The NAFTA Panel Decision on Supply Management: Gamble or Bargain?
In: The Canadian yearbook of international law: Annuaire canadien de droit international, Band 35, S. 81-112
ISSN: 1925-0169
SummaryIn July 1995, the United States requested the establishment of the first Panel under Chapter 20 procedures of the North American Free Trade Agreement (NAFTA) and challenged Canada's duties on its "supply-managed" dairy, poultry, egg, barley, and margarine products. These industries had grown and prospered under supply management – a system intended to establish stability in a domestic market afflicted by unpredictable production cycles. The import restrictions were designed in conformity with the international trade rules as set out in the General Agreement of Tariffs and Trade (GATT). These rules changed in 1995 as a result of the WTO Agreement on Agriculture under which Canada and WTO members replaced quantitative import restrictions with tariffs and tariff-rate quotas. The United States claimed that the duties contravened the basic NAFTA obligation to not rahe tariffs. Canada countered that the new tariff rates were justified under the new WTO Agreement on Agriculture that had been negotiated in Geneva after NAFTA. The resulting decision in favour of Canada was both praised for its consideration of the case in the context of the complex interplay of relevant trade obligations and criticized for finding "an implied bargain among negotiators … that was never struck." The Panel assumed that if tariff eqivalents could not be applied – which in effed would render the WTO Agreement on Agriculture inoperative – the result would be that the parties would be entitled to apply Article XI restrictions as if the Uruguay Round had never happened. The logic was impeccable – the NAFTA was "not to be read in clinical isolation from public international law."