¹ See Markle, J.S., “Slaying the Sacred Cow: Looking for Consensus in the Reform of World Agricultural Trade“ (1992) 68 North Dakota L. Rev. 609 at 609.Google Scholar See also Long, O., Law and its Limitation in the GATT Multilateral Trade System (Dordrecht: Martinus Nijholf, 1988)Google Scholar; Warley, T., “Western Trade in Agricultural Products” in International Economic Relations of the Western World 1959–1971, Vol. 1, Politics and Trade (London: Oxford University Press)Google Scholar; Jackson, J., World Trade and the Law of GATT (Indianapolis: Bobbs-Merrill, 1969)Google Scholar; GATT, Trade in Agricultural Products — Second and Third Reports of Committee II (Geneva: GATT, 1962); Evans, J., The Kennedy Round in American Trade Policy: The Twilight of the GATT? (Cambridge: Howard University Press, 1971)CrossRefGoogle Scholar; Miner, WT. and Hathaway, D. (eds.), World Agricultural Trade: Building a Consensus (Halifax, Nova Scotia: Institute for Research on Public Policy, 1988)Google Scholar; Hockman, B., “Agriculture and the Uruguay Round” (1989) 23 J. World T. 83 Google Scholar; Tangemann, S., “Will Agricul-ture Always Remain a Problem in GATT?” (1987) 22 Intereconomics 163–67.CrossRefGoogle Scholar

² Hudec, R., Enforcing International Trade Law: The Evolution of the Modem GATT Legal System 329 (New Hampshire: Butterworths, 1990).Google Scholar

³ (1993) 32 I.L.M. 297.

⁴ The Results of the Uruguay Round of Multilateral Trade Negotiations: The Legal Texts (Geneva: GATT, 1994).

⁵ The terminology to be used when referring to the new GATT as contained in the final Act has not yet crystallized. In the meantime we have adopted the following conventions: ( 1 ) GATT 1947 refers to the obligations states assumed up to and including the signing of the “Final Act.” Thus, GATT 1947 will include the obligations contained in the original GATT itself, its interpretative notes, its amendments, its schedules of tariff bindings and decisions of the contracting parties of GATT. At times, we will also refer to the Subsidiary Codes of GATT 1947 that were concluded at the end of the Tokyo Round in 1979 as part of GATT 1947, even if, technically, they are separate treaties. (2) GATT 1994 refers to the obligations that states have assumed by signing the Marrakesh Protocol (i.e., the Ministerial Decision and Declarations) and those obligations that have become effective with the coming into force of the Agreement Establishing the World Trade Organization. Technically speaking, however, the WTO Agreement contains GATT 1994 which, in its turn, incorporates GATT 1947. (There was an old woman who swallowed a spider who swallowed a fly who swallowed. . . .)

⁶ GATT 1947 contains a preamble and four parts, 38 articles in all. The Preamble and Part 1 relate to the tariff concessions granted under GATT, while Part 2 (Arts. 3 to 23) outlines obligations relating to non-tariff obligations. Part 3 (Arts. 23 to 35 ) deals with procedural and other matters while Part 4 (Arts. 36 to 38) covers principles, objectives, and commitments relating to trade and development. The principal GATT obligations are set out in Parts 1 and 2. GATT 1947 has been formally amended several times, most recently in 1965. GATT 1947 has also been “informally” amended by several understandings and agreements that have resulted from negotiations during rounds of multilateral trade negotiations. Some of the understandings are interpretations of GATT 1947 provisions and are thus binding on all members, whereas other agreements are separate but related free-standing international agreements that bind only those GATT 1947 members that sign and ratify them. The 1982 Ministerial Declaration is an example of the former, while the Subsidies Code of 1979 is an example of the latter.

⁷ In Sept. 1986, the eighth round of multilateral trade negotiations under GATT 1947 was commenced in Punte Del Este, Uruguay. The “Uruguay Round“ was completed eight years later, with the signing of the Final Act in Marrakesh, Morroco on Apr. 15, 1994. One other key date in the conclusion of the Uruguay Round was Dec. 15, 1993, when substantial agreement on the results of the round were achieved. GATT 1994, as part of the institutional package envisioned by the WTO Agreement, came into force on Jan. 1, 1995.

