After some last-minute lobbying of his own provinces by new Canadian Prime Minister Stephen Harper, the U.S. and Canada have announced an agreement settling their multi-decade lumber trade dispute. A copy of at least one version of the agreement can be found here.
I can’t speak to the actual substance of the agreement (who cares?). From a legal perspective, the agreement raises a number of interesting questions, both international and domestic.
First, the agreement is not a treaty, at least for U.S. law purposes, and it does not require any U.S. legislative action. (That does not appear to be the case in Canada).
Second, the agreement is not actually a binding international agreement because although the “parties” are the U.S. and Canada, the precatory language in the agreement makes it a nonbinding memorandum of understanding. (Duncan may have thoughts about this, but to me it looks like a term sheet drafted by non-lawyers).
Finally, and perhaps more importantly, the agreement seems to place itself outside of the NAFTA or WTO dispute resolution process, setting up a separate “dispute resolution” process staffed by non-North American arbitrators. I don’t even know if they can do this under NAFTA or the WTO, but that’s what they want. Moreover, both parties agree to suspend all litigation, both existing litigation in the WTO and NAFTA, but also future litigations. This is no doubt a good idea, but will such an agreement not to litigate be enforceable? I’m not sure about that either.
All in all, though, a settlement here is far superior to the ongoing litigation in NAFTA and the WTO. If anything, the possibility of international dispute resolution may have actually delayed this settlement by convincing one or the other countries of the “legality” of their trade positions. It raises interesting questions about whether international dispute resolution can actually damage or undermine international trade relations rather than support them.
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