McMillan LLP’s CUSMA Dispute Settlement Scoreboard
Introduction
The Canada-United States-Mexico Agreement (“CUSMA”) [1] entered into force on July 1, 2020, replacing the two and a half decade-old North American Free Trade Agreement (“NAFTA”).
Despite remaining one of the largest and deepest trade relationships in the world, [2] various prominent trade disputes have arisen between Canada, Mexico and the United States under the CUSMA.
We are pleased to introduce the “McMillan LLP CUSMA Dispute Settlement Scoreboard”, which provides overview and analysis of ongoing and concluded CUSMA disputes. The Scoreboard keeps a running tally of who has scored “points” in dispute settlement under CUSMA.
The Scoreboard provides the views of McMillan LLP International Trade Group. Points are granted based on which side ultimately prevailed in the dispute (ie, the country whose position the decision-maker ultimately favoured), in conjunction with the decision’s broader impact. [3]
The views expressed through this Scoreboard are those of the authors, and do not necessarily represent those of the firm more broadly, nor does this constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
Background on the relevant dispute settlement mechanisms contained in the CUSMA [4] can be found in the pages following the Scoreboard.
The Score
As of February 18, 2022, ten disputes have been initiated under CUSMA and two have been decided by panels.[5] The score stands at United States: 1, Canada: 1, with Mexico remaining for now on the sidelines, albeit with cases of its own before panels. See our Scoreboard below for more information and analysis on each dispute. McMillan LLP will update this resource as information on CUSMA disputes becomes available.
CUSMA TOTAL Score |
Canada | Mexico | U.S.A. | |
|---|---|---|---|---|
| Wins | 1 | – | 1 | |
| Losses | 1 | – | 1 | |
| Total Disputes | 7 | 3 | 10 |
Chapter 31 (General Dispute Settlement) Disputes
Dairy TRQ Allocation Measures (CDAUSA- 2021-31-01)
The United States challenged Canada’s dairy tariff rate quota (“TRQs”) allocation under several CUSMA provisions, including Article 3.A.2.11(b), which prohibits allocating a portion of a quota to processors.
| Dispute | |
| Complaining Party: | United States |
| Responding Party: | Canada |
| Timeline | |
| Panel Request: | May 25, 2021 |
| Final Report: | December 20, 2021 |
| Total Length of Panel Proceedings: | 209 days |
| Result | |
| The Panel found that Canada’s practice of reserving access to 85 to 100% of its 14 dairy TRQs exclusively to processors and further processors was inconsistent with Canada’s obligations under CUSMA. Canada and the United States must agree on a resolution, which could require Canada to open dairy TRQs to downstream producers.
Point to: United States |
|
Crystalline Silicon Photovoltaic Cells Safeguard Measure (USA-CDA-2021-31-01)
Canada challenged the United States’ application of safeguards on solar products from Canada as a violation of, among other provisions, Article 10.2.1. That obligation prevents the application of safeguards to a Party unless imports from that Party “account for a substantial share of total imports” and “contribute importantly to the serious injury.”
| Dispute | |
| Complaining Party: | Canada |
| Responding Party: | United States |
| Timeline | |
| Panel Request: | June 21, 2021 |
| Final Report: | February 15, 2022 |
| Total Length of Panel Proceedings: | 242 days |
| Result | |
| The Panel found that the United States’ imposition of a safeguard tariff on Canadian solar products violated its commitments under Article 10.2.1 and 2.4.2 of CUSMA. This is an important win for Canada and its solar producers, who should gain tariff-free access to the United States market.
Point to: Canada |
|
Automotive Parts and Vehicles – Rules of Origin
Mexico challenges the way in which the United Stated determines “value” for the purposes of calculating regional value content under CUSMA’s rules of origin (Article 4.2). It argues that value can include 100% of the value of “core parts” of a vehicle, even when those core parts are not entirely originating in the CUSMA Party, provided 75% of their value of does originate in a CUSMA Party. Canada agrees with this approach.
| Dispute | |
| Complaining Party: | Mexico (joined by Canada) |
| Responding Party: | United States |
| Timeline | |
| Panel Request: | January 6 2022 |
| Result | |
| Dispute ongoing | |
Chapter 31 (Dispute Settlement) Total Score
| Canada | Mexico | U.S.A. | |
|---|---|---|---|
| Wins | 1 | – | 1 |
| Losses | 1 | – | 1 |
| Total Disputes | 2 | 1 | 3 |
Chapter 10 (Trade Remedies Binational Panel Review)
Gypsum Board (CDA-USA-2020-10.12.01)
The complainant (CGC Inc.) challenges the Canadian International Trade Tribunal’s decision not to conduct an interim review of its 2017 injury determination with respect to gypsum board. It argues that the test the CITT applied to find a “regional market” was erroneous.
