Constitutionality of Binational Panel Review in Canada-U.S. Free Trade Agreement

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In September 1988 the Canada-United States Free Trade Agreement (FTA) received the approval of Congress, and implementing legislation subsequently was signed into law by President Ronald Reagan. Canada approved the FTA on December 30, 1988, and the Agreement entered into force on January 1, 1989. Over a ten-year period, the FTA would eliminate most barriers to trade between the two countries. Among the significant dispute settlement provisions, the FTA establishes binding binational panel review to resolve disputes concerning final antidumping and countervailing duty4 orders from the administrative agencies of either country. The binding procedure will expire in seven years, during which time the internal laws of both countries will be harmonized to eliminate further need for the dispute resolution mechanism.

The "unique dispute resolution mechanism,” while critical to Canada's acceptance of the FTA to ensure impartiality, stirs controversy in the United States. In addition to criticism of the binational panel provisions on political and economic grounds (reflecting concealed protectionism and internal tensions between the Executive, the Congress, and the courts), the Congress considered and rejected speculation that these provisions may be constitutionally infirm. Though congressional approval has quelled the policy controversy, hidden in the constitutional question is distrust over a perceived protectionist bias of the International Trade Court and the Court of Appeals for the Federal Circuit in their present judicial review function. Some of the fears of the Canadians and United States free traders are well-known in the subsidy and dumping cases, and judicial review of agency orders in the United States has gone both ways. Nonetheless, for as much disinterestedness and impartiality in reviewing orders as possible under the FTA. including as much insulation as possible from unilateral statutory changes, the Canadians insisted and the United States negotiators agreed to Party election to have binding review of these orders in a binational forum outside domestic judicial control.

This article addresses those constitutional issues relating to the binding binational panel review provisions that may surface under the FTA. We wish to appraise these issues, to appraise ways in which potential difficulties have been resolved by the implementing statute, and to determine whether any other constitutional questions might properly be considered by federal courts in the United States.

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