Fresh,Chilled or Frozen Pork from Canada (ECC, 1991)A description of the forum and theapplicable dispute resolution processThis event was given in the UnitedStates, in relation to the topic Fresh, Chilled or Frozen Pork from Canada,since some anomalies were found during the process of importing it. It isimportant to mention, that two Canadian packers that were engaged in the exportof pork carcasses to the United States, requested that the file be analyzedagain. This request was also endorsed and required by the governments of theprovince of Quebec and Alberta.The only option at that time was theacceptance of the review of the case, since both countries had the right torequest an investigation of the case in case there was doubt that any anomalycould be present.
To follow up on this process, theprocesses already established in Chapter 19 of the Free Trade Agreement had tobe followed, since it is known in advance that the United States and Canadahave this treaty and that it was used at the time of export pork meat. Thistreaty led to the conclusion of using different alternative mechanisms ofresolution, so that the decisions were totally equitable, a panel was createdthat was made up of people who would act as judges of the case. For example, ifthe panel was made up of twenty people, ten of them were representing Canadaand the other half were from the United States.Once the panel analyzed the file, allthe points discussed were made in relation to article 1904 of the Free TradeAgreement and its revision was based on the provisions of article 1911 of thesame one. · A description of the facts of the case- who did what?A US companyconducted a series of analyzes where it was found that pork imports in any oftheir presentations was generating a very serious problem for the country.It is clear andacceptable that the State decided to analyze in detail the processes ofimporting pork meat, since in 1989 the organization of international tradeencouraged the importation of pork, because it promoted this activity throughfinancial support given to pig farmers in Canada.On the other hand, aninternational commission related to matters of imports, declared that the pigsector could be seriously harmed by this type of support provided to pigproducers from abroad.Due to theseriousness of the situation, new intrigues arose for the case.
First, the amount ofpork consumption in the United States was not known exactly. For example, therewas the possibility that the figures obtained could have alterations or theinformation did not come from reliable resources.Second, Although itis a somewhat opposite issue, the United States was analyzing whether Canadawas a viable country to start business with Japan. For example, the US wonderedif Canada could start sending pork meat to Japan. This was a latent risk, sinceJapan was seen as a threat and competition.Third, there wasdoubt in relation to the total production of pigs that were raised andslaughtered, with the support received by the American subsidies.The three assumptionsmentioned above and others that were not mentioned in great detail, were sentto the International Trade Commission to analyze them in detail, because asmentioned above, these were only assumptions and it was not known for sure ifthese could be true or not.At the end of theInternational Trade Commission process, It was declared that all of theseassumptions were a great threat that would harm the American pig farmers.
On the other hand,the panel of people integrated equally by Canadian and Americanrepresentatives, analyzed the case again and affirmed that the InternationalTrade Commission made anomalies at the time that did not want to accept newevidence and by not announcing both parties (US and Canada ) that the casewould be analyzed a second time.While a clear andreliable answer was obtained to these assumptions, the United States and Canadaestablished that during that period of time, the pork meat would continue to beaccepted, for seven years.A description of therelevant issuesOn March 29, 1991,the National Council of Pork Producers of the United States (NPPC) requestedthe representation of Carla Hills, who was representing the American porkproducers at that time.
In addition, she requested a compliance committee thatis based on the article of 1904. The purpose of this committee was to ensurethat no panelist / judge had violated or misapplied a rule throughout theprocess.On the other hand,the Canadian officials affirmed that she only participated to gain fame andreputation to create new alliances with Mexico, since this country alsoparticipates in the Free Trade Agreement.
In addition, Canadian representativesaffirm that the United States violated rules that are stipulated in the FreeTrade Agreement.Likewise, Canadamentioned that its exports would not have consequences for the United States orfor the American pig farmers, since imports only represented a low number (3%)of the total swine production in the country.The key point thatgenerated this conflict was a penalty / fine related to a process called”Purpose Rule”.Another of therelevant problems of this file is that the International Trade Commission founda problem generated by the growth of pork imports in all of the presentationsand in turn by the decrease in the production of pigs in the United States. What is the disputeabout? a discussion of the relevant rule(s) of law.Another problemdescribed is that one of the panels did not want to accept some evidencepresented to the International Trade Commission, since these tests were notvisible to the Federal Registration Agency.One of the partiesrefused to give evidence to the International Trade Commission, so it was notpossible to carry out a more detailed investigation to obtain more specificdata that would have helped a lot in the resolution of the case.Canada may haveexercised the antidumping law and other laws related to importing.
If during the processof 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 theInternational Trade Court and the Court of Appeals should apply, so that it cananalyze and judge the case correctly.On the other hand,the United States and Canada had a different perspective on how a countervailingduty would be applied, because of this type of misunderstanding and while therewas a final decision, the GATT did not give any meaning to the term subsidy.Canada stated thatthe United States should never have forced the application of a countervailingduty, since Article Six of the General Agreement establishes that no productshould have this countervailing duty, if it does not exceed the amounts alreadyestablished.
The main factor bywhich this great controversy was developed was the omission of a compensatorytax. It is important to mention that for both countries, this type of situationis not common, since they have always enjoyed having good businessrelationships. On January 1, 1989, the United States and Canada signed thisagreement in which both would benefit.In addition, theCanadian pork producers indicate that the United States should have given themat least more than twenty million dollars, for the tariff rate that was appliedfor the pork meat in 1989.This figure can beheard enormously, but Smith, who is a Canadian farmer said that Canada has hadmillionaire losses by the tariff rate that the United States was applying. Forexample, the estimate of losses for Canada is around two hundred million.
In case one of thepanels commits irregularities, it would not have had sufficient preparation orknowledge related to this situation. There was something called”extraordinary challenge”, which would be in charge of getting ajudge, who would be selected by both countries.Another problempresented is that Canada was unsure if pork was being sold at a lower pricethan what was established, so International Trade had to interfere to ensurethat the price was not being handled differently. Cite the law, explainit the decision of the court/tribunal and the reasons for the decisionThe pig farmers ofthe 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 bythat time they would leave things like that but for the future other measureswould be taken in case a situation like this happens and if the Canadiangovernment launches new subsidies for local pork producers, he will be surethat the US will take into account resuming doing business in relation toimports of pork meat.One of the decisionson 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 anequitable manner with all the requirements and sanctions established in thislaw.
Similarly for thefinal resolution, the court relied on articles 1904 and 1911, which give theassurance that none of the panels applied different legal principles to theUnited States and that the minimum details (tests) were taken into account thefinal resolution of the case. In the Free Trade Agreement, article 1911established that if both parties agreed to be analyzed in detail, they couldhave the opportunity of a hearing.After all this seriesof processes, the International Trade Commission agreed to open the file againso that both countries could see how the final resolution of the case wasobtained.All the argumentspresented and analyzed by the different panels (judges) were based on the FreeTrade Agreement so it does not to apply a law directly as a court would havedone.It was also arguedthat the Free Trade Agreement should be accepted so that panels would acceptdifferent requests and present different evidence.
It is worthmentioning, that the Supreme Court stipulated that all governments and theircorresponding authorities should be free to create their own legal andinvestigative processes so that they can comply with the laws more quickly andefficiently, since in this case of the importation of pork was limited a bitthat the International Trade Commission fulfilled and effectively applied itsregulations.Ananalysis of why they came to the decision they didCanada had pointedout that this type of situation had never been presented before.The judges wereforced to close the case, since they affirmed that this type of procedures andlaws were created for more specific and exceptional cases. For example, thelocust case was discussed, but this case was very different from pork imports,so the same procedures could not be applied.
