<html><head><meta http-equiv="Content-Type" content="text/html charset=utf-8"></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" class=""><h1 style="margin: 0in 0in 0.0001pt; font-size: 24pt; font-family: 'Times New Roman', serif; vertical-align: baseline;" class=""><span style="font-size: 19pt; font-family: Georgia, serif; letter-spacing: -0.45pt; font-weight: normal;" class="">Ottawa draws line on U.S. plan to remove NAFTA dispute mechanism<o:p class=""></o:p></span></h1><div style="margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: 'Times New Roman', serif; vertical-align: baseline;" class=""><span style="font-size: 8.5pt; font-family: Georgia, serif; color: rgb(223, 0, 35); text-transform: uppercase;" class=""><a href="https://www.theglobeandmail.com/authors/robert-fife" title="Go to Robert Fife’s author page" style="color: purple;" class=""><span style="color: rgb(223, 0, 35);" class="">ROBERT FIFE</span></a> AND <a href="https://www.theglobeandmail.com/authors/steven-chase" title="Go to Steven Chase’s author page" style="color: purple;" class=""><span style="color: rgb(223, 0, 35);" class="">STEVEN CHASE</span></a><o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: 'Times New Roman', serif; vertical-align: baseline; outline: 0px;" class=""><span style="font-size: 8.5pt; font-family: Helvetica, sans-serif;" class="">OTTAWA — The Globe and Mail<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: 'Times New Roman', serif; vertical-align: baseline; outline: 0px;" class=""><span style="font-size: 8.5pt; font-family: Helvetica, sans-serif;" class="">Published Tuesday, Jul. 25, 2017 5:00AM EDT<o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: 'Times New Roman', serif; vertical-align: baseline; outline: 0px;" class=""><span style="font-size: 8.5pt; font-family: Helvetica, sans-serif;" class="">Last updated Tuesday, Jul. 25, 2017 5:44AM EDT<o:p class=""></o:p></span></div><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; margin-bottom: 15pt; vertical-align: baseline;"><span style="font-family: Verdana, sans-serif; font-size: 9pt;" class=""> </span><font face="Verdana, sans-serif" class=""><a href="https://www.theglobeandmail.com/news/politics/ottawa-draws-line-on-us-plan-to-remove-nafta-dispute-mechanism/article35788006/" class="">https://www.theglobeandmail.com/news/politics/ottawa-draws-line-on-us-plan-to-remove-nafta-dispute-mechanism/article35788006/</a></font></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">The Trudeau government is prepared to walk away from NAFTA negotiations if the Trump administration insists that dispute-settlement panels be removed from the accord, a senior official says.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">Canada, the United States and Mexico will sit down on Aug. 16 for the first round of talks aimed at rewriting the North American free-trade agreement – the only reopening of the accord in the past 23 years. The negotiations are taking place at the request of U.S. President Donald Trump, who threatened during his campaign last year to tear up NAFTA if he could not extract a better deal for Americans.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">The U.S. government announced last week that eliminating the dispute-resolution mechanism is among its top priorities in the talks.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">Chapter 19 of NAFTA allows Canada, the United States or Mexico to request the establishment of independent, bi-national panels when their exporters or producers feel they are the victim of unfair trade rulings by another NAFTA country. These panels issue binding decisions to resolve the dispute.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">Critics in the United States have felt Chapter 19 is an unacceptable ceding of U.S. sovereignty and the U.S. government would prefer foreign companies to seek redress in U.S. courts – a more costly and lengthy process.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">A senior Canadian official who was not authorized to speak on the record said Prime Minister Justin Trudeau regards Chapter 19 as the “red line” that Canada will not cross.<o:p class=""></o:p></span></p><div style="margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: 'Times New Roman', serif; vertical-align: baseline; outline: 0px;" class=""><span style="font-family: Verdana, sans-serif; font-size: 9pt;" class="">If Canada or Mexico were to leave the talks, NAFTA would stay as it is and Mr. Trump might then have to fulfill his pledge to pull the United States out of the deal.</span></div><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">The official said Mr. Trudeau is ready to walk away from the negotiations if U.S. Trade Representative Robert Lighthizer declines to relent on the panels.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">Mr. Trudeau would be following the example of Conservative prime minister Brian Mulroney, who ordered his negotiators to leave 1987 negotiations on a Canada-U.S. free-trade deal unless a dispute-settlement mechanism was included. Mr. Mulroney believed independent, bi-national panels would prevent years of litigation in U.S. courts when trade disagreements arose.