Introduction
The Canada-United States-Mexico Agreement ("CUSMA")1 entered into force on July 1, 2020, replacing the two and a half decade-old North American Free Trade Agreement ("NAFTA").
Despite remaining one of the largest and deepest trade relationships in the world,2 various prominent trade disputes have arisen between Canada, Mexico and the United States under the CUSMA.
We are pleased to introduce the "McMillan LLP CUSMA Dispute Settlement Scoreboard", which provides overview and analysis of ongoing and concluded CUSMA disputes. The Scoreboard keeps a running tally of who has scored "points" in dispute settlement under CUSMA.
The Scoreboard provides the views of McMillan LLP International Trade Group. Points are granted based on which side ultimately prevailed in the dispute (ie, the country whose position the decision-maker ultimately favoured), in conjunction with the decision's broader impact.3
The views expressed through this Scoreboard are those of the authors, and do not necessarily represent those of the firm more broadly, nor does this constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
Background on the relevant dispute settlement mechanisms contained in the CUSMA5 can be found below the Scoreboard.
The Score
As of June 5, 2023, nineteen disputes have been initiated under CUSMA and four have been decided by panels.6 The score stands at United States: 1, Canada: 3, Mexico: 1. Click on the expandable table below for more information and analysis on each dispute. McMillan LLP will update this resource as information on CUSMA disputes becomes available.
CUSMA TOTAL Score |
Canada | Mexico | U.S.A. | |
|---|---|---|---|---|
| Wins | 3 | 1 | 1 | |
| Losses | 1 | – | 2 | |
| Total Disputes | 15 | 6 | 18 |
Chapter 31 (General Dispute Settlement) Disputes
Dairy TRQ Allocation Measures (CDAUSA- 2021-31-01)
The United States challenged Canada's dairy tariff rate quota ("TRQs") allocation under several CUSMA provisions, including Article 3.A.2.11(b), which prohibits allocating a portion of a quota to processors.
| Dispute | |
| Complaining Party: | United States |
| Responding Party: | Canada |
| Timeline | |
| Panel Request: | May 25, 2021 |
| Final Report: | December 20, 2021 |
| Total Length of Panel Proceedings: | 209 days |
| Result | |
| The Panel found that Canada's practice of
reserving access to 85 to 100% of its 14 dairy TRQs exclusively to
processors and further processors was inconsistent with
Canada's obligations under CUSMA. Canada announced new dairy
TRQ allocation and administration policies on May 16, 2022, which
ended the use of processor-specific TRQ pools. However,
Canada's dairy TRQ allocation policies have come under fire
again in a new US-initiated dispute under CUSMA chapter 31 (see
below).
Point to: United States |
|
Crystalline Silicon Photovoltaic Cells Safeguard Measure
(USA-CDA-2021-31-01)
Canada challenged the United States' application of safeguards on solar products from Canada as a violation of, among other provisions, Article 10.2.1. That obligation prevents the application of safeguards to a Party unless imports from that Party "account for a substantial share of total imports" and "contribute importantly to the serious injury."
| Dispute | |
| Complaining Party: | Canada |
| Responding Party: | United States |
| Timeline | |
| Panel Request: | June 21, 2021 |
| Final Report: | February 15, 2022 |
| Total Length of Panel Proceedings: | 239 days |
| Result | |
| The Panel found that the United States'
imposition of a safeguard tariff on Canadian solar products
violated its commitments under Article 10.2.1 and 2.4.2 of CUSMA.
On July 8, 2022, the United States and Canada agreed to a
resolution under which the US suspended the application of solar
safeguards to Canadian CSPV products, effective retroactively to
February 1, 2022.
Point to: Canada |
|
Automotive Parts and Vehicles – Rules of Origin
Mexico challenged the United States' approach to determining regional value content for certain vehicles under CUSMA's rules of origin (Article 4.2). It argued that regional value content should include 100% of the value of "core parts" that are found to be originating in a CUSMA Party, even when part of the value of the core part does not originate in a CUSMA Party. Canada joined Mexico in the dispute.
| Dispute | |
| Complaining Party: | Mexico (joined by Canada) |
| Responding Party: | United States |
| Timeline | |
| Panel Request: | January 6 2022 |
| Final Report: | December 14 2022 |
| Total Length of Panel Proceedings: | 342 days |
| Result | |
| The panel held in favour of Mexico and Canada,
clarifying that the entire value of originating core parts could be
included in the regional value content calculation for the vehicle.
The US, Mexico and Canada have 45 days from the date of the
decision to reach a resolution, and for the US to bring itself into
conformity with CUSMA. Alternatively, if the US does not bring
itself into conformity, Canada and Mexico could legally retaliate
against the US, and could target its automotive sector.
Point to: Mexico and Canada |
|
Dairy TRQ Allocation Measures 2023
The United States has again challenged Canada's dairy TRQ allocation policies, alleging that Canada has breached its CUSMA obligations by making certain types of importers ineligible to apply for a dairy TRQ allocation, unfairly limiting eligible applicants and their allocation based on their market share, and restricting importers' ability to utilize their TRQ quantities fully by requiring them to return unused allocations four months prior to the end of the year.
| Dispute | |
| Complaining Party: | United States |
| Responding Party: | Canada |
| Timeline | |
| Panel Request: | – |
| Final Report: | – |
| Total Length of Panel Proceedings: | – |
| Result | |
| Dispute ongoing.