⁸ GATT 1994 was based considerably on the Dunkel text, MTN.TNC/W/FA (1991), a report tabled by Arthur Dunkel, the Director-General of GATT in 1991. The report, which was tabled on Dec. 20, 1991, contained, inter aha, a detailed proposal for an agricultural agreement Dunkel recognized that agriculture was the last great stumbling block in the Uruguay Round and hoped that his report would spawn consensus. Some of its ideas were brought into GATT 1994, but the success of the Uruguay Round cannot be attributed solely to this report.

⁹ Art. II. 2.

¹⁰ Those 13 agreements are: (1) GATT 1994 containing (a) GATT 1947, as amended with schedules, (b) protocols of states other than their Protocols of Provisional Application, (c) GATT 1947 waivers still in force at the time of the WTO Agreement coming into force, ( d) decisions of the contracting parties of GATT 1947, (e) six Understandings interpreting provisions of various obligations under GATT, and (f) the Marrakesh Protocol and members’ schedules of commitments and concessions to GATT 1994; (2) Agreement on Agriculture; (3) Agreement on the Application of Sanitary and Phytosanitary Measures; (4) Agreement on Textiles and Clothing; (5) Agreement on Technical Barriers to Trade; (6) Agreement on Trade-Related Investment Measures; (7) Agreement on Implementation of Art. VI of GATT 1994; (8) Agreement on Implementation of Art, VII of GATT 1994; (9) Agreement on Preshipment Inspection; (10) Agreement on Rules of Origin; (11) Agreement on Import Licensing Procedures; (12) Agreement on Subsidies and Countervailing Measures; and (13) Agreement on Safeguards.

¹¹ GATT 1994 also includes Annex 4 — Plurilateral Trade Agreements, i.e., Trade in Civil Aircraft, Government Procurement, International Dairy Arrangement, and the Arrangement Regarding Bovine Meat. These agreements are not binding on all members but only on those who ratify them.

¹² Schedule 5 — Uruguay Round Schedule of Commitments — Final Schedule of Agriculture Commitments, Part I — Most-Favoured Nation Tariff, Section 1 Agricultural Products, Section 1 — A Tariffs. E.g., Canada’s commitment includes the following: durum wheat, a reduction of tariff from $4.41/t to $190/t within access commitment and a reduction from 57.7 per cent to 49.0 per cent over access commitment; milk and cream, not concentrated or containing added sugar or other sweetening matter of a fat content, by weight, exceeding 6 per cent, a reduction of tariff from 17.5 per cent to 7.5 per cent within access commitment and a reduction from 283.8 per cent to 241.3 per cent over access commitment; beef, a reduction of tariff from 4.41 cents/kg. to free within access commitment and a reduction from 37.9 per cent to 26.5 per cent over access commitment.

¹³ NAFTA requires tariffs on all goods traded between Canada, the U.S., and Mexico to be eliminated according to each party’s schedule to Annex 302.2 or as set out in Annex 300-B (NAFTA Art. 300). The tariff elimination provision applies to all goods that meet the rules of origin as set out in Chap. 4 of NAFTA, unless provided otherwise in the Agreement.

¹⁴ Art. 302(1).

¹⁵ Art. XI, which generally prohibits quantitative restrictions, specifically permits (a) export restrictions on agricultural products to prevent critical shortages of foodstuffs; (b) import or export restrictions to maintain standards for the grading and marketing of commodities; and (c) import restrictions to enforce domestic marketing or production restriction programs, or programs that attempt to remove temporary surpluses of a certain commodity.

¹⁶ An amendment to s. 22 of the U.S. Agricultural Adjustment Act of 1933 in the 1950s permitted the President to impose whatever import restrictions were necessary when those imports interfered with any program or operation undertaken under the Act. This was in clear contravention of GATT’s prohibition on the proliferation of quantitative restrictions, and forced the Contracting Parties of GATT to grant the U.S. a waiver for the latter’s agricultural programs (BISD 3/32 (Geneva: GATT, 1955)). This waiver was used over the years to protect American production of several agricultural commodities. For a general discussion of GATT Art. XXV waivers, see Jackson, supra note 1 at 541.

¹⁷ Agreement on Agriculture, Art. 4 and state schedules.

