McNeil, Robert L.

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Case Western Reserve University School of Law

Canada-United States Law JournalVolume 17 | Issue 1 Article 18January 1991The Business Perspective: Cross Border ViewsRobert L. McNeilFollow this and additional works at: https://scholarlycommons.law.case.edu/cusljPart of the Transnational Law CommonsThis Speech is brought to you for free and open access by the Student Journals at Case Western Reserve University School of Law Scholarly Commons.It has been accepted for inclusion in Canada-United States Law Journal by an authorized administrator of Case Western Reserve University School ofLaw Scholarly Commons.Recommended CitationRobert L. McNeil, The Business Perspective: Cross Border Views, 17 Can.-U.S. L.J. 55 (1991)Available at: https://scholarlycommons.law.case.edu/cuslj/vol17/iss1/18The Business Perspective: Cross Border ViewsRobert L. McNeill*first became aware that the United States shares a common space withanother country when I was thirty-four years old. I was hired by theU.S. Chamber of Commerce and my initial assignment was to updatethe statistics in a Chamber booklet entitled, "Are Canadians Really?"subtitled "Or for that Matter is Canada?" This booklet was humorous informat, but wonderful in substance. It contained cartoons of Rose Marieand the Royal Canadian Mounted Police, but most importantly, it de-scribed Canada to those who took the time to read it. The Chamber hadprinted and distributed over a million copies, and its largest single cus-tomer was the Canadian Embassy which used it worldwide as a docu-ment describing Canada.Eight years later, I had a second experience impressing upon methat there was, in fact, a Canada. I was sitting in the Secretary of Com-merce's office, and in walks a rather brash and pugnacious young manwith his minister of industry, to complain about our examination of aCanadian tariff remission scheme. Canada, pursuant to our commissionreport, had provided that they would remit the twenty-five percent Cana-dian import tariff on engine blocks imported into Canada in return forCanadian producers shipping Canadian automotive products. It was adollar for dollar deal. A U.S. producer could import a million dollarsworth of engine blocks free by increasing the incremental exports fromCanada by the same amount. From that tariff remission by Canada, theCanada-United States Automotive Products agreement was derived.Today, I will discuss some personal experiences I have had in theanti-dumping area. First, let me tell you about the Emergency Commit-tee for American Trade ("ECAT"). ECAT has been in existence fornearly twenty-four years. It is comprised of sixty-five large U.S. interna-tional corporations whose members are the CEO's of these companies.ECAT's members have worldwide sales of over a trillion dollars annu-ally, and their worldwide employment is roughly six and one half mil-lion. They are large, substantial companies, perhaps among the Fortune100.ECAT has only recently become concerned with the issue of anti-dumping. While the U.S. anti-dumping statute has been periodicallyamended for years, ECAT did not take issue with the amendments.However, their cumulative effect has been quite drastic. In the United* Executive Vice Chairman, Emergency Committee for American Trade (Washington, D.C.).1McNeil: The Business Perspective: Cross Border ViewsPublished by Case Western Reserve University School of Law Scholarly Commons, 1991CANADA-UNITED STATES LAW JOURNALStates, the domestic statute has been deemed unfair and arbitrary interms of the criteria used in its implementation and administration.Many of our companies were even more concerned with the rash of anti-dumping statutes being initiated and implemented in other countries.They are concerned that their exports could be adversely impacted bycapricious anti-dumping regimes. For this reason, ECAT undertook astudy and proposed a series of recommendations to improve not our U.S.statute unilaterally, but the GATT anti-dumping code itself. We devel-oped twenty recommendations, and allow me to mention three or four togive you an overview of what ECAT recommended. Keep in mind theseproposed GATT anti-dumping amendments would be universally appli-cable to the extent which GATT membership has universal acceptance.First, ECAT recommended a de minimis rule in the administrationof the anti-dumping law. This recommendation was derived from theexperience of a member who produces orange juice in Brazil and importsit into the United States. U.S. orange juice producers petitioned for ananti-dumping duty because they felt that the juice was being imported ata dumped price. An investigation was undertaken and a margin of sixtenths of one percent or six one hundredths of one percent dumping wasfound. To process this one application, the member company spent overtwo million dollars in external legal fees, plus in-house legal counsel ex-penditures. Having witnessed this expensive process, ECAT consideredwhether an anti-dumping duty of six one hundredths or six tenths of onepercent really has any impact on the