Point to: – |
|
Mexico Energy
Canada and the United States allege that 2021 amendments to Mexico's energy laws prioritize electricity produced by Mexico's state-owned entities over electricity produced by private producers in the dispatch of electricity to Mexico's electricity grid. They allege that this is in violation of CUSMA's non-discrimination obligation (Article 2.3), among other provisions.
| Dispute | |
| Complaining Party: | Canada and United States |
| Responding Party: | Mexico |
| Timeline | |
| Panel Request: | – |
| Final Report: | – |
| Total Length of Panel Proceedings: | – |
| Result | |
| Dispute ongoing.
Point to: – |
|
Mexico Genetically Engineered Products
The United States alleges that Mexico is effectively banning imports of certain genetically engineered products, namely corn, canola, cotton and soybean, in violation of the sanitary and phytosanitary measures chapter of CUSMA (Chapter 9) as well as CUSMA's prohibition on import restrictions (Article 2.11).
| Dispute | |
| Complaining Party: | United States (joined by Canada) |
| Responding Party: | Mexico |
| Timeline | |
| Panel Request: | – |
| Final Report: | – |
| Total Length of Panel Proceedings: | – |
| Result | |
| Dispute ongoing.
Point to: – |
|
Chapter 31 (Dispute Settlement) Total Score
| Canada | Mexico | U.S.A. | |
|---|---|---|---|
| Wins | 2 | 1 | 1 |
| Losses | 1 | 0 | 2 |
| Total Disputes | 5 | 3 | 6 |
Chapter 10 (Trade Remedies Binational Panel Review)
Gypsum Board (CDA-USA-2020-10.12.01)
The complainant (CGC Inc.) challenged the Canadian International Trade Tribunal's decision not to conduct an interim review of its 2017 injury determination with respect to gypsum board. It argued that the test the CITT applied to find a "regional market" was erroneous.
| Dispute | |
| Importing Party: | Canada |
| Other Involved Party: | United States |
| Timeline | |
| Panel Request: | November 26 2020 |
| Final Report: | June 14 2022 |
| Total Length of Panel Proceedings: | 565 days |
| Result | |
| The Panel upheld the CITT's decision not to
conduct an interim review under the reasonableness standard.
Point to: Canada |
|
Softwood Lumber CVD AR (USA-CDA-2020-10.12-01)
The complainants, a group that includes the Government of Canada, several Canadian provinces, lumber associations and producers, challenge the US Department of Commerce's final CVD determination in the first administrative review in Certain Softwood Lumber Products from Canada.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | December 10, 2020 |
| Result | |
| Dispute ongoing. | |
Softwood Lumber AD AR (USA-CDA-2020-10.12-02)
The complainants challenge the US Department of Commerce's final AD determination in the first administrative review in Certain Softwood Lumber Products from Canada. Canada, one complainant, challenges (1) Commerce's application of the "differential pricing methodology" to determine the method of calculating weighted-average dumping margins, and (2) Commerce's use of "zeroing" in its comparison methodologies.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | December 22, 2020 |
| Result | |
| Dispute ongoing. | |
Carbon and Certain Alloy Steel Wire Rod AD AR
(USA-MEX-2021-10.12-01)
The complaint alleges that the US Department of Commerce's final AD determination in the administrative review of the AD order in Carbon and Certain Alloy Steel Wire Rod from Mexico is unsupported by substantial evidence on the record or otherwise not in accordance with law. Specifically, Deacero argues that the Department of Commerce incorrectly accounted for s. 232 national security tariffs on steel and the United States' commitments to Mexico in its determination of anti-dumping duties.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Mexico |
| Timeline | |
| Panel Request: | September 17, 2021 |
| Result | |
| Dispute ongoing. | |
Steel Concrete Reinforcing Bar AD AR (USAMEX-2021-10.12-02)
The complainant (Deacero) challenges the US Department of Commerce's final AD determination in the administrative review of Steel Concrete Reinforcing Bar From Mexico. It argues that Commerce incorrectly accounted for s. 232 national security tariffs on steel and the United States' commitments to Mexico in its determination of anti-dumping duties.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Mexico |
| Timeline | |
| Panel Request: | October 8, 2021 |
| Result | |
| Dispute ongoing. | |
Softwood Lumber CVD AR2 (USA-CDA-2021-10.12-03)
The complainants challenge the US Department of Commerce's final CVD determination in the second administrative review of Certain Softwood Lumber Products from Canada.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | December 28, 2021 |
| Result | |
| Dispute ongoing. | |
Softwood Lumber AD AR2 (USA-CDA-2021-10.12-04)
The complainants challenge the US Department of Commerce's final AD determination in the second administrative review of Certain Softwood Lumber Products from Canada.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | December 28, 2021 |
| Result | |
| Dispute ongoing. | |
Large Diameter Welded Pipe AD AR (USA-CDA-2022-10.12-01)