¹⁸ Antidumping duties are imposed where the export price of a product is lower than its domestic price. A primary product is excepted from this general rule where a system exists for stabilizing its domestic price, even though this may result in the product’s export price being lower than its comparable price in the domestic market. The exception operates, however, only where the product is at times available to export markets at higher prices than in the domestic market, and where the system does not operate to “stimulate exports unduly or otherwise seriously prejudice the interests of other contracting parties.”

¹⁹ Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, Art. 2 “Determination of Dumping” and Art. 3 “Determination of Injury.”

²⁰ Ibid., Art. 11.3.

²¹ The Agreement on the Interpretation and Application of Arts. VI, XVI, and XXIII of the GATT (1947) clarified these provisions: BISD 26S/56 (Geneva: GATT, 1979). Although the definition of “more than an equitable share of world export trade“ was fuzzy, the GATT found a violation of it in the Australia/France wheat and wheat flour dispute in 1958: French Export Subsidy on Wheat Flour (Australia v. France), BISD 7S/46 (Geneva: GATT, 1958). But when the definition was later “clarified” in the 1979 Subsidies Code, the Subsidies Committee found in the GATT panel decision EEC Subsidies on Exports of Wheat Flour, BISD 31S/259 (Geneva: GATT, 1982) that the rise in market share for wheat flour from 24 per cent in 1964 to 62 per cent in 1979 did not violate this definition! GATT 1994 has eliminated this troublesome definition.

²² FTA Art. 701 (2), incorporated by reference into NAFTA by Annex 702.1.

²³ FTA Art. 701.4.

²⁴ NAFTA Art. 705(1) and (2).

²⁵ The agreement defines a subsidy as any financial contribution by a government or any public body (such as a direct transfer of funds, a tax credit, or government purchases of goods) where a benefit is thereby conferred upon the recipient: Art. 1.1.

²⁶ Subsidies Agreement, Art. 3.1.

²⁷ Ibid., Arts. 2 and 5. Injury under Art. 5 is defined on the basis of the volume of imports and the effect of the subsidies on domestic producers. If subsidies are causing injury, a member may impose a countervailing duty unless the subsidy is withdrawn: Art. 19. Any countervailing duty must be imposed in a nondiscriminatory way and not in excess of the amount of the subsidy being countervailed. The duty may remain in effect only as long as is necessary to combat the subsidy causing injury, to a maximum of five years: Art. 21. Serious prejudice is deemed to exist in the circumstances set out in Art. 6 of the Agreement, including where a subsidy is granted to cover operating losses sustained by an industry or the direct forgiveness of a debt Art. 6.1.

²⁸ Agreement on Agriculture, Art. 3. The level of reduction is set out in Part 4 of each member’s schedule and is called the “Member’s Annual and Final Bound Commitment Level.” In Canada, the support provided during the base period of 1986-88 was such that it is unlikely that any cuts will have to be made to meet the year 2000 target.

²⁹ To determine whether a member has exceeded its level, the member’s “Current Total Aggregate Measure of Support” is subtracted from the member’s “Annual and Final Bound Commitment Level” as specified in Part 4 of each member’s schedule. The terms for calculation are defined in Art. 1 of the Agreement See also Art. 6, which sets out the obligation that a member’s actual level is not to exceed the allowable level.

³⁰ Annex 2 of the Agreement on Agriculture lists the domestic support measures that do not have to be included in a member’s AMS, including, e.g., government service programs, food aid, regional assistance, and general services.

³¹ Agreement on Agriculture, Art. 13. “Green box” programs are free from threat of countervail action for nine years.

³² Art. g. The indirect subsidies that must be reduced include transport charges mandated by government that are more favourable for export shipments than for domestic shipments and subsidies intended to reduce the costs of marketing exports of agricultural products. For a complete list of the export subsidies subject to reduction commitments, see Art. 9(1) of the Agreement on Agriculture.

³³ Subsidies that are not prohibited are countervailable if they cause injury: Art. 13.

³⁴ Agreement on Agriculture, Art. 10. Thus, a member must not veil an export subsidy in such a way that it would not technically fit into an Art. 9 category, if without the veil it would be subject to reduction.

