Sylvia Mercado Kierkegaard (ed.) Trade. International Law and Trade Conference May 10-11, 2007 Proceedings

Transcription

1 Sylvia Mercado Kierkegaard (ed.) International Law and Trade Bridging the East-West Divide International Law and Trade Conference May 10-11, 2007 Proceedings

2 ISBN13: ISBN10:

3 International Law and Trade Bridging the East-West Divide Ed. by Sylvia Kierkegaard

4 International Law and Trade Ankara Barosu Yay nlar (Ankara Bar Association Press) 1000 Adet bas lm t r. (1000 copies) 1.Bask /1. Edition Telif Hakk 2007 Iinternational Association of IT Lawyers (IAITL) Bu kitap Ankara Barosu taraf ndan bast r l p da t lm t r. Her bir makalenin telif hakk eserin yazar na ait olup, yazarlar n görü leri Ankara Barsounu ba lamaz. This book has been printed and distributed by the Ankara Bar Association. Views expressed by the writers are not binding on the Ankara Bar Association. leti im Adresi; (Contact) Ankara Barosu Ba kanl Ankara Adalet Saray Kat:5 (06100) S hhiye Ankara Tel : Faks : E-Posta : ankarabarosu@ankarabarosu.org.tr Web : Bask /printing : Teknoform Bas m Yay m Da t m Ltd. ti. Tel :

5 International Law and Trade: Bridging the East-West Divide Revised Edition ISBN13: ISBN10: All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical,photocopying, recording or otherwise without the prior written consent of the publishers. This book has been made possible through the support of the Ankara Bar Association. ankarabarosu@ankarabarosu.org.tr Adliye Saray 5.Kat S hhiye/ankara Phone: (Pbx) Fax:

6 ISBN13: ISBN10: Sylvia Mercado Kierkegaard 2007 by the International Association of IT Lawyers (IAITL) Copyright The submission of the paper implies and warrants that the article submitted are the author(s) own work and it does not infringe or violate the rights of anyone else. The author grants ILTC/IAITL the non-exclusive rights to reproduce and distribute in whole or in part, the work submitted to the Conference for publication. The agreement does not cover reproduction for purposes that are essentially commercial. Furthermore, the author(s) understand that it is their sole responsibility to obtain written permission to include any copyrighted materials in his/their article. In addition, all trademark use within the manuscript must be credited to its owner, or written permission to use the name must be granted. The author(s) will hold the publisher harmless from any unlawful matter contained in his submitted work. The author(s) in consideration of the publication of the above named manuscript understand and agree that: Copyright in the article will remain with the owner of the copyright. By submitting an article to the conference, the owner of the copyright grants the publishers with a license to publish the article. The author warrants that he is the owner of all rights of copyright in the article. Where the author subsequently publishes the article, the author is requested to acknowledge the article appeared in the book of proceedings. The Author(s) will indemnify and defend the Publisher against any claim, demand or recovery against the Publisher by reason of any violation of any proprietary right or copyright, or because of any libellous or scandalous matter contained in the Manuscript. The Publisher will have the right to edit the work for the original edition and for any revision, provided that the meaning of the text is not materially altered. This Agreement represents the entire understanding between the parties hereto with respect to the subject matter hereof and this Agreement supersedes all previous representations, understandings of agreements, oral or written, between the parties with respect to subject matter hereof and cannot be modified except by a written instrument signed by the parties hereto. This Agreement shall be binding upon the parties hereto, their heirs, successors, assigns and personal representatives.