The complainants argue that the Department of Commerce incorrectly calculated Evraz's revenue when determining antidumping duty margins in the administrative review of the AD order in Large Diameter Welded Pipe from Canada.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | March 4, 202 |
| Final Report: | n/a (terminated December 9, 2022) |
| Total Length of Panel Proceedings: | 280 days |
| Result | |
| The parties consented to terminate proceedings pursuant to Rule 75(2) of the USMCA Rules of Procedure for Article 10.12 (Binational Panel Review). | |
Softwood Lumber CVD AR3 (USA-CDA-2022-10.12-03)
The complainants allege that the US Department of Commerce's final CVD determination in the third administrative review of the AD order in Certain Softwood Lumber Products from Canada is unsupported by substantial evidence on the record or otherwise not in accordance with law. For example, complainants argue that Commerce's use of Nova Scotia as a benchmark for other provinces is unfounded, as are its findings with regard to specific grant and incentive programs.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | September 8, 202 |
| Final Report: | – |
| Total Length of Panel Proceedings: | – |
| Result | |
| Dispute ongoing. | |
Softwood Lumber AD AR3 (USA-CDA-2022-10.12-02)
The complainants allege that the US Department of Commerce's final AD determination in the third administrative review of the AD order in Certain Softwood Lumber Products from Canada is unsupported by substantial evidence on the record or otherwise not in accordance with law. This includes, for example, Commerce's use of certain methods for calculating the margin of dumping, which the complainants argue was flawed.
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | September 8, 202 |
| Final Report: | – |
| Total Length of Panel Proceedings: | – |
| Result | |
| Dispute ongoing. | |
Large Diameter Welded Pipe AD AR2
(USA-CDA-2022-10.12-UNDEFINED)
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | – |
| Final Report: | – |
| Total Length of Panel Proceedings: | – |
| Result | |
| Dispute ongoing. | |
Softwood Lumber from Canada Sunset Review AD Order
(USA-CDA-2023-10.12-01)
| Dispute | |
| Importing Party: | United States |
| Other Involved Party: | Canada |
| Timeline | |
| Panel Request: | – |
| Final Report: | – |
| Total Length of Panel Proceedings: | – |
| Result | |
| Dispute ongoing. | |
Chapter 10 (Trade Remedies Binational Panel Review) Total
Score
| Canada | Mexico | U.S.A. | |
|---|---|---|---|
| Wins | 1 | 0 | 0 |
| Losses | 0 | 0 | 0 |
| Total Disputes | 10 | 2 | 12 |
Chapter 14 (Investor-State Dispute Settlement) Disputes
Finley Resources et al. v. Mexico (ICSID Case No. ARB/21/25)
The claimants entered into several oilfield service contracts with Petroleos Mexicanos ("Pemex"), Mexico's state-owned oil company. They allege that Pemex breached those contracts, leading to litigation that either had to be abandoned or was wrongly decided in favour of Pemex. The claimants also allege that Mexico compromised with and paid similarly situated Mexican oilfield service companies. The claims are brought under the national treatment (Article 14.4) and minimum standard of treatment (Article 14.6) obligations of USMCA, in addition to comparable NAFTA obligations.
| Dispute | |
| Claimants: | Finley Resources, Inc. (US), MWS Management, Inc. (US), Prize Permanent Holdings, LLC (US) |
| Respondent: | Mexico |
| Timeline | |
| Notice of Arbitration: | March 25, 2021 |
| Final Report: | – |
| Total Length of Panel Proceedings: | – |
| Result | |
| Dispute ongoing. | |
Chapter 14 (Investor-State Dispute Settlement) Total Score
| Canada | Mexico | U.S.A. | |
|---|---|---|---|
| Wins | – | – | – |
| Losses | – | – | – |
| Total Disputes | – | 1 | – |
Overview of Dispute Settlement Paths under CUSMA
The CUSMA contains three principal dispute settlement mechanisms: binational panel review under Chapter 10, investor-state dispute settlement under Chapter 14, and the general dispute settlement provisions of Chapter 31.
The appropriate dispute settlement path depends on the disputing parties (e.g., state vs. state or investor vs. state) and the obligation the party seeks to enforce (e.g., anti-dumping or countervailing duty, investment, or another CUSMA obligation).
Footnotes
Footnotes
1. Known in the United States as the United States–Mexico-Canada Agreement ("USMCA")
2. The value of international trade between Canada, Mexico and the United States was over USD $ 1.1 trillion in merchandise in 2019
3. For example, if a country launches a dispute against another with 10 unique claims, and that country is successful in only one of those 10, it is entirely possible that the Scoreboard would accord the point to the defending party (especially if the only claim on which the complaining party was successful was minor or of less important).
4. These are Chapter 10, Trade Remedies Binational Panel Review; Chapter 14, Investor-State Dispute Settlement as between Mexico and the United States; and Chapter 31, General Dispute Settlement.
5. This does not include disputes that continue under NAFTA, which we have excluded from the Scoreboard.
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.
© McMillan LLP 2021
