cally set down for this panel, and I'm just wondering why discretely these two areas of complaint are designated and nothing else.

MS. ANDERSON. These two kinds of unfair-There certainly are other kinds of unfair trade practices. The mind of man knows no limits in figuring out how to make more or do something differently in international trade.

But the reason for the application of a binational panel process for just dumping and subsidies goes back to the fact that these are the two most classic kinds of unfair trade in which the most highly developed sets of laws have been developed over decades to deal with them. Indeed, they are kinds of unfair trade practices for which Canada and the U.S. and, indeed, many, many other countries in the world have very similar laws. The practices are quite well defined, well recognized, and the laws are designed specifically to deal with them, and they are much used. They are quite nondiscretionary laws and they are much used by domestic industries in the U.S. and, for that matter, in Canada and in other countries, to protect against these specific practices. Other kinds of unfair trade practices tend to be harder to define and don't have specific laws aimed directly at very narrowly defined practices.

Ambassador Holmer may want to add to that.

Mr. HOLMER. No.

Mr. KASTENMEIER. In terms of panel members, who should appoint the panel members, the President or the courts or whom?

MS. ANDERSON. We think that the appointment ought to be in the executive branch, that it should be the President. After all, under both the foreign affairs power and certainly as a practical matter, the President has to have the responsibility for implementing an international agreement.

Mr. KASTENMEIER. Subject to Senate confirmation then?

MS. ANDERSON. We think that Senate confirmation, as such, probably would not be appropriate here, for a number of reasons— and I'll try to be very brief.

One, it might suggest that there is some affiliation with the U.S. Government, that it might give that impression in Canada. We may view a Presidential appointment and Senate confirmation process as apolitical and know that it can be that, but we doubt it would look that way on the Canadian side of the border, and we have an interest in both countries of ensuring that, in both countries, we have an impartial, apolitical selection process.

We do think that there is undoubtedly a role for consultation with the Congress, with private bar associations, with private industry and so on in the panel selection process.

Mr. KASTENMEIER. Thank you.

My last question that I will put to Mr. Holmer is not dissimilar from Mr. Berman's question. This committee is here by virtue of our interest in courts, but we also handle intellectual propertythat is to say, copyrights and patents and the like. I'm sure we will be asked why so little was accomplished with respect to intellectual property, other than redistribution of cable rights-that is to say, motion pictures, records, books and many other areas in which the United States has a major export interest and trade interest.

Was there any particular reason that we didn't get very far in those areas?

Mr. HOLMER. Well, I guess there are two parts to the answer. The first is, the two areas that we had complained about most with the Canadians related to pharmaceuticals and the retransmission issue. Both of those have been addressed now by Canada, one within the agreement and one outside the agreement.

The second point is that the price was too high. It became apparent that, in order to get an intellectual property chapter, the Canadians were going to want an exemption under section 337 and section 301 of our trade laws. They wanted adherence to the Berne Convention as part of the FTA, and a significant revision of U.S. patent laws. It was our view that that was just not going to be digestible here in the Congress.

Mr. KASTENMEIER. Surely not as a demand by a foreign country, however friendly. As a matter of fact, this afternoon I think we will have adherence to Bern go through the first step in full committee.

One thing we did do, I suppose, which this committee did, was allow the manufacturing clause, in terms of the importation of foreign printed material, lapse. I suspect that had been a problem for some time. I'm not certain whether there was a differential problem with Canada or not, but certainly in the world community it was a problem.

I thank you very much. We do have a number of other questions to pose, but perhaps we could do that by letter and elicit your thoughtful response on that basis.

If my colleagues have no questions of these two witnesses, I would like to express our gratitude to you both for your contributions. You discussion has been both illuminating and very helpful to us and we deeply appreciate your appearance.

Ms. ANDERSON. Thank you, Mr. Chairman.

Mr. HOLMER. Thank you.

Mr. KASTENMEIER. Now, our second witness this morning is our colleague, Congressman Sam Gibbons. Congressman Gibbons is not only the Chairman of the Trade Subcommittee of the Committee on Ways and Means, but he is also the intellectual and political godfather of the Free Trade Agreement. It is largely through the efforts of our colleague that we are here today ready to consider the most significant single trade agreement in history between our Nation and a major trading partner.