7 Foreword International trade law is expanding rapidly during the era of globalization. The rules of the trade game and global economics are being refined to cope with market liberalization and intense market competition. Rapid evolution has occurred in several business areas that would have been difficult to predict only a few years ago. This has been made possible by new technologies, which provide unprecedented opportunities for economic development. International trade agreements involving information technology, international telecommunications and financial services have been concluded within the framework of the World Trade Organization (WTO), and new international trade policies are being developed that shape the way trade is conducted. This dynamic business environment presents continuing challenges as lawyers, businesspersons, and policymakers seek to stay abreast of current developments. What then is international trade? It covers a wide and diverse spectrum which is reflected in this book. The articles shed light on issues such as IPR, arbitration, environment, IT law, and particular matters in multilateral and bilateral trade agreements. The articles illuminate controversies and at the same time, contribute to enrich the legal and economic literature This book offers a collection of research papers written and presented by some of the worlds top experts on international trade law and economics at the International Conference on Law and Trade held in Istanbul on May 10-12, The Conference was organized by the International Association of IT Lawyers in cooperation with Istanbul Bilgi University, a leading institution in Turkey for the study and development of technology law. The purpose of the Conference was to build communities among constituencies interested in these varied yet related topics, including researchers, policymakers, practitioners, and business people, who are seeking to develop new ideas and to enhance their understanding of the international trade environment. Access to the international perspectives of participants representing six continents and more than two dozen countries provides an enriching and unique experience. The book has taken shape as a result of contributions from a number of individuals and through the generous support of the Ankara Bar Association. We are grateful to all the authors, sponsors, and program committee members, and in particular to those from the IT Law Research Center of Istanbul Bilgi University This book provides new perspectives, challenges and recommendations about trade. We invite you to read more in the following pages. Sylvia Mercado Kierkegaard Editor

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9 International Trade & Maritime Law Table of Contents A Comparison of US Judicial and NAFTA Panel Review of Trade Remedy Cases...1 Juscelino F. Colares and John W. Bohn Sound Science and Trade Barriers: Democracy, Autonomy and the Limits of the SPS Agreement...10 Edward Morse Bridging the Gap in the Doha Talks: A Look at Services Trade...21 Rafael Leal-Arcas GATT/WTO and MEAs: Resolving the Competing Paradigm...31 Abdul Hasseb Ansari Iraq s Accession to the WTO: Commitments and Implications...43 Bashar Hikmet Malwaki Need for FLCs in India with Respect to Honouring the GATS...53 Krishnendu Sen and Ritankar Sahu Traditional Knowledge, the CBD and the TRIPS Regime: Synthesising the Discordant Discourses at the WTO...62 Vydyanathan Lakshmanan Rescuing the Inexhaustible (The Issue of Fisheries Subsidies in the International Trade Policy...71 Ekaterina Anyanova The Development of Maritime Laws in Malaysia-Selected Issues...83 Faizah Nazri Abd Rahman Trade and Investment An East-West Contrast of Foreign Direct Investment on Small Business Development...89 David Floyd & Sandhla Summan Truth Finding: Do Subsidies Continue After Privatization?...94 Yu Wu Foreign Direct Investment in India with Special Focus on Retail Trade Tanay Kumar Nandi and Ritankar Sahu Buying Properties in Malaysia? Highlight on Laws, Policies and their Implications on Foreign Land Ownership Nor Asiah Mohamad World Economy and Globalisation Globalization and China s Pathway in Quest for a New Identity Wei Dan How To Cope with the Globalization : Recommendations for the EU Novel Members Amos Avny

10 Human Rights and Governance International Law and Trade: Bridging the East-West Divide Table of Contents The Prohibition of Bribery of Foreign Public Officials under the South African Legislation and the African Union Convention: An Examination of its Strengths and Weaknesses Omphemetse Sibanda Structuring Money Laundering Control as Mechanism for Controlling Corruption In Nigeria: Need for Enhanced International Cooperation Charles O.Adekoya International Human Rights Law: Providing Measurement Tools for CSR Diego Quiroz-Ornate and Mhairi Aitken Legal and Technological Developments Concerning egovernment Services in Poland Paul Przemyslaw Polanski Democracy and Human Rights: Reappraising the Rhetoric of Interdependence and Mutual Reinforcement Ubong E. Effeh Corporate Governance, Business and Finance The Legal Implications of Reputation Risk Management for Franchisors Tom Burns The New EU Services Directive: Metaphor for Europe Today; Model for Expanding International Harmonization Tomorrow Patrick Hugg Relieving the Burden of UK Capital Taxation on Business Tim Vollans Auditor s Liability towards Third Parties within the EU: A Comparative Study between the United Kingdom, The Netherlands, Germany and Belgium Ingrid De Poorter Recent Developments of Corporate Governance in the Global Economy and the New Turkish Commercial Draft Law Reforms Cuneyt Yuksel Financial Collateral Arrangements Gulenay Rusen Virtual Meeting of Shareholders and its Immediate Rewards H. Jaap van den herik and Svetla Pencheva Possibilities of Measuring the Option Clauses Value in Sports Contracts: Empirical Study Ji í Strouhal Intellectual Property Rights Taking Patents Seriously Helen Gubby,Pieter Kleve and Richard De Mulder Intellectual Property Rights from an Islamic Perspective Salah Zaineddin I TM : Avatars as Trade Marks Angela Adrian The Purpose of Copyright Protection in Jordan & Canada: A Brief Comparison Saleh Al-Sharie

