Chilled or Frozen Pork from Canada (ECC, 1991)
A description of the forum and the
applicable dispute resolution process
This event was given in the United
States, in relation to the topic Fresh, Chilled or Frozen Pork from Canada,
since some anomalies were found during the process of importing it. It is
important to mention, that two Canadian packers that were engaged in the export
of pork carcasses to the United States, requested that the file be analyzed
again. This request was also endorsed and required by the governments of the
province of Quebec and Alberta.
The only option at that time was the
acceptance of the review of the case, since both countries had the right to
request an investigation of the case in case there was doubt that any anomaly
could be present.
To follow up on this process, the
processes already established in Chapter 19 of the Free Trade Agreement had to
be followed, since it is known in advance that the United States and Canada
have this treaty and that it was used at the time of export pork meat. This
treaty led to the conclusion of using different alternative mechanisms of
resolution, so that the decisions were totally equitable, a panel was created
that was made up of people who would act as judges of the case. For example, if
the panel was made up of twenty people, ten of them were representing Canada
and the other half were from the United States.
Once the panel analyzed the file, all
the points discussed were made in relation to article 1904 of the Free Trade
Agreement and its revision was based on the provisions of article 1911 of the
A description of the facts of the case
– who did what?
A US company
conducted a series of analyzes where it was found that pork imports in any of
their presentations was generating a very serious problem for the country.
It is clear and
acceptable that the State decided to analyze in detail the processes of
importing pork meat, since in 1989 the organization of international trade
encouraged the importation of pork, because it promoted this activity through
financial support given to pig farmers in Canada.
On the other hand, an
international commission related to matters of imports, declared that the pig
sector could be seriously harmed by this type of support provided to pig
producers from abroad.
Due to the
seriousness of the situation, new intrigues arose for the case.
First, the amount of
pork consumption in the United States was not known exactly. For example, there
was the possibility that the figures obtained could have alterations or the
information did not come from reliable resources.
Second, Although it
is a somewhat opposite issue, the United States was analyzing whether Canada
was a viable country to start business with Japan. For example, the US wondered
if Canada could start sending pork meat to Japan. This was a latent risk, since
Japan was seen as a threat and competition.
Third, there was
doubt in relation to the total production of pigs that were raised and
slaughtered, with the support received by the American subsidies.
The three assumptions
mentioned above and others that were not mentioned in great detail, were sent
to the International Trade Commission to analyze them in detail, because as
mentioned above, these were only assumptions and it was not known for sure if
these could be true or not.
At the end of the
International Trade Commission process, It was declared that all of these
assumptions were a great threat that would harm the American pig farmers.
On the other hand,
the panel of people integrated equally by Canadian and American
representatives, analyzed the case again and affirmed that the International
Trade Commission made anomalies at the time that did not want to accept new
evidence and by not announcing both parties (US and Canada ) that the case
would be analyzed a second time.
While a clear and
reliable answer was obtained to these assumptions, the United States and Canada
established that during that period of time, the pork meat would continue to be
accepted, for seven years.
A description of the
On March 29, 1991,
the National Council of Pork Producers of the United States (NPPC) requested
the representation of Carla Hills, who was representing the American pork
producers at that time. In addition, she requested a compliance committee that
is based on the article of 1904. The purpose of this committee was to ensure
that no panelist / judge had violated or misapplied a rule throughout the
On the other hand,
the Canadian officials affirmed that she only participated to gain fame and
reputation to create new alliances with Mexico, since this country also
participates in the Free Trade Agreement. In addition, Canadian representatives
affirm that the United States violated rules that are stipulated in the Free
mentioned that its exports would not have consequences for the United States or
for the American pig farmers, since imports only represented a low number (3%)
of the total swine production in the country.
The key point that
generated this conflict was a penalty / fine related to a process called
Another of the
relevant problems of this file is that the International Trade Commission found
a problem generated by the growth of pork imports in all of the presentations
and in turn by the decrease in the production of pigs in the United States.