It is a pleasure to welcome him here today. It gives me an opportunity publicly to thank him and his staff for the spirit of cooperation they have shown toward us on this subcommittee in our joint work on the Omnibus Trade Bill. In any event, it's a delight to welcome our colleague, Sam Gibbons.

TESTIMONY OF HON. SAM M. GIBBONS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA; CHAIRMAN, SUBCOMMITTEE ON TRADE, COMMITTEE ON WAYS AND MEANS

Mr. GIBBONS. Thank you, Mr. Kastenmeier. I appreciate the overgenerous introduction. I hope that this agreement has better parentage than I could supply for it. If not, it would end up being called a "fatherless child". But it is perhaps the most important

Let me emphasize that this is a trade agreement; it is not a treaty. It only requires a majority vote in the House and the Senate for the implementing legislation. And while we do not have the implementing legislation before us now, we will have the implementing legislation before us soon, and I hope that your committee and your staff will pay very close attention to that and help us work out any of the practical or philosophical problems that you find in it, because we look to your expertise.

The dispute settlement provision is perhaps the most critical part of the whole trade agreement. It is the part that, without it, there would be no trade agreement. The Canadians, I think_very wisely, would not go any further and would not have entered into an agreement had it not been for this section. So the most crucial part of this whole agreement is entrusted to your committee and to your wisdom.

It is a departure from past procedures, but not a radical departure from past procedures. I am convinced, Mr. Chairman, after plenty of study done both before the agreement was entered into and since the agreement was entered into, that it will meet all tests of constitutionality and I think it is a good, practical way to solve these trade disputes that are numerous and that arise between us all the time in the area of countervailing and dumping actions.

As you know, both countervailing and dumping actions are remedies under the trade laws of the United States. As such, we have seen fit over the years to engraft upon those trade laws a system of judicial review. It is not any attempt on the part of your Government or of the Ways and Means Committee to strip off any judicial review. In fact, I am a great advocate of judicial review and participated very strongly in the 1979 amendments that created the court that we're all so proud of and has done such a fine job.

But let me stress again that there is no more critical provision of this trade agreement than the one that is before this panel at this very moment. Without it, there won't be an agreement. We know that clearly from our discussions with the Canadians and, frankly, I think it is a good, sound, rational solution to the problem.

I'm sure Mr. Holmer and the other witnesses that were here before you told you about the trade agreement. It is really not a free trade arrangement. It is a freer trade arrangement. It does not cover everything that we have that are matters of difference between the United States and Canada. It just covers as much as you can get sovereign States to do at one, two, three, or five years of sitting together trying to work out their differences. It is a beginning, not an end. It has taken 150 years to get this far and has been as very sensitive matter of international relations between these two sovereign States. So we are at a very important point. I have a formal statement here that I would like to enter in the record at the conclusion of my statement, Mr. Chairman.

Mr. KASTENMEIER. Without objection, we will receive your statement and it will appear in its totality in the record.

Mr. GIBBONS. I think it's important, for those of you who are not familiar with this, to realize that there are two types of dispute settlement mechanisms in this agreement. The first is in chapter 18 of the agreement, and it does not involve judicial review. It is more of

a consultative process than chapter 19, which is the one in which we concentrate our attention and which substitutes a form of binding panel review for the current form of judicial review. So I won't go into chapter 18. It is important and it perhaps will alleviate a lot of disputes over interpretation that arise under this agreement, or could possibly arise under this agreement, and it is very necessary. An agreement that lives like this one will have to have a chapter 18 type of dispute settlement mechanism. But it is not a final binding type of agreement like chapter 19 is.

Now, chapter 19 says essentially this: that if a dispute arises involving countervailing duties or subsidies, or dumping-and those are the most prevalent types of trade disputes that arise-that they shall begin as they have always begun, under the administrative procedures in each country. The private parties, who are the instigators of these actions, shall proceed under the existing statute as they have always proceeded. If a case begins here in the United States, or an action begins here in the United States, we shall follow United States law and United States procedure. We've always done that. If a case begins in Canada, we shall follow Canadian law and Canadian procedure. We have always done that. So there is nothing new up to that stage.

