Goldstein, John C., President, Federal Circuit Bar Association, May 4, 1988..... Page 515 516 572 REPORTS New York State Bar Association, International Law and Practice Section OTHER MATERIALS 60 Horlick, Gary N. and Valentine, Debra N., Improvements in Trade Remedy Moyer, Herbert E., Binational Panel Dispute Settlement and the United Battram. Shelly P. and Glossop, Peter L., Dispute Resolution under the Robinson, David R., Dispute Resolution under Chapter 18 of the United 665 707 723 739 760 786 795 822 OVERSIGHT-U.S.-CANADA FREE TRADE AGREEMENT THURSDAY, APRIL 28, 1988 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES AND THE ADMINISTRATION OF JUSTICE, COMMITTEE ON THE JUDICIARY, The subcommittee met, pursuant to call, at 9:36 a.m., in room 2261, Rayburn House Office Building, Hon. Robert W. Kastenmeier (chairman of the subcommittee) presiding. Present: Representatives Kastenmeier, Moorhead, Berman, Coble and Slaughter. Staff present: David W. Beier, counsel; Joseph V. Wolfe, associate counsel; and Veronica L. Eligan, clerk. Mr. KASTENMEIER. The subcommittee will come to order. Mr. MOORHEAD. Mr. Chairman. Mr. KASTENMEIER. The gentleman from California. Mr. MOORHEAD. I ask unanimous consent that the subcommittee permit the meeting today to be covered, in whole or in part, by television broadcast, radio broadcast, and/or still photography, pursuant to Rule 5 of the Committee Rules. Mr. KASTENMEIER. Without objection, that will be agreed to. This morning the subcommittee is conducting a one-day hearing on the dispute resolution and judicial review mechanisms contained in the United States-Canada Free Trade Agreement. Before discussing the legal issues before us today, let me take a brief moment to review the procedural situation. As my colleagues know, the FTA was signed by President Reagan and Prime Minister Mulroney on July 2 of this year. Regrettably, Prime Minister Mulroney is not able to be a witness before this body, but we understood he would want to speak about acid rain, anyway. [Laughter.] Seriously, the agreement was negotiated by the administration pursuant to authority granted by the Congress. The Free Trade Agreement would go into effect only if Congress passes legislation to implement the FTA. This legislation will be submitted on June 1, 1988, and once the bill is submitted, it will be referred to eight House committees, we are told, including the Committee on the Judiciary, under the "fast track" provisions of the Trade Act of 1974. Once the bill is submitted, it cannot be amended and must be voted on by the committee within 45 days and by the full House (1) within the next 15 days. This is, of course, a very unusual and unique procedure. Because of this procedure, it is necessary for the relevant committees to conduct hearings on the Free Trade Agreement before the bill has actually been introduced. The issues before the committee today involve subject matter within the jurisdiction of the Committee on the Judiciary, but resolution of these issues will require cooperation with the executive branch in developing the implementing legislation. In addition, the committee will need to continue its excellent working relationship with the Committee on Ways and Means. The agreement calls for both the United States and Canada to preclude judicial review of certain antidumping cases and certain countervailing duty cases. The agreement calls for a binational panel to review these cases. The agreement poses two basic policy questions within the jurisdiction of this committee. One, should the Court of International Trade and Court of Appeals for the Federal Circuit be, in effect, deprived of jurisdiction, and secondly, are there constitutional impediments to the removal of Federal Court jurisdiction within our system. The first question is one of policy. In recent years, the Congress has tended to expand judicial review, but this agreement goes in the other direction. As a policy matter, the question of judicial review is a subject which has traditionally been shared by the Judiciary and the Ways and Means Committees. More significantly, the existence of a right subject of judicial review to relief in antidumping and countervailing duty cases has been a question within the jurisdiction of the Ways and Means Committee. The second question relates to constitutionality of the proposal. In that respect, it poses the following questions. One, does the bill violate Article III of the Constitution by failing to authorize judicial review, and second, does the bill violate the appointments clause. Also, does the due process clause of the Fifth Amendment require that some form of judicial review be available to claimants in these countervailing duty cases and these antidumping cases. Additional policy questions also that emerge within the jurisdiction of the committee include, one, treatment of protective orders in these cases; two, judicial review mechanisms for testing the constitutionality of the entire review scheme; three, application of the Ethics in Government Act to members of this new panel; four, determination of the effect of panel decisions on the Federal Courtsthat is, relevant to precedent, res judicata, collateral estoppel and issue preclusion; fifth, the determination of the propriety of using Federal judges as members of the extraordinary challenge review panel; sixth, the method of selection of the panels; and seventh, lastly, the determination of how the review mechanism applies to cases that mix antidumping/countervailing duty cases with other types of legal claims, and how to handle cases involving products from Canada and from other countries. Well, all these questions, I gather, we will attempt to deal with and obviously solicit the views of the very important witnesses that we have before us this morning. Before I introduce them, I would like to call on my colleague, the gentleman from California, Mr. Moorhead, for a statement. Mr. MOORHEAD. Thank you, Mr. Chairman. The U.S.