC injury determinations in Softwood Lumber (three remands in the 1993-1994 review; and three remands in the 2003-2004 review). Thus, it is possible that there will be multiple remands in this proceeding. If so, this is just the first step in the process, and the final outcome has yet to be determined.
Tereposky & DeRose regularly provides advice on NAFTA matters and our lawyers are experienced in binational panel reviews in Canada, Mexico and the United States. Should you have any questions regarding binational panel reviews, we are at your disposal.