But when each Government, at the administrative level, has finally acted, that upon the petition of either Government a binational dispute settlement panel will be constituted. This binational dispute settlement panel will be composed of two nationals of each of the States, the requirement being that a majority of the panel members must be lawyers-because you could possibly have economists and administrators and everything else-but they are to be lawyers.

In the United States law it was suggested that perhaps a way to add more continuity and to add more judicial stature to the dispute settlement process would be that justices or judges of the Court of International Trade could permissively be the United States nominees-not require them. If the President wanted to name one or two members from the United States panelists, he could name those justices. I would hope that he would, particularly in the beginning, as the case law begins to develop in this area. I hope it will work out so that we will always probably, depending upon the rest of the workload of that court, have all of these panelists come from the Court. Because I, as a lawyer myself, I have a great respect for jurists, particularly the ones that rule with me, and even the ones that don't, if I think they have applied good judicial procedures and precedent and have listened attentively to my arguments. So I lean toward that. But we do not tie the hands of the President. He can appoint anyone who he feels is qualified, as long as those people are lawyers or are members of that court.

Now, after they are appointed, they will convene. There is a clerk's office or a secretariat set up to administer the procedure. I hope you all will pay particular attention to that because you understand courts and how they work and how necessary a good clerk's office is to proper functioning. There will be a clerk's office here in Washington and there will also be one in Ottawa, who will process the cases and work together as you must do in receiving the pleadings in the case and preserving the record and preserving

the evidence and all of that that courts do and clerks do. They will establish liaison with each other and make sure that the dispute settlement mechanism is properly supported from an administrative point of view, as a clerk does-handling the filing of documents, providing for the physical setup of the court.

The people appointed on each side will convene and will select from a predetermined list of either U.S. or Canadian nationals a fifth person to sit on that dispute settlement panel. It could be either U.S. or Canadian person. Hopefully it will be somebody who is objective and well-qualified. It could be one of the jurists. That person would also be appointed to sit on the panel.

Then the review process begins. The agreement spells out specifically, with a great deal of detail, just how the court is to proceed, setting time limits and providing that if the case arises in the United States, we shall use U.S. law. If it arises in Canada, we shall use Canadian law.

Now, you may say why didn't you use either one law or the other, or why didn't you use international law. We examined the international law that was available and found out that it just wouldn't really fit the circumstances between the United States and Canada. So we hit upon a mechanism of saying that for five years we will consult and work together and try to develop a common set of dumping and countervailing duty laws, and if after five years we can't develop them, we will work a couple of more years and see what we can do. I hope that within that seven-year period we can come up with something that both of us can agree should be the statutory law on this and would bring it back to our respective national bodies and enact that as law which would control the court. But if it can't, we can always extend this agreement and still go on U.S. law or Canadian law, wherever the case arose or the cause of action arose.

There is precedent for this in other actions that the United States has taken in dispute settlement. I have three well-reasoned papers presented, Mr. Chairman, by lawyers and constitutional scholars who have studied the question that I would like to present, if I could, at this time and have them made a part of the record supporting the constitutionality of what is being considered here. I think they would throw some light for those judges in the United States Supreme Court or other courts who may be called upon in an appropriate case to rule upon the constitutionality of this procedure. So if you would accept those in your record, we would be glad to have them.

Mr. KASTENMEIER. Yes, without objection. Actually, at the outset

Mr. GIBBONS. I think you already have one of them.

Mr. KASTENMEIER. we did ask that legal opinions of the FTA by the American Law Division of the Library of Congress, et cetera, and the General Counsel's Office of the International Trade Commission be admitted to the record.

But, in addition you recommend-and I would ask unanimous consent-that that which comes from a coalition of distinguished international trade and customs law practitioners, who are members of the bar of the Court of International Trade, that those particular documents be also accepted.