Transcript AD/CVD Cases (1987

Trading Remedies To Remedy Trade -
The NAFTA Experience
Beatriz Leycegui and Mario Ruiz Cornejo
March, 2002
Content and Purpose

Overview of Trade Remedy Measures- A look at the objective,
origin, evolution, legal framework and use or abuse of
antidumping (AD), countervailing duties (CVD) and safeguard
measures.

Trade Remedy Laws in North America- A look at how much
have NAFTA parties traded remedies to remedy trade vis a vis
themselves and third countries.

Trading remedies to remedy trade under NAFTA- A look at the
negotiation history, the description and objectives of the most
relevant commitments, and experience during the first 8 years
of the Agreement’s implementation.
AD/CVD Cases (1987 - 1999):
Total number of initiations
Total number of initiations and
measures
United States
Success ratio: 0.47
598
Mexico Success ratio: 0.52 228
Canada Success ratio: 0.70
0
100
200
225
300
Cases with measures
Cases with no measures
400
500
Number of initiations
600
700
AD/CVD cases (1987 - 1999):
“Success ratio”

Of the cases initiated by each country, those against NAFTA
partners had lower success ratios than against other
countries.
Success ratio by country
Country
Canada
Mexico
United States*
NAFTA
partners
0.61
0.43
0.32
Other
countries
0.73
0.56
0.49
* This ratio does not consider the cases concluded
because of price undertakings.
AD/CVD Cases (1987 - 1999):
Initiations by type of investigation
Mexico
United States
Countervailing
8%
Countervailing
19%
Antidumping
81%
Antidumping
92%
Canada
Countervailing
5%
Antidumping
95%
Safeguards

The only country active in the use of safeguards is the United
States: from 1995 to 2001 it has initiated 10 cases.

Canada and Mexico have not initiated a safeguard investigation since
1995.

From the initiated cases, 9 have concluded. In five cases
measures were imposed.

Canada and Mexico have been excluded from 4 of the 5
measures, since it was determined that they didn’t contribute
to the injury.
AD/CVD cases (1987 - 1999):
Initiations by country
Mexico
United States
Japan
10%
United
States
29%
Others
34%
Korea
7%
Canada
2%
South Korea
4%
Venezuela
4%
China
9%
Others
59%
China
17%
Brazil
10%
Taiwan
6%
Mexico
3%
Canada
United
States
21%
Germany
6%
Brazil
5%
Others
54%
Mexico
1%
Taiwan
4%
United
Kingdom
5%
France
4%
Canada
6%
AD/CVD cases (1987 - 1999):
Initiations by Sector
Mexico
Electrical
equipment
6%
United States
Other
21%
Base metals
36%
Other
15%
Minerals
4%
Plastics
8%
Plastics
7%
Textiles
10%
Chemicals
10%
Chemicals
20%
Electrical
equipment
11%
Canada
Footwear
5%
Other
18%
Prepared
foodstuffs
6%
Pulp and
paper
10%
Electrical
equipment
10%
Base metals
51%
Base metals
52%
Intensity in the use of AD/CVD measures



One way to infer the intensity with which each country uses
its AD/CVD tools, is simply calculating the number of cases
for each percentual point in the imports/GDP ratio.
The numbers suggest that the most intensive user against
NAFTA partners is the United States, followed by Mexico and
finally Canada.
It is interesting to note that for the three countries the
intensity ratio with respect to other countries is higher,
suggesting that they use AD/CVD measures less against
NAFTA partners.
Intensity in the use of AD/CVD
Investigating
country
Canada
Mexico
United States
Total cases NAFTA's imports/ Intensity
against NAFTA
GDP ratio
ratio
49
70
53
23.05
23.17
3.37
2.13
3.02
15.72
Total cases
against other
countries
176
158
545
Other countries
imports/GDP
ratio
9.89
7.15
8.06
Intensity
ratio
17.80
22.09
67.65
AD/CVD Initiations affecting intra-NAFTA
Trade by partner 1987-1999
20
18
Average intra-NAFTA initiations by year : 18
Canada
Mexico
United States
14
12
10
8
Average intra-NAFTA initiations by year: 8
6
4
2
0
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
Initiations
16
Chapter 19 Binational Panels - Investigated
Authority (January 1994- January 2002)
vs. DMNR o
CITT (Canada)3
19
25%
vs. SEDECO
(Mexico) 1
11
15%
Total: 75 cases
1 Secretaría de Economía (Ministry of Economy)
2 Department of Commerce and International Trade
Commission
3 Deputy Minister of National Revenue or Canadian
International Trade Tribunal
Source: Elaborated with data from the Ministry of Economy and the
Mexican Section of the Secretariat of Free Trade Agreements.
vs. DOC and ITC
(United
States) 2
45
60%
Chapter 19: Binational Panels Affected
Sectors (January 1994- January 2002)
Chemical
5
7%
Food and
Agricultural
Products
11
15%
Manufacture
15
20%
Mineral and
Metals
34
45%
Construction
10
13%
Source: Elaborated with data from the Ministry of Economy and the
Mexican Section of the Secretariat of Free Trade Agreements.
Total: 75 cases
Status of Chapter 19 Cases (January 2002)
Cases
Concluded
Withdrawn
Pending
Total
Mexico
5
3
3
11
U.S.
11
14
20
45
Canada
10
4
5
19
Total
26
21
28
75
Source: Elaborated with data from the Ministry of Economy and the
Mexican Section of the Secretariat of Free Trade Agreements.
Panels decisions (January 2002)