11 Table of Contents Consumer Protection Consumer Protection and Commercial Transactions in Malaysia Talat Mahmood Abdul Rashid Current International Trends in International Product Liability Law Esin Kucuk Sengur Arbitration & Mediation Waiver of a Right to Arbitrate by Resort to Litigation, in the Context of International Commercial Arbitration Peter Gillies and Andrew Dahdal Integrating Equity and Mediation into International Commercial Arbitration to make it More Economical and Just Syed Khalid Rashid Recognition & Enforcement of 'Foreign Arbitral Awards': A Comparative Study Anirudh Dadhich and Arun Kumar Bajaj Mediation in an IP context: WIPO or ICC? Ioanna Thoma Cyberlaw Towards Privacy-Preserving Data Mining in Law Enforcement Stijn Vanderlooy, Joop Verbeek and Jaap van den Herik Erroneous Execution of Payment Transactions: What Will Be New in the Future? Reinhard Steennot Spam, Spamdexing and Regulation of Internet Advertising Paul Przemyslaw Polanski Some Remarks on the Jordanian Electronic Transaction Act Hisham Tahat The Importance of Live Link in Child Abuse Cases (Incest) Norbani Mohamed Nazeri Virtual Criminal Law in Boundless New Environments B.J.V. Keupink The You Tube Case: Privacy Protection or the Right to Try to Have Sex on the Spanish Public Beaches? Carlos Rohrmann

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13 Ed. by Sylvia Kierkegaard

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16 A Comparison of U.S. Judicial and NAFTA Panel Review of Trade Remedy Cases Juscelino F. Colares Assistant Professor of Law Syracuse University College of Law John W. Bohn Attorney Dewey Ballantine, LLP (Washington, D.C.) Abstract. Empirical analysis of NAFTA Chapter 19 panel decisions shows that they are far more likely than U.S. courts to overturn U.S. agency decisions despite being bound to apply the same law under the same standard and principles of review that U.S. courts adopt. Also, Chapter 19 panels have produced outcomes more favorable to Canadian importers than have U.S. courts. This outcome illustrates that the facial legal terms of an international agreement may give a misleading impression of how it will actually be implemented, and suggests that greater attention must be paid to how it will be interpreted and by whom. 1. Introduction The United States, like Canada and nearly every other industrialized nation, maintains "trade remedy" laws that authorize U.S. administrative agencies to impose duties on imported goods they find to be "dumped" or subsidized. These antidumping (AD) and countervailing duty (CVD) determinations are subject to review by U.S. federal courts. Chapter 19 of the Canada-United States Free Trade Agreement (CUSFTA) and its successor, [2] the North American Free Trade Agreement (NAFTA), allowed replacing review of agency decisions by national judges on trade-remedy cases with review by binational panels appointed jointly by the governments involved (Canada-United States Free Trade Agreement [CUSFTA], 1988, art. 1904; North American Free Trade Agreement [NAFTA], 1993, art. 1904). Chapter 19 requires these binational panels to review agency decisions on AD and CVD law using the same standard of review and substantive law as would the domestic courts they replace (CUSFTA, 1988, art. 1904(3); NAFTA, 1993, art. 1904(3)). NAFTA also prohibits domestic judicial review once one of the members requests the formation of a panel, and requires them to obey the decisions of these panels (CUSFTA, 1988, art. 1904(1); NAFTA, 1993, art. 1904(1)). The U.S. and Canadian governments adopted this arrangement as a compromise after the United States rejected Canada's demands that CUSFTA eliminate all antidumping and countervailing duties in trade between the two countries (Hart, 1989, p ). Canadians reasoned that this new mechanism for review of agency decisions would put a check on what they perceived as a predisposition on the part of U.S. agencies to rule in favor of U.S. industry petitioners (U.S. General Accounting Office [GAO], 1995, p. 3). Prior studies of Chapter 19 agree that these panels overturn U.S. agency decisions more often than U.S. judges. Yet, none of these studies has provided an actual empirical comparison of how review has been different under these two systems. This Article reviews prior research and extends it by comparing the results of judicial review of U.S. agency determinations with Chapter 19 review 2. U.S. Trade Remedy Law The AD and CVD law in the United States is a complex set of statutes designed to ensure that the executive branch takes action against unfair trade practices by foreign countries and/or foreign companies trading with the U.S. Usually, a U.S. manufacturer files a petition with the U.S. Department of Commerce (Commerce) (Tariff Act of 1930 (1930) 702 & 732). The petition must claim that imports from another country have benefited from government subsidies (CVD) or are being sold in the U.S. at prices lower than in their home market (AD) (Tariff Act of 1930 (1930) 702 & 732). After a brief preliminary inquiry into the sufficiency of the petition, Commerce then conducts an investigation to determine if the petitioner's claims are valid (Tariff Act of 1930 (1930) 702 & 732). Concurrently, the U.S. International Trade Commission (ITC) investigates whether the 1

