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The U.S. Allegations of Improper NAFTA Panel Review in the Softwood Lumber Dispute

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Initially contained in Chapter 19 of the Canada-United States Free Trade Agreement (CUSFTA), the dispute settlement mechanism for trade remedies (antidumping (AD) and countervailing duty (CVD) cases) of the North American Free Trade Agreement (NAFTA) is now more than two decades old. While some scholars point to the relative success of Chapter 19 in providing for speedy reviews of either Canadian or American trade remedy determinations and establishing a relatively predictable trade environment for both countries, they also indicate the inherent limits of this chapter despite its binding nature. Some, such as Robert Howse, say that the softwood lumber dispute clearly illustrates such inherent flaws. In fact, the third and fourth episodes of the dispute, known as Lumber III (1991-1996) and Lumber IV (2001-2006), ended in stalemate with both sides unsatisfied with the results. If a binding review mechanism seems adequate for other trade remedy disputes, Softwood Lumber has not been solved through adjudication, but instead through negotiations involving power and diplomacy. With this case in mind, it is not uncommon to hear that Chapter 19 lacks teeth to solve highly litigious trade disputes. Softwood Lumber, thus, has been a real test case for Chapter 19.

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