Law, Knowledge and National Interests in Trade Disputes: The Case of Softwood Lumber
George Hoberg, Paul Howe
June 13, 1999
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The impact of international trade agreements on domestic policy autonomy will depend in larger part on the operation of the dispute settlement mechanisms established by these agreements. This paper examines the implications of dispute settlement mechanisms for Canada’s domestic policy sovereignty by analyzing one extremely high-profile case: the softwood lumber dispute with the United States. The methodology is based on disentangling and then reintegrating the legal, normative, and factual bases for decisions. The paper describes the dispute settlement procedures, provides an overview of the softwood lumber controversy, and then examines the substantive aspects of the panels’ decisions in detail. Particular attention is paid to the relative importance of legal standards, the factual evidence, and the nationality of the panel members.
The case demonstrates that panel members can be convinced by evidence to take positions at odds with their government. Even the US minority supported a number of Canadian arguments on one key matter, stumpage rates, and the Canadian majority, in response to the redetermination by Commerce, changed its view from the first panel on the other central issue at stake in the case, log export restraints. But despite this relative consensus on the factual disputes, there was intense disagreement on the legal standards in question.
Overall, the dispute resolution process had the potential to provide some protection for Canada, but ultimately was trumped by legislative changes in the US. The potential institutionalization of the dispute settlement process is limited by the terms of the free trade agreements that continue to apply the subsidy laws of the importing country. In this case, Canadian sovereignty has been challenged not because of the transfer of authority to supranational institutions, but precisely because supranational institutions were not strong enough. Recent Titles in the Working Paper S