17 U.S. domestic industry has suffered injury by reason of such imports (Tariff Act of 1930 (1930) 705 & 735). If both agencies make affirmative determinations, then Commerce calculates an offsetting duty that will be applied against the subject import (Tariff Act of 1930 (1930) 705 & 735). Agency determinations can only be reviewed by the U.S. Court of International Trade (CIT), an Article III court sitting in New York City (Customs Courts Act (1980) 201). The U.S. Court of Appeals for the Federal Circuit (CAFC) has exclusive appellate jurisdiction over final decisions of the CIT (Federal Courts Improvement Act (1982) 715). The U.S. Supreme Court has discretion to review CAFC decisions (Act to Improve the Administration of Justice by Providing Greater Discretion to the Supreme Court in Selecting the Cases it will Review (1988) 2), though it has reviewed only a handful of AD and CVD cases in the last hundred years. [3] Review of U.S. agency final determinations occurs under the "substantial evidence" standard. Under this standard, the reviewing court decides whether such determinations are "unsupported by substantial evidence on the record, or otherwise not in accordance with law" (Tariff Act of 1930 (1930) 516A). Specifically, this standard has been interpreted to be the equivalent of asking "'is the determination unreasonable?'" (SSIH Equip. SA v. U.S. Int'l Trade Comm'n (1983), p. 381 as cited in Nippon Steel Corp. v. United States (2006), p. 6). In the majority of cases, when deciding whether an agency's decision is "not in accordance with law," a court will provide some deference to the agency's legal interpretations, upholding them unless they are "effectively precluded by the statute" (PPG Indus. V. United States (1991), p. 1573). While this review process is open to all foreign parties who wish to appeal U.S. agency determinations before U.S. courts, NAFTA member countries have another option in Chapter 19 panel review. 3. The Chapter 19 Review System Chapter 19 came into effect on January 1, 1989 (CUSFTA, 1988, art. 2105). Members agreed to waive their sovereign right to have their agency determinations be reviewed by their domestic courts, opting instead for review by binational panels (NAFTA, 1993, art. 1904(1)). Agency compliance with its country's domestic trade remedy laws, as determined by these binational panels, would be the measure of that country's compliance with its NAFTA obligations (NAFTA, 1993, art. 1904(2)). Thus, parties from NAFTA countries affected by U.S. trade remedy determinations were given the option to seek either U.S. judicial or Chapter 19 panel review (NAFTA, 1993, art. 1904(5); Tariff Act of 1930 (1930) 516A). However, a request for the formation of a binational panel by any party who took part in the agency proceedings forecloses U.S. court review of such determinations (NAFTA, 1993, art. 1904(11); Tariff Act of 1930 (1930) 516A). Panels, which consist of "experts" in international trade matters (usually lawyers in private practice), are bound to apply the domestic law of the party whose agency order is challenged, i.e., the law of the importing country (NAFTA, 1993, annex (1)-(2); Tariff Act of 1930 (1930) 516A). More importantly, as reviewing authorities, NAFTA panels must apply "the standard of review... and the general legal principles that a court of the importing party otherwise would apply to" determinations of the competent agencies in the importing country (NAFTA, 1993, art. 1904(3)). Therefore, NAFTA panels reviewing Commerce or ITC trade remedy decisions are bound to (a) apply U.S. trade remedy law; and (b) employ the statutorily mandated standard of review and assume a level of deference similar to that extended to such agencies by the CIT and the CAFC (NAFTA, 1993, art. 1904(3); GAO, 1995, p. 35). In contrast to the U.S. judicial review system where the Federal Courts of Appeal have no discretion to refuse appeals of final determinations from lower courts (Customs Courts Act (1980) 201; Federal Courts Improvement Act (1982), 124; Act to Establish a United States Court of Appeals for the Federal Circuit (1982), 124) there is no appeal as a matter of right from a panel decision. Under NAFTA, only governments can file a request for an "extraordinary challenge" to a panel decision (NAFTA, 1995, art. 1904(13)). Extraordinary Challenge Committees ("ECCs") exist partly to ensure that NAFTA decisions remain consistent with domestic law and precedent, (Pure Magnesium from Canada (ECC Report), 2004, para. 29) [ 4] but are permitted only in relatively extreme circumstances. For example, a government can file an extraordinary challenge if a panelist is guilty of "gross misconduct," or the Panel "manifestly exceeded its powers, authority or jurisdictionfor example by failing to apply the appropriate standard of review," but even then only if such an action "materially affected the panel's decision and threatens the integrity of the binational panel review process" (NAFTA, 1993, art. 1904(13)). 2

