Saturday, April 29, 2006

Interesting NAFTA Reading

Note from Larry: I edited the post below to add some links. I originally wrote it on the fly but now feel like it is not very informative without references to the source material.

There is not a lot of caselaw on NAFTA. There are a few cases on whether something does or does not qualify. I have been involved in a couple of those. There was also some litigation over whether the NAFTA was properly passed and whether it is constitutional. Those cases tend to be more interesting in an academic sense than for any practical impact.

In that vein, I feel a little bad for Judge Pogue who issued a very thorough opinion over a very technical aspect of NAFTA and trade law. The case is Canadian Lumber Trade Alliance v. United States, Slip Op. 06-48 (Apr. 7, 2006). The reason I feel bad is that he obviously put a lot of effort into the opinion, but it really has limited impact.

In a nutshell (Note to West, I am using that in the generic sense), the case involves a provision of the NAFTA (Article 1902) that shields Canada and Mexico from amendments to the antidumping and countervailing duty laws unless certain steps were taken. The change involved was the so-called Byrd Amendment. The Byrd Amendment required Customs to distribute the collected duties to certain affected domestic producers of the subject merchandise. Canadian interests, with the support of the Mexican government sued in the U.S. Court of International Trade to prevent the application of the Byrd Amendment to Canadian merchandise.

The interesting parts of the case involve whether the Canadian government and producers had legal standing to pursue the case in court. Here is the upshot: producers have standing because they might actually be injured by the distribution of funds to competitors; the government of Canada does not have standing.

The next question was whether the NAFTA language applied to the Byrd Amendment. Answer: yes it does. The U.S. had some good arguments involving a technical parsing of the language relating to the difference between "goods" of Canada and antidumping duties collected on the importation of Canadian goods. My favorite argument was the Hail Mary position that Congress has the constitutional power to spend money however it wants and that distributing Byrd funds is a spending function. The court did not buy any of this.

In the end, it held that the Byrd Amendment was illegally applied to Canadian and Mexican imports. Hats off to whoever came up with the Article 1902 argument.

The reason this is primarily of academic interest is that the Byrd Amendment has been repealed effective October 1, 2007. So, future imports of Canadian and Mexican goods face little chance of being damaged by the law.

The question that is not at all academic is what to do about this. Should all the money collected illegally be returned to the treasury from the recipient companies? Should the U.S. return it to the treasury from some other source? Or, should future collections just be enjoined? Don't know. Judge Pogue ordered further briefing.

One side note, I found footnote 7 very interesting. In it, the Court states that the extensive discussion of relevant WTO decisions is provided only as background and that the court's decision is based exclusively on U.S. law. That says something interesting about the Court's approach to the use of international law. I'm just not sure what it is. But, in my head (and completely without supporting information), I am taking a bit of credit for that footnote.
Possibly more on that later.

1 comment:

David said...

"My favorite argument was the Hail Mary position that Congress has the constitutional power to spend money however it wants and that distributing Byrd funds is a spending function. The court did not buy any of this."

Yeah the WTO didn't buy that either. When making an argument that weak I think "and at the hour of our death" is the most relavant part of the Hail Mary.