Of the 27 cases in which the panels have issued a decision, in
14 (52 percent) they confirmed the determinations. Of those
reviewing U.S. decisions they confirmed 42 percent; of
Canada, 80 percent; and Mexico only 20 percent.
Confirmed
Remanded
Total
Mexico
1
4
5
U.S.
5
7
12
Canada
8
2
10
Total
14
13
27
Source: Elaborated with data from the Ministry of Economy and the
Mexican Section of the Secretariat of Free Trade Agreements.
Panel´s vote (January 2002)

Of the 27 decisions rendered by binational panels, 24 of them
were adopted unanimously (89 percent); and 3 with a majority
vote. In these latter cases, in neither of them the vote splitted
according to nationality.
Unanimous
Majority vote
Total
Mexico
3
2
5
U.S.
11
1
12
Canada
10
0
10
Total
24
3
27
Source: Elaborated with data from the Ministry of Economy and the
Mexican Section of the Secretariat of Free Trade Agreements.
Average total time of Chapter 19 cases (January 2002)
Cases
Procedure
Panel
Implementation
(26 cases) integration of the decision
(38 cases)
(26 cases)
Canada (days)
522
164
148
U.S. (days)
568
303
138
Mexico (days)
843
184
260
Average total time (days)603
245
165
Source: Elaborated with data from the Ministry of Economy and the
Mexican Section of the Secretariat of Free Trade Agreements.
Chapter 19-Assessment

Time- Since the average time of binational panel proceedings

Cost- Their cost is equal or higher that U.S. and Canada’s

Expertise- Since panels comprise five experts in
is 603 days, it is not clear that they are more expeditious than
national judicial reviews. Delays are associated with panels’
integration process (average time, 245 days).
national review procedures and nearly six times higher than
those of Mexico.
international trade law, in general they are considered more
specialized than internal review bodies.
Chapter 19-Assessment

Fairness and objectivity- Since in 85 percent of the cases

Main contribution- Chapter 19 panels have contributed to
the panels vote was unanimous; only one of the 26 decisions
rendered has been challenged; and the investigating
authorities of the NAFTA Parties have complied in all cases
with the panels decisions; these have proven to be fair and
objective.
discipline the use of AD/CVD measures within the North
American region. In recent years there has been a decrease of
initiation of cases between NAFTA Parties (despite important
increases in trade), since administrative authorities have been
more careful when initiating and imposing duties against their
trading partners.
Final comments and prospective thoughts

Under a scenario in which NAFTA partners will continue to
use “trade remedies to remedy their trade” because of market
imperfections, they shall observe the principles and
obligations of the WTO Agreements and NAFTA.

NAFTA Parties shall continue negotiating multilaterally on
pending issues in order to further discipline the application of
trade remedies, reducing the discretionality that is still
present in trade remedy investigations.
Final comments and prospective thoughts

Considering the serious problems associated with the
integration of NAFTA’s Chapter 19 binational panels, it is
urgent that parties agree: on a roster of panelists; on
improving the benefits and payments offered to them; and if
necessary on substituting the present ad hoc panels by a
permanent tribunal.

Since the elimination of AD and CVD laws within NAFTA
seems unfeasible in the short and middle term, Parties should
work towards negotiating less trade-restrictive AD and CVD
rules to be applied between them and in strenghtening the
use of safeguards when required.
Final comments and prospective thoughts

Finally, a diminishment in the trading of remedies to remedy
trade among NAFTA partners will occur when:

A higher degree of specialization in the production processes is
reached within the North American region.

Consumers and domestic producers (users of intermediate goods
usually investigated), become better organized to counter the
political pressure exerted by very specific domestic industries.

The North American market becomes further integrated with the
implementation of the agreed trade liberalization.

The domestic industry of Canada, Mexico and the U.S. have better
adapted to competition and thus the reallocation of the production
factors has taken place to improve the regions’ competitiveness.

The losers of the liberalization are substantially reduced or have
disappeared.