U.S.-Canada Free-Trade Agreement, Article 1904 Binational Panel Reviews: Decision of the Extraordinary Challenge Committee

DEPARTMENT OF COMMERCE

International Trade Administration

U.S.-Canada Free-Trade Agreement, Article 1904 Binational Panel

Reviews: Decision of the Extraordinary Challenge Committee

AGENCY: NAFTA Secretariat, United States Section, International Trade

Administration, Department of Commerce.

ACTION: Notice of Decision of the Extraordinary Challenge Committee

respecting Softwood Lumber Products from Canada, Secretariat File No.

ECC-94-1904-01USA.

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SUMMARY: On August 3, 1994, the Extraordinary Challenge Committee (ECC)

in review of the binational panel decision in the panel review of the

affirmative countervailing duty determination made by the International

Trade Administration, dismissed the request for an extraordinary

challenge for failure to meet the standards of an extraordinary

challenge set forth in FTA Article 1904.13. The ECC ordered that the

Binational Panel's May 6, 1993 and December 17, 1993 Decisions

reviewing the International Trade Administration's affirmative

countervailing duty determination and redetermination on remand shall

remain in effect. The Binational Panel's Order Affirming the

Determination on Remand dated February 23, 1994 was affirmed.

FOR FURTHER INFORMATION CONTACT: James R. Holbein, United States

Secretary, NAFTA Secretariat, Suite 2061, 14th and Constitution Avenue,

Washington, D.C. 20230, (202) 482-5438.

SUPPLEMENTARY INFORMATION: Chapter 19 of the United States-Canada Free-

Trade Agreement (``Agreement'') establishes a mechanism to replace

domestic judicial review of final determinations in antidumping and

countervailing duty cases involving imports from the other country with

review by independent binational panels. When a Request for Panel

Review is filed, a panel is established to act in place of national

courts to review expeditiously the final determination to determine

whether it conforms with the antidumping or countervailing duty law of

the country that made the determination.

Under Article 1904.13 of the Agreement, where a Party alleges that

a binational panel has seriously departed from a fundamental rule of

procedure, has manifestly exceeded its powers, authority or

jurisdiction or that a member of the panel has materially violated the

Code of Conduct established pursuant to Article 1910, and further

alleges that any of these actions have materially affected the panel's

decision and threaten the integrity of the panel review process, that

Party may request that an Extraordinary Challenge Committee be

established under the procedure set out in Annex 1904.13 of the

Agreement.

Under Annex 1904.13 of the Agreement, the Government of the United

States and the Government of Canada established Rules of Procedure for

Article 1904 Extraordinary Challenge Committees (``ECC Rules''). These

ECC Rules were published in the Federal Register on December 30, 1988

(53 FR 53222). These Rules were amended in the Federal Register on

February 8, 1994 (59 FR 5910). The ECC Rules give effect to the

provisions of Chapter Nineteen of the Agreement with respect to

Extraordinary Challenge Committee proceedings conducted pursuant to

Article 1904 of the Agreement. The ECC Rules are intended to result in

decisions typically within 30 days after the establishment of the

Extraordinary Challenge Committee. The Extraordinary Challenge

Committee proceeding in this matter was conducted in accordance with

these ECC Rules.

Background

On April 6, 1994, the United States Trade Representative filed a

Request for an Extraordinary Challenge Committee on behalf of the

United States Government in its capacity as a Party to the United

States-Canada Free-Trade Agreement, with the United States Secretary of

the NAFTA Secretariat. Four specific counts were contained in the

Request. (1) The U.S. Government alleged that two of the Binational

Panelists maintained relationships or engaged in activities creating

the appearance of partiality or bias or, in the case of one of the

panelists, constituting a serious conflict of interest. Further,

contrary to the Binational Panel Rules of Conduct, the two Panelists

did not disclose this information before joining the Panel or, in

certain instances, as the information came to light during the Panel

review; (2) The U.S. Government alleged that the Panel, in its May 6,

1993 determination, manifestly exceeded its power, authority, and

jurisdiction by failing to apply the appropriate standard of review and

general legal principles that a court of the United States would apply

when it ruled that Commerce must determine that the preferential

treatment in timber pricing led to an increased output of lumber; (3)

In its December 17, 1993 decision analyzing Commerce's determination

that provincial stumpage programs in fact benefit a specific industry

or group of industries, the Majority manifestly exceeded its power,

authority, or jurisdiction by failing to apply the appropriate standard

of review and by seriously misapprehending the U.S. substantive law it

was required to apply; and (4) Finally, the U.S. Government alleged

that for reasons similar to the case of stumpage, the Majority

manifestly exceeded its powers, authority, and jurisdiction in its

finding concerning whether B.C.'s log expert restriction were

``specific'' under U.S. countervailing duty law.

ECC Decision

The Extraordinary Challenge Committee issued its Memorandum

Opinions and Order on August 3, 1994. Each Committee Member wrote a

separate opinion, two affirming the Binational Panel's decisions and

one dissenting. The Order dismissed the ECC Request for failure to meet

other standards for an extraordinary challenge. The Order also affirmed

the Binational Panel's decisions and order Affirming the Determination

on remand.

Dated: August 8, 1994.

James R. Holbein,

United States Secretary, NAFTA Secretariat.

[FR Doc. 94-19928 Filed 8-12-94; 8:45 am]

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