18 4. Earlier Studies on the Record of Chapter 19 Review Many authors have in some way sought to compare the results of Chapter 19 review of U.S. agency decisions with the outcomes of adjudication by the CIT and CAFC (Cannon, 1994; GAO, 1995; Goldstein, 1996; Jones, 2000; Krauss, 1993; Lowenfeld, 1991; Macrory, 2002; Mercury, 1995; Pan, 1999; Riccardi, 2002). They all have noted that Chapter 19 panels overturn agency decisions more often than the U.S. courts (Cannon, 1994; GAO, 1995; Goldstein, 1996; Jones, 2000; Krauss, 1993; Lowenfeld, 1991; Macrory, 2002; Mercury, 1995; Pan, 1999; Riccardi, 2002). Most consider this a desirable outcome or at least one permissible under U.S. law (Goldstein, 1996, p. 562; Jones, 2000, p. 149; Lowenfeld, 1991, p. 338; Macrory, 2002, p. 18; Mercury, 1995, p ; Pan, 1999, p ). Some studies have also compared how Chapter 19 panels review U.S. and Canadian agency decisions. They have concluded that Chapter 19 panels have showed far more deference to Canadian decisions, and have ruled more often in favor of petitioners from Canada (Jones, 2000, p. 149; Mercury, 1995, , ). None of these studies, however, has systematically looked at the outcomes of all Chapter 19 decisions during both CUSFTA & NAFTA periods. They relied on either data available from the CUSFTA period or data from the earlier years of NAFTA. More importantly, no prior study has compared the results of Chapter 19 review with outcomes of U.S. judicial review. 5. Empirical Analysis of Federal Judicial and NAFTA Review of U.S. Agency Determinations on Trade Remedy Cases from 1989 to Statement of Hypotheses and Some Methodological Considerations To empirically verify whether the agreed-upon review mechanism of NAFTA has behaved similarly to the CIT/CAFC review system, we looked at quantifiable aspects of decisions by these parallel adjudicatory systems. To confirm or refute the general impression that NAFTA panels have been less deferential to U.S. agency decisions than U.S. courts, we examined AD/CVD rate, scope and injury decisions before and after review. [ 5] The goal was to test the following two hypotheses: [ 6] H 1 : NAFTA panel review is less likely to leave rate determinations unchanged than U.S. federal court review; and H 2 : NAFTA panel review is less likely to result in rate increases than U.S. federal court review. The first hypothesis tests specifically whether original AD/CVD rate determinations by U.S. agencies have the same "success" rate under the two review systems. By looking at whether the final results of either type of review maintain or alter the original agency decisionby reference to what happens to the rate after all review is completedone can develop a picture of how often agency findings (whether affirmative or negative) receive deference. For our purposes, an agency "win" is either an outright affirmance by the CIT or NAFTA panel or an affirmance of a determination on remand that leaves the original rate undisturbed. Conversely, a "loss" occurs whenever the rate changes as a result of review. Assuming ceteris paribus conditions, if one detects statistically significant differences in the way the two adjudicatory systems approach agency decisions under review, one can then identify one of these two systems as being systematically less deferential than the other. Looking at a subset of these cases, the data collected under the second hypothesis helps us answer what happens to rates when an agency is reversed. This hypothesis notably excludes cases where agencies have "won," as explained in the first hypothesis. By examining how rates change as a result of review, we attempt to detect whether a particular statistically significant trend in the direction of rates exists. Specifically, when we exclude cases where rates remain the same after review, do these adjudicatory systems differ in terms of trends in post-review rates in such a way that one tends to reduce or increase rates more than the other? If one of these review systems is more likely to reduce agency-determined AD/CVD rates than the other, then we can consider that particular system to be more beneficial to exporting interests than to the competing domestic industry in the importing country. Thus, by determining that one review system is more likely to increase (or decrease) rates than the other, we should be able to identify which set of economic interests tend to benefit more under each systeman inquiry beyond the notion of deference, tested in the first hypothesis. 3