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">“We fought hard to get it,” Derek Burney, a former Canadian ambassador to the United States who helped negotiate the Canada-U.S. free-trade agreement in the 1980s, recalled in a recent interview with The Globe and Mail. “We walked away [from the negotiating room] because we couldn’t get it and we wouldn’t have come back without it.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">“It is important. It’s very important. We shouldn’t let [the Americans] get away with unilaterally announcing they are going to do away with it,” Mr. Burney said of Chapter 19.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">Canada’s ambassador to the United States, David MacNaughton, spoke publicly last week about the need for a dispute-settlement mechanism in NAFTA.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">“We think it’s critical to have some kind of a dispute-resolution mechanism incorporated – it was in 1994 and it continues to be,” Mr. MacNaughton said during a visit to Edmonton, where Canada’s premiers were meeting. “Whether or not … [it] can be improved or modernized, I think we’re up for discussion on that.”<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">U.S. critics have charged that the tribunals are biased against U.S. interests.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">Data compiled by Canadian international trade lawyer Riyaz Dattu, however, suggest otherwise.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">Of the 47 cases either Canada or Mexico brought against the United States under Chapter 19, 36 were decided by unanimous decision of the five panelists appointed to hear the dispute. That means arbitrators appointed by both countries to rule on the matter were of the same mind in nearly 77 per cent of the cases. In each case, a panel was composed of lawyers or retired judges from each of the countries involved in the dispute, with the U.S. government picking two or often three of the panelists.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">Foreign Affairs Minister Chrystia Freeland is scheduled to appear before a Parliamentary committee in Ottawa on Aug. 14 to lay out Canada’s negotiating objectives for the NAFTA talks.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">Under Chapter 19, when one country slaps anti-dumping and countervailing duties on products from another country, the duties can be appealed to the panel rather than to the court system in the country that imposed the penalties.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">The chapter has been invoked over the years to deal with disputes on everything from softwood lumber to pork to magnesium to beer to cement.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">U.S. uneasiness with the panels turned to anger after major NAFTA rulings went against Washington. Panels in the early 1990s and mid-2000s found in Canada’s favour on the softwood dispute. In the early 1990s case, the United States’ complaints were exacerbated by the fact that panel decisions broke down on national lines, with Canadian members of the panels ruling in Ottawa’s favour and Americans supporting the United States.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">Critics contended the panels failed to properly apply the relevant U.S. laws.<o:p class=""></o:p></span></p><p class="selectionshareable" style="margin-right: 0in; margin-left: 0in; font-size: 12pt; font-family: 'Times New Roman', serif; margin-bottom: 15pt; vertical-align: baseline; outline: 0px;"><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">The push to scrap the panels has the enthusiastic backing of the U.S. lumber lobby. “The Chapter 19 system is unconstitutional, unworkable in practice, and for decades has seriously undermined the enforcement of U.S. law against unfair trade practices by Canada and Mexico, to the detriment of U.S. industries and workers,” Zoltan van Heyningen of the U.S. Lumber Coalition said in a statement last week.<o:p class=""></o:p></span></p><div style="margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: 'Times New Roman', serif; vertical-align: baseline; outline: 0px;" class=""><em class=""><span style="font-size: 9pt; font-family: Verdana, sans-serif; border: 1pt none windowtext; padding: 0in;" class="">With a report from Adrian Morrow</span></em><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class=""><o:p class=""></o:p></span></div><div style="margin: 0in 0in 0.0001pt; font-size: 12pt; font-family: 'Times New Roman', serif; vertical-align: baseline;" class=""><span style="font-size: 9pt; font-family: Verdana, sans-serif;" class="">Follow us on Twitter: <span class="articleontwitter--byline"><span style="border: 1pt none windowtext; padding: 0in;" class="">Robert Fife</span></span> <span class="articleontwitter--link"><span style="border: 1pt none windowtext; padding: 0in;" class=""><a href="http://twitter.com/@RobertFife" target="_blank" style="color: purple;" class=""><span style="color: rgb(223, 0, 35);" class="">@RobertFife</span></a></span></span>, <span class="articleontwitter--byline"><span style="border: 1pt none windowtext; padding: 0in;" class="">StevenChase</span></span> <span class="articleontwitter--link"><span style="border: 1pt none windowtext; padding: 0in;" class=""><a href="http://twitter.com/@stevenchase" target="_blank" style="color: purple;" class=""><span style="color: rgb(223, 0, 35);" class="">@stevenchase</span></a></span></span></span></div></body></html>