³⁵ Since there were inadequate, objective controls within the GATT system on what constituted legitimate measures, many states saw this provision not only as providing special treatment for agricultural products, but also as a tool for protecting domestic agricultural production. The EC’s imposition under this exception of an import prohibition on all beef treated with growth hormones was seen by the U.S. as completely unjustified, given current scientific evidence. See Caspair, C. and Neville-Rolfe, E., “The Future of European Agriculture” (1989) The Economist Intelligence Unit, Special Report No. 2007 at 32–33.Google Scholar

³⁶ See NAFTA, Chap. 7, Section B, “Sanitary and Phytosanitary Measures,” Arts. 709–24; GATT 1994, Agreement on the Application of Sanitary and Phytosanitary Measures. Under both agreements, parties appeal to all states to base sanitary and phytosanitary measures on international scientific standards, guidelines, or recommendations. Higher or more stringent measures may be used by any state as long as (1) these measures are not a disguised restriction on trade, (2) there is a scientific justification for the measures, and (3) a relevant risk assessment is completed. Sanitary and phytosanitary measures must be transparent and must recognize the equivalence of similar measures of different states.

³⁷ E.g., close to one half of the panel reports issued by FTA panels have involved agricultural goods: Free Trade Reporter (Chicago: CCH, 1991) at Chaps. 29–31. See also Hudec, supra note 2.

³⁸ NAFTA, Art. 2001 ( 1 ). The Commission’s functions also include supervising the implementation of NAFTA.

³⁹ NAFTA, Art. 2004. Chap. 19 of NAFTA is dealt with infra. A dispute setdement provision not found in either Chap. 19 or Chap. 20 is Art. 706, which creates the Commission on Agricultural Trade. Although this Commission is not part of a fully-fledged dispute settlement process, it provides a forum for consultation on issues relating to agricultural trade and is not unlike the Committee on Agriculture of GATT 1994: see Agreement on Agriculture, Arts. 17 and 18.

⁴⁰ Understanding on the Rules and Procedures Governing the Settlement of Disputes, (“Understanding”), Art. 2.1. Note that the Understanding will only apply to disputes that arise on or after Jan. 1, 1995.

⁴¹ Under both agreements, the parties also have access to alternative techniques of dispute resolution, such as good offices, conciliation, and mediation. Under NAFTA the Commission can request the use of alternative dispute resolution mechanisms, but under GATT these techniques can be undertaken only with the consent of the parties: Understanding, Art. 5.1. Alternative dispute settlement mechanisms may be requested at any stage in the dispute settlement procedure; in fact, they may be concurrent with a panel proceeding: ibid., Art.5.5.

⁴² Art. 2006. A third party may join in the consultations if it has a substantial interest in the issue. Although wider consultation may create a more cumbersome process, dispute resolution techniques should not risk alienating a third party that is interested in the dispute, thereby creating rather than alleviating tension in the disputed area.

⁴³ Agreement on Agriculture, Art. 18.5.

⁴⁴ A respondent to a request to consult under the Understanding must respond within 10 days of the request and enter into consultations within 30 days of the request. If the respondent fails to do this, the complainant may proceed to the establishment of an arbitral panel: Understanding, Art 4.3. When a third party has a substantial interest in the dispute, it may join in the consultations: Understanding, Art 4.11.

⁴⁵ The time allowed for consultations is 45 days if a third party has become involved or 15 days if a perishable agricultural good is involved.

⁴⁶ NAFTA Art. 2007(4) and (5). The Commission may obtain expert opinions or have recourse to alternative dispute resolution techniques in attempting to settle an issue.

⁴⁷ Understanding, Art. 6.1.

⁴⁸ Ibid., Art. 4.1.