19 5.2 The Data To test the two hypotheses, we obtained data from a sample of completed results of CIT/CAFC review and from all NAFTA binational decisions in the period from January 1, 1989 to December 31, These results focused on determinations made by the Department of Commerce and the ITC. As we looked at each of these decisions, we monitored subsequent developments in case outcomes by looking at agency determinations on remand. Upon completion of data collection, we coded each case for purposes of hypothesis testing. In addition to summarizing the results in the text below, we provide the results in table format in the appendix. In order to include ITC cases within our sample, we developed a method that allowed us to convert review results from injury determinations into a rate-based approach. Because of the binary nature of injury determinations in U.S. trade remedy law, final judicial or NAFTA review of affirmative injury determinations can result in either affirmance or revocation of the underlying AD/CVD duty order (Tariff Act of & 703). Therefore, an affirmance of an affirmative injury determination was coded as a decision that does not alter the rate, while a final decision vacating or calling for the revocation of a prior affirmative injury determination on remand means that the rate is in effect reduced (i.e., the rate actually disappears) as a result of the order being revoked. Accordingly, final affirmance of a negative injury determination was interpreted as a decision that leaves the rate unchanged (i.e., the rate remains at zero as no order imposing offsetting duties exists), while a court or panel-mandated remand that subsequently results in the ITC issuance of an affirmative injury remand redetermination was counted as a change in rates, since duty rates will necessarily be imposed and rates will change from zero upwards. 5.3 Statistical Comparison of Chapter 19 and U.S. Judicial Review Outcomes First Hypothesis: NAFTA panel review is less likely to leave rate determinations unchanged than U.S. federal court review Review by U.S. courts results in no change in the agency-determined rate about 68 percent of the time, while NAFTA review maintains the original rate only about 34 percent of the time. Thus, in rounded figures, over 2 challenges in 3 fail to succeed in changing U.S. agencies' rate decisions in U.S. courts. Yet, only 1 challenge in 3 at NAFTA fails to change rates. Conversely, U.S. judicial review of agency determinations change rates less than one-third of the time, while review at NAFTA does so just short of two-thirds of the time. These results demonstrate that varying the review system impacts the likelihood that rates will remain the same. To be precise, U.S. judicial review is more deferential to prior agency determinations than NAFTA binational review because it allows the status quo to stand much more frequently. To determine whether a statistically significant relationship exists between "adjudicating system" and "rate status," we performed a Fisher's Exact Test. Obtaining a p-value less than.0001 (one-tailed), we were able to corroborate our hypothesis that NAFTA panel review is less likely to leave rate determinations unchanged than U.S. federal court review. That the source of review affects whether rates change, suggests that U.S. judicial review is more deferential to agency determinations than NAFTA as a result of the principle of judicial deference prevailing in all administrative litigation in U.S. courts Second Hypothesis: NAFTA panel review is less likely to result in rate increases than U.S. federal court review By examining the subset of decisions where U.S. agencies were reversed, we seek to determine if the two review systems also differ with respect to the direction that revised rates assume after review is completed. Although both review systems are more likely to decrease than increase rates when they reverse agencies, they differ markedly in terms of how often rates are increased or decreased. When U.S. courts reverse U.S. agencies, their review leads to increased rates about 32 percent of the time or almost 3 times for every 10 reversals. NAFTA does so 8 percent of the time or less than once for every 10 reversals. In relative percentages, NAFTA review is thus four times less likely to result in increased rates than U.S. court review. Conversely, after NAFTA review, rates are decreased 92 percent of the time compared to only 68 percent of the time in U.S. federal courts. Statistical testing (p-value approximately.0212) confirmed the interpretation above, allowing us to corroborate our hypothesis that NAFTA panel review is less likely to result in rate increases than U.S. federal court review. That NAFTA review is more likely to result in rate decreases than U.S. judicial review, supports 4