| Dispute | |
| Importing Party: | Canada |
| Other Involved Party: | United States |
| Timeline | |
| Panel Request: | November 26, 2020 |
| Result | |
| Dispute ongoing. | |
Softwood Lumber CVD AR (USA-CDA-2020-10.12-01)
The complainants, a group that includes the Government of Canada, several Canadian provinces, lumber associations and producers, challenge the US Department of Commerce’s final CVD determination in the first administrative review in Certain Softwood Lumber Products from Canada.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | December 10, 2020 |
| Result | |
| Dispute ongoing. | |
Softwood Lumber AD AR (USA-CDA-2020-10.12-02)
The complainants challenge the US Department of Commerce’s final AD determination in the first administrative review in Certain Softwood Lumber Products from Canada. Canada, one complainant, challenges (1) Commerce’s application of the “differential pricing methodology” to determine the method of calculating weighted-average dumping margins, and (2) Commerce’s use of “zeroing” in its comparison methodologies.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | December 22, 2020 |
| Result | |
| Dispute ongoing. | |
Carbon and Certain Alloy Steel Wire
The complainants challenge the US Department of Commerce’s final AD determination in the first administrative review in Certain Softwood Lumber Products from Canada. Canada, one complainant, challenges (1) Commerce’s application of the “differential pricing methodology” to determine the method of calculating weighted-average dumping margins, and (2) Commerce’s use of “zeroing” in its comparison methodologies.
| Dispute | ||
| Rod AD AR (USAMEX-2021-10.12-01 | ||
| Importing Party: | United States | |
| Other Involved Party: | Mexico | |
| Timeline | ||
| Panel Request: | September 17, 2021 | |
| Result | ||
| Dispute ongoing. | ||
Steel Concrete Reinforcing Bar AD AR (USAMEX-2021-10.12-02)
The complainant (Deacero) challenges the US Department of Commerce’s final AD determination in the administrative review of Steel Concrete Reinforcing Bar From Mexico. It argues that Commerce incorrectly accounted for s. 232 national security tariffs on steel and the United States’ commitments to Mexico in its determination of anti-dumping duties.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Mexico |
| Timeline | |
| Panel Request: | October 8, 2021 |
| Result | |
| Dispute ongoing. | |
Softwood Lumber CVD AR2 (USA-CDA-2021-10.12-03)
The complainants challenge the US Department of Commerce’s final CVD determination in the second administrative review of Certain Softwood Lumber Products from Canada.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | December 28, 2021 |
| Result | |
| Dispute ongoing. | |
Softwood Lumber AD AR2 (USA-CDA-2021-10.12-04)
The complainants challenge the US Department of Commerce’s final AD determination in the second administrative review of Certain Softwood Lumber Products from Canada.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | December 28, 2021 |
| Result | |
| Dispute ongoing. | |
Chapter 10 (Trade Remedies Binational Panel Review) Total Score
| Canada | Mexico | U.S.A. | |
|---|---|---|---|
| Wins | – | – | – |
| Losses | – | – | – |
| Total Disputes | 5 | 2 | 7 |
Chapter 14 (Investor-State Dispute Settlement) Disputes
No disputes have yet been filed
| Dispute | |
| Timeline | |
| Result | |
Chapter 14 (Investor-State Dispute Settlement) Total Score
| Canada | Mexico | U.S.A. | |
|---|---|---|---|
| Wins | – | – | – |
| Losses | – | – | – |
| Total Disputes | – | – | – |
[1] Known in the United States as the United States–Mexico-Canada Agreement (“USMCA”)
[2] The value of international trade between Canada, Mexico and the United States was over USD $ 1.1 trillion in merchandise in 2019
[3 ] For example, if a country launches a dispute against another with 10 unique claims, and that country is successful in only one of those 10, it is entirely possible that the Scoreboard would accord the point to the defending party (especially if the only claim on which the complaining party was successful was minor or of less important).
[4] These are Chapter 10, Trade Remedies Binational Panel Review; Chapter 14, Investor-State Dispute Settlement as between Mexico and the United States; and Chapter 31, General Dispute Settlement.
[5] This does not include disputes that continue under NAFTA, which we have excluded from the Scoreboard.
by William Pellerin and Philip Kariam
A Cautionary Note
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2022
Insights (5 Posts)
Fanning the Flames of Liability: The Ontario Court of Appeal Considers Product Liability Issues in Burr v. Tecumseh Products of Canada Limited
The decision of the Court of Appeal in Burr v. Tecumseh Products of Canada Limited, 2023 ONCA 135 provides a helpful overview of product liability law.
A Look at Some Key Findings by the Alberta Securities Commission in Re Bison Acquisition Corp.
On December 21, 2021, a panel of the Alberta Securities Commission issued its written decision providing its reasons for the oral ruling it made on July 12, 2021 regarding applications brought by Bison Acquisition Corp. and Brookfield Infrastructure Corporation Exchange Limited Partnership, as well as Inter Pipeline Ltd. and Pembina Pipeline Corporation.
Employer’s Disturbing Termination Conduct Results in $15,000 Moral Damages Award
Teljeur v Aurora Hotel Group 2023 ONSC 1324 provides example of post-termination conduct and bad faith damages.
Succeeding at Succession: Tips on Corporate Governance including How to Navigate Board Renewals and Elections
Stakeholders are demanding good corporate governance, which includes effective succession planning where a range of skills, experience, and backgrounds are highly valued and reflected. In collaboration with WATSON, a national multidisciplinary governance firm, join us in the morning on Wednesday, April 19, to discuss strategies and action plans that drive robust succession planning and strong corporate governance.
Adjudication under the Construction Act: Court Confirms Test to Apply for Judicial Review a “High Bar”
Adjudication under the Construction Act: Court Confirms Test to Apply for Judicial Review a “High Bar” Anatolia Tile & Stone Inc. v Flow-Rite Inc. 2023 ONSC 129.
Get updates delivered right to your inbox. You can unsubscribe at any time.