⁴⁹ Both NAFTA and GATT 1994 panelists are selected from rosters. The roster of NAFTA panelists is selected by the parties on consent, while the GATT roster is established by its Secretariat: NAFTA, Art. 2009(1) and Understanding, Art. 8.4. Qualifications for being on the NAFTA roster include having expertise in international law and being independent. GATT panelists must be selected with a view to ensuring an independent and diverse panel and they must be well-qualified governmental and/or non-govemmental individuals with some GATT experience. Under GATT 1994, citizens of members states that are party to a dispute shall thus not be panelists for that dispute unless the disputing parties agree otherwise: Understanding, Arts 8.2 and 8.3. NAFTA panelists are selected by a fairly convoluted method to ensure that the panel does not appear to favour any one party. If there are two disputing parties, a panel shall comprise five members, two selected by each party, and the chair will be selected by consent. If there are more than two disputing parties, a panel shall comprise five members, two selected by the complainant two by the party complained against and the chair by consent NAFTA, Art. 2011. GATT panels are to be composed of three panelists, unless the disputing parties agree to five members within to days of the panel’s establishment. Selection of panelists is to be by consent, but if there is no Agreement within 20 days of the panel’s establishment, the panelists are to be appointed by the Director-General in consultation with the DSB chair and the chair of any relevant committee or council.

⁵⁰ Under NAFTA, parties must submit written comments to the panel within 14 days of the issuance of the initial report The panel must then issue a final report within 30 days of the initial report and may take into account the comments made by the parties. If separate opinions are given, panelists delivering the opinions may not be identified. This provision preserves the independence of the panelists and seeks to avoid panelist selection based on apparent biases.

GATT allows for even more participation by the parties. Before issuing an interim report, the panel must first submit the factual and argument portions of its draft decision to the disputants, who then have an opportunity to submit written comments. The panel then issues its interim report in which it states its findings and conclusions. Disputing parties may then submit a request that the panel review particular issues in its interim report. The panel will then issue its final report. Like NAFTA, GATT 1994 requires separate opinions expressed in a panel report to be anonymous: Understanding, Art. 14.3. After the final report is submitted to the DSB, the disputing parties may provide written objections to the decision and may participate in the DSB’s consideration of the panel’s decision: Understanding, Arts. 16.2 and 16.3.

⁵¹ For a discussion of the non-binding nature of NAFTA panels, see G. Horlick and DeBusk, A., “Dispute Resolution Under NAFTA — Building on the U.S.-Canada FTA, GATT and ICSID” (1993) 10 J. Int’l Arb. 51 at 69.Google Scholar

⁵² Understanding, Art. 16.4.

⁵³ Although GATT 1947’s system of dispute resolution was clearly problematic in this area, it must be recognized that political pressure played a major role in the progression of a dispute. The less influential member states may have feared withholding their consent, so in fact in most cases disputes tended to progress fairly efficiently. See R. Hudec, supra note 2 at 165.

⁵⁴ Art. 17.1 of the Understanding requires the DSB to create a Standing Appellate Body, composed of seven persons, to sit in panels of three to hear an appeal from a panel decision. Members of the Appellate Body must demonstrate expertise in law, international trade, and the subjects of the GATT 1994 agreements. They are also to be unaffiliated with any government. The requirement for expertise and independence creates a higher standard for the Standing Appellate Body than for the arbitral panels.

⁵⁵ Understanding, Art. 17.6.

⁵⁶ Ibid. Art. 17.13.

⁵⁷ NAFTA, Chap. 19. GATT 1994 defines and regulates the use by states of domestic support measures and export subsidies. Providing for reviews to ensure that a duty determination accords with a member state’s domestic law would be beyond the purview of GATT.

⁵⁸ In Canada, the Special Imports Measure Act, R.S.C. 1985, c. S-15, regulates the imposition of antidumping and countervailing duties. This statute grants the Canadian International Trade Tribunal the authority to make final inquiries for determining injury in antidumping and countervailing cases subsequent to a preliminary determination of dumping and subsidization and the imposition of dudes by the Deputy Minister of National Revenue for Customs and Excise. The equivalent bodies in the U.S. are the International Trade Commission, which makes findings of injury, and the Department of Commerce, which determines when dumping and subsidization are occurring.

⁵⁹ E.g., the parries must amend their domestic law to ensure that they do not frustrate the effective implementation of the panel procedure. Consultations may be entered into if a party’s domestic law circumvents some aspect of this procedure. Parties must make certain amendments to their domestic law as specified in NAFTA, and they must notify of, and if requested enter into consultations about, changes in their antidumping and countervailing duty laws. Finally, parties must enter into consultations annually to improve the dispute settlement mechanism. See Oelstrom, K., “A Treaty for the Future — the Dispute Settlement Mechanism of the NAFTA” (1994) 25 Law & Pol’y Int’l Bus. 792.Google Scholar

⁶⁰ NAFTA, Art. 1904(13). The panelists who are to comprise the ECC are to be chosen from a roster established under Annex 1904.13. The majority of panelists chosen should be lawyers in good standing and are often retired judges.