20 the earlier inference that NAFTA is more beneficial to exporting interests than to the competing U.S. domestic industry seeking relief against foreign trade practices. 5.4 Why a Priest-Klein Case Selection Effect Cannot Account for the Results of Chapter 19 Litigation Priest and Klein (1984) posited that samples consisting only of litigated cases are not necessarily representative of the larger population of disputes about which one draws causal inferences. [ 7] In light of this, one may question whether a case selection effect might actually account for the demonstrated propensity of Chapter 19 panels to rule against U.S. agency decisions. If fewer challenges to NAFTA mean only stronger cases are being pursued, the difference in reversal rates between the two systems may be a result of case selection, rather than an indication of less deference in the Chapter 19 system. Data on the frequency of Canadian appeals refute this conjecture. First, from 1989 through 2003 (the most recent year for which statistics on agency orders are available), the U.S. issued 15 AD/CVD orders on Canadian imports (International Trade Administration [ITA] (a), 2006; ITA (b), 2006; ITA (c), 2006), all of which were appealed to Chapter 19 panels. That Canadian parties chose to challenge every order a U.S. agency issued against their exportsall leading to NAFTA decisions without a single settlementshows how unselective they have been with respect to their decisions to appeal. That Canadian appeals have become more frequent since the creation of Chapter 19 review refutes the notion that these cases are somehow made up of stronger claims. 5.5 Pre-Chapter 19 Litigation Results in Cases Involving Canadian Goods A comparison between litigation patterns in challenges to U.S. agency determinations on Canadian goods before and after the creation of Chapter 19 is necessary. Should Chapter 19 reversal rates match those of U.S. judicial review in the years immediately preceding its creation, one would be forced to conclude that Chapter 19 is not deciding Canadian cases differently than would the U.S. courts it replaced. We now examine the rate of U.S. agency wins and losses during the post-chevron period that preceded the creation of Chapter 19 ( ). While a perfect comparison between the datasets in the two periods is not possible due to lack of information on the status of rates (pre- and post-review), we can still roughly determine the extent to which U.S. agency decisions were maintained (or changed) by analyzing published court opinions involving Canadian goods in the relevant period. A search of published CIT decisions produced 17 separate cases brought by U.S. domestic industry, U.S. importing industry or Canadian producers. Of these 17 cases, the U.S. government won 10 (58.82 percent), with other parties winning 7 (41.18 percent). While this analysis does not reveal what happened to the rate after court review, it uses U.S. government wins as a proxy for agency affirmance and, therefore, deference. We suspect that if we had the data on rates before and after review, some of these cases would result in rates being left ultimately unchanged, since, as we learned from our other sample ( ) that not all court reversals lead to rate decreases on remand. Regardless, this means that at least 58 percent of cases resulted in no change in rates. In comparison with the percent U.S. agency win rate at NAFTA, this is quite a change. Furthermore, we can surmise that nonagency parties went from a less than 42 percent win rate before NAFTA to a 66 percent win rate, which is a significant increase. Thus, we can conclude that change in review systems brought a greater agency reversal rate. Of course, this analysis combines under the label "other parties" Canadian and U.S. plaintiffs (U.S. domestic industry and U.S. importers). But for the desire to reverse prior agency action, these parties have opposing interests. Therefore, we analyzed these 17 cases according to whether the party who won had a preference to maintain or increase duty rates (U.S. government and U.S. domestic industry), or was attempting to reduce or eliminate these rates altogether (Canadian producer and U.S. importer). Bearing in mind that U.S. agencies won 10 of these cases, if one takes note of the fact that, among the 7 wins for other parties, 3 wins are for U.S. domestic industry, one can conclude that pro-rate parties won (at least) percent of these pre- NAFTA cases, much higher than the percent win rate for anti-rate parties. These changes in rates of agency reversal and duty rate reductions show a systemic pattern: far from mirroring preexisting litigation patterns in U.S. judicial review, the switch from CIT adjudication to Chapter 19 review has profoundly altered the general profile of outcomes in favor of Canadian producers and against U.S. agencies and U.S. domestic industry. More importantly, they corroborate the notion that Chapter 19 panels have not behaved like the U.S. courts they replaced. 5