-Canadian Free Trade Agreement is a document of potentially great significance. Although our two countries have long had a fruitful trading relationship, this agreement proposes to take that relationship one step further by explicitly and formally binding each partner to the removal of all artificial government barriers to a free and open flow of goods and services across the national boundaries. The pursuit of free trade is good economic and foreign policy. I believe that the representatives of the United States and Canadian Governments, who worked for two years to reach this agreement, should be commended for their efforts. This is not to say that the agreement doesn't raise some important issues that Congress needs to consider. I do have some concerns about the agreement, but they are primarily in the energy area. I am inclined to agree with the consensus of opinion that the system of binational panels to review antidumping and countervailing duty cases will meet United States constitutional standards. In that regard, I look forward to the testimony of the witnesses today, for I am sure their testimony will help us to better understand the constitutional issues raised by the use of binational panels as contemplated in the agreement. Thank you, Mr. Chairman. Mr. KASTENMEIER. I thank my colleague for his statement. I should announce, too, that due to the change in schedule-and I apologize to our witnesses, and to those who are not now able to come, because of the rescheduling that was necessitated by important full Committee business-that, regrettably, Professors Shapiro, Henkin and Lowenfeld will not be with us today. I therefore would ask unanimous consent that their statements be made part of the record. In addition, I would like to ask unanimous consent to insert in the record at this point the statements of the New York State Bar Association, the Association of the Bar of the City of New York, and legal opinions on the FTA by the American Law Division, Library of Congress, (see Appendix materials) and the Chief Counsel of the International Trade Administration (see p. 69). Without objection, that will be done. Mr. KASTENMEIER. I am pleased to also greet my colleague, Mr. Berman. Do you have an opening statement? Mr. BERMAN. No. Mr. KASTENMEIER. I would also like to say we may be from time to time interrupted by votes on the floor. The House will be considering the Defense authorization bill and, if we're lucky, the interruptions will be few. But I do suggest that, so that the interruptions, such as they are, may be understood. Our first witnesses this morning represent the administration. The lead witness is Alan F. Holmer, Deputy United States Trade Representative. Mr. Holmer spent six years on Capitol Hill as chief of staff for Senator Packwood, as well as time in the administration as General Counsel of the U.S. Trade Representative, Deputy Assistant to the President, and Deputy Assistant Secretary of Commerce. We are delighted to have Mr. Holmer. Accompanying Mr. Holmer this morning is Miss Jean Anderson, General Counsel of the International Trade Administration of the Department of Commerce. Miss Anderson is responsible for implementation of the antidumping and countervailing duty statues at issue today. We are delighted to have you both here, and if I may, I would like to call on Mr. Holmer to opening up the testimony. TESTIMONY OF ALAN F. HOLMER, DEPUTY U.S. TRADE REPRESENTATIVE; ACCOMPANIED BY M. JEAN ANDERSON, CHIEF COUNSEL, INTERNATIONAL TRADE ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE Mr. HOLMER. Thank you very much, Mr. Chairman. As I believe you know, Miss Anderson from the Commerce Department was the one who was the lead negotiator for the U.S. Government with respect to this dispute settlement mechanism. She will focus her comments on that. Before she does, though, I just wanted to review the overall perspective of the administration with respect to this agreement, and I will do that very briefly. This agreement is truly stunning in its scope. You're talking about $160 billion in bilateral trade in goods and services between the United States and Canada. From our perspective, it's clearly a win-win agreement for both the United States and Canada. You have two countries joining together to create the world's largest shared market and we believe it is going to expand growth and jobs on both sides of the border. Some of the major provisions: Tariffs are obviously an important part of any free trade agreement. You have now presently tariffs on the Canadian side, which are the highest in the industrialized world, that average about 9 or 10 percent, and on the U.S. side those tariffs average 3 or 4 percent. Under this agreement, those Canadian tariffs and the U.S. tariffs are all going to go to zero, no exceptions. In 1985, Canadian tariffs were a $1.3 billion price burden on U.S. exports. We think it's going to be very useful to U.S. companies, that those restrictions are going to be eliminated. With respect to investment, we're one heck of a lot better off under this agreement than before. With respect to new "green field" investments in Canada, there will be no review of those. With respect to direct takeovers, currently "investment Canada" review occurs with respect to investments for companies with assets of more than $5 million. That number will be increased to $150 million, with the result that while 7,600 firms in Canada are now subject to screening, that number will be reduced to 600 firms. That's a 92 percent reduction. We think that's a very positive change as far as U.S. interests are concerned. What we get, perhaps most importantly, is protection that Canada will not go back to the restrictive policies of the 1970s. In energy, we obtain nondiscriminatory access to Canadian energy supplies. We believe that cheaper and more secure energy will make U.S. industries more competitive, both in North America and around the world, and we believe that should help all consum |