⁶¹ Ibid., Art. 707. An Advisory Committee on Private Commercial Disputes regarding Agricultural Goods makes recommendations to the Committee on Agricultural Trade.

⁶² Agreement on Agriculture, Art. 18.

⁶³ Ibid. Art. 18.5.

⁶⁴ Canadian Statement on Implementation, Department of External Affairs, Canada Gazette Part I, no. 128(1), Jan. 1, 1994 at 76.

⁶⁵ Art. 103 ( 1 ).

⁶⁶ (1969) H55 U.N.T.S. 331.

⁶⁷ See “U.S. milk producers push for greater access to NAFTA territories:” 1(16) NAFTA Watch (Sept. 15, 1994) at 8.

⁶⁸ Agreement on Agriculture, Art. 4.

⁶⁹ Such tariffications for Canada have arisen through the loss of supply management schemes. Sectors that might be vulnerable to U.S. imports are eggs, turkey, chicken, and dairy products. Tariffications for the U.S. have arisen through loss of its exemptions from s. 22 of the Agricultural Adjustment Act. Sectors affected and vulnerable to Canadian imports include sugar products and peanut products.

⁷⁰ Elias, T.O., The Modem Law of Treaties 71–78 (Dobbs Ferry: Oceana, 1974)Google Scholar; McNair, A., Law of Treaties 424–31 (Oxford: Clarendon Press, 1961).Google Scholar

⁷¹ NAFTA, Art 1904(3).

⁷² The standard of review in the U.S. includes allowing review of a decision that is “arbitrary, capricious [or] an abuse of discretion” or “unsupported by substantial evidence on the record” or otherwise “not in accordance with law” (see the Tariff Act of 1930, 19U.S.C.S.§ 1516a(b) ( 1 ) (B). The Canadian standard is set out in the Federal Court Act, R.S.C. 1985, c. 7. It allows review of a decision that “fail[s] to observe a principle of natural justice” or in which the decision-makers act beyond or refuse to exercise their jurisdiction, or base their decision on an “erroneous finding of fact in a perverse or capricious manner.” Mexico’s standard is considered even more rigorous than that of the U.S. See Smith, J. & Whitney, M., “Dispute Settlement Mechanism of the NAFTA and Agriculture” (1992) 68 North Dakota L.R. 567 at 601.Google Scholar

⁷³ Art. 2005.

⁷⁴ Art. 3005(2). It was agreed in a note to NAFTA that this default to the NAFTA process is not in itself disputable: Canadian Statement on Implementation, supra note 64 at 211.

⁷⁵ Art. 2014.

⁷⁶ Art. 2015.

⁷⁷ Under GATT 1994, only the panel, not the parties, have the right to initiate the request for outside assistance: Understanding, Art. 13.

⁷⁸ NAFTA Art. 703(3). For a discussion of these provisions, see NAFTA Handbook: A Practical Guide for Doing Business under the NAFTA 94 (Chicago: CCH, 1994).

⁷⁹ See, e.g., the Canada-U.S. wheat dispute: Morton, P., “Wheat war troops have swords,” The [Toronto) Financial Post (June 25, 1994) 521 Google Scholar and Ewins, A. “Canada and U.S. avoid wheat war,” The [Saskatoon] Western Producer (Aug. 4, 1994) 1.Google Scholar

⁸⁰ By July 1995, 100 countries were members of the WTO. “WTO Membership Reaches 100,” World Trade Organization Press Release, July 4, 1995.

⁸¹ The argument is that the Japanese paid for this concession elsewhere, but the fact remains that the agricultural commitments are not uniform and might lead to grumbling and retaliation down the road, when other concessions are forgotten by states whose access commitment is higher than that of Japan.

⁸² States may however choose to adhere or not adhere to the plurilateral agreements in a piecemeal fashion.

⁸³ WTO Agreement, Art. 16.3. The “Multilateral Trade Agreements” are those included in Annexes 1 to 3 of the WTO Agreement.

⁸⁴ Agreement on Agriculture, Art. 21.