flow of trade? I think the answer isperhaps, no. That being the case, ECAT thought that the GATT shouldbe amended to provide a de minimis rule if the margin of dumping is twopercent or less, but establish a standard below which petitions will not beaccepted.The second recommendation stated that if U.S. petitioners requestedan anti-dumping investigation, there must be support from a substantialnumber of producers in that particular industry. There are cases wherean investigation will be undertaken absent support of the petition by amajority in the particular industry. Therefore, ECAT suggested thatworldwide, before petitions for anti-dumping investigations are acceptedand undertaken, there should be some understanding that the petitionersdo, in fact, have the force of a substantial number of the domestic produ-cers of the particular product.The third recommendation was that in cases where materials in theproduction process are in short supply domestically, anti-dumping dutiesshould not be imposed against them so as to make the imported productmore expensive. The fourth recommendation involved a sunset provisionwhere anti-dumping duty cases would be limited to five years. The pur-pose of this finite period is to establish a point at which the anti-dumpingduties will either be removed or liberalized, unless at the end of the pe-riod there is a reason to believe that the anti-dumping duty should becontinued.Vol. 17:55 19912Canada-United States Law Journal, Vol. 17 [1991], Iss. 1, Art. 18https://scholarlycommons.law.case.edu/cuslj/vol17/iss1/18McNeill-CROSS BORDER VIEWSThe reaction to ECAT's recommendations was immediate, drasticand severe. Johnson & Johnson's CEO received a letter from representa-tives of U.S. companies who wanted to preserve the status quo. In addi-tion, ECAT's CEO's received letters from elected officials, including asenator who sent a letter questioning our patriotism. Therefore, when wethink about creating a substitute for the present anti-dumping regimebetween the United States and Canada, it is a very difficult issue.The Canadian objective in the Free Trade Agreement was to achieveexemption from the application of our unfair trade statutes, primarilyanti-dumping and countervailing duty statutes. The special dispute set-tlement procedure in the Free Trade Agreement involves the appoint-ment of panels to examine anti-dumping cases processed in each country.The purpose of the examination is to determine whether, in this case, thedecision was appropriate based on the facts before Congress.Of the twelve to fifteen cases that have been referred to these panels,roughly half have seen unanimous agreement that the U.S. application ofthe law was absolutely correct. The panels remanded the other half ofthe cases back to the United States with questions concerning the factualbases for the findings. It is my understanding that the U.S. actions fol-lowing the remand in these instances satisfied the panelists. Overall, itseems to be a system short of exemption, but one that is working effi-ciently for producers in both countries.If Canada becomes a full participant in the forthcoming bilateralfree trade agreement talks between the United States and Mexico, theensuing trilateral agreement will make it more difficult for Congress toeffect any substantial changes in our anti-dumping and countervailingduty statutes. Indeed, such participation could make it difficult for Con-gress to maintain the present dispute settlement procedure between theUnited States and Canada. This is because Mexico has a legal systemwhich is based on a civil code, unlike the Canadian and U.S. systemswhich are founded on common law principles. Also, the application isdifferent in the Mexican judicial system. It is much more capricious;much less certain than the legal systems in either the United States orCanada. Mexico has only recently instituted its own anti-dumping re-gime. A number of cases have been brought against the United States inMexico, and the Mexican anti-dumping administration is wholly unlikethat of the United States. Some cases have been decided with an absolutelack of due process, an absolute lack of transparency. In a matter ofdays, anti-dumping cases have been accepted, processed and anti-dump-ing duties applied, without any opportunity for the parties to respond.Negotiating a free trade agreement between Mexico and the UnitedStates will be much more difficult than the Canada-U.S. negotiationswere. If a trilateral negotiation materializes, with respect to the unfairtrade statutes in the United States, it will be very difficult to move beyonda bilateral system between Canada and the United States.3McNeil: The Business Perspective: Cross Border ViewsPublished by Case Western Reserve University School of Law Scholarly Commons, 19914Canada-United States Law Journal, Vol. 17 [1991], Iss. 1, Art. 18https://scholarlycommons.law.case.edu/cuslj/vol17/iss1/18

The Business Perspective: Cross Border Views

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The Business Perspective: Cross Border Views

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