What is the dispute
about? a discussion of the relevant rule(s) of law.
described is that one of the panels did not want to accept some evidence
presented to the International Trade Commission, since these tests were not
visible to the Federal Registration Agency.
One of the parties
refused to give evidence to the International Trade Commission, so it was not
possible to carry out a more detailed investigation to obtain more specific
data that would have helped a lot in the resolution of the case.
Canada may have
exercised the antidumping law and other laws related to importing.
If during the process
of review of the case it had been found that a law applied incorrectly,
automatically the case would be closed due to anomalies, since the Law of the
International Trade Court and the Court of Appeals should apply, so that it can
analyze and judge the case correctly.
On the other hand,
the United States and Canada had a different perspective on how a countervailing
duty would be applied, because of this type of misunderstanding and while there
was a final decision, the GATT did not give any meaning to the term subsidy.
Canada stated that
the United States should never have forced the application of a countervailing
duty, since Article Six of the General Agreement establishes that no product
should have this countervailing duty, if it does not exceed the amounts already
The main factor by
which this great controversy was developed was the omission of a compensatory
tax. It is important to mention that for both countries, this type of situation
is not common, since they have always enjoyed having good business
relationships. On January 1, 1989, the United States and Canada signed this
agreement in which both would benefit.
In addition, the
Canadian pork producers indicate that the United States should have given them
at least more than twenty million dollars, for the tariff rate that was applied
for the pork meat in 1989.
This figure can be
heard enormously, but Smith, who is a Canadian farmer said that Canada has had
millionaire losses by the tariff rate that the United States was applying. For
example, the estimate of losses for Canada is around two hundred million.
In case one of the
panels commits irregularities, it would not have had sufficient preparation or
knowledge related to this situation. There was something called
“extraordinary challenge”, which would be in charge of getting a
judge, who would be selected by both countries.
presented is that Canada was unsure if pork was being sold at a lower price
than what was established, so International Trade had to interfere to ensure
that the price was not being handled differently.
Cite the law, explain
it the decision of the court/tribunal and the reasons for the decision
The pig farmers of
the United States, accepted the resolution given to the case, but John Hardin,
president of NPPC (National Council of Pork Producers of the US) stated that by
that time they would leave things like that but for the future other measures
would be taken in case a situation like this happens and if the Canadian
government launches new subsidies for local pork producers, he will be sure
that the US will take into account resuming doing business in relation to
imports of pork meat.
One of the decisions
on which the court based itself was on a so-called “Due Process”,
since both countries participate in this law and oblige them to comply in an
equitable manner with all the requirements and sanctions established in this
Similarly for the
final resolution, the court relied on articles 1904 and 1911, which give the
assurance that none of the panels applied different legal principles to the
United States and that the minimum details (tests) were taken into account the
final resolution of the case. In the Free Trade Agreement, article 1911
established that if both parties agreed to be analyzed in detail, they could
have the opportunity of a hearing.
After all this series
of processes, the International Trade Commission agreed to open the file again
so that both countries could see how the final resolution of the case was
All the arguments
presented and analyzed by the different panels (judges) were based on the Free
Trade Agreement so it does not to apply a law directly as a court would have
It was also argued
that the Free Trade Agreement should be accepted so that panels would accept
different requests and present different evidence.
It is worth
mentioning, that the Supreme Court stipulated that all governments and their
corresponding authorities should be free to create their own legal and
investigative processes so that they can comply with the laws more quickly and
efficiently, since in this case of the importation of pork was limited a bit
that the International Trade Commission fulfilled and effectively applied its
analysis of why they came to the decision they did
Canada had pointed
out that this type of situation had never been presented before.
The judges were
forced to close the case, since they affirmed that this type of procedures and
laws were created for more specific and exceptional cases. For example, the
locust case was discussed, but this case was very different from pork imports,
so the same procedures could not be applied.