NORTH AMERICAN FREE TRADE AGREEMENT 32 I.L.M. 296 (Parts One Through Three) 32 I.L.M. 612 (Parts Four Through Eight) (1993)

The North American Free Trade Agreement between the Government of the United States of America, the Government of Canada, and the Government of the United Mexican States (NAFTA) was signed on December 17, 1992 by Canadian Prime Minister Brian Mulroney, Mexican President Carlos Salinas de Gortari, and U.S. President george h. w. bush. The U.S. government concluded NAFTA as a congressional–executive agreement, pursuant to a delegation of "fast track" negotiating authority set forth in section 1103 of the Omnibus Trade and Competitiveness Act of 1988 and section 151 of the Trade Act of 1974. The North American Free Trade Agreement Implementation Act—the vehicle for congressional approval and implementation of the Agreement—passed the U.S. house of representatives on November 17, 1993 by a 234–200 margin, and then passed the U.S. senate on November 20 by a 61–38 vote. President william j. clinton signed the bill on December 8, enabling NAFTA to enter into force on January 1, 1994.

NAFTA consists of eight parts organized into twenty-two chapters (plus scores of annexes and schedules), which together liberalize North American trade in goods and services. Whether a good qualifies for the application of NAFTA's trade-liberalizing rules is determined by the Rules of Origin (chapter four). The principle of national treatment must be applied to all qualifying goods and services. Tariffs, quotas, and other trade restrictions on qualifying goods are eliminated over a ten-year period. By eliminating these barriers to "substantially all trade" between the constituent territories, NAFTA is a free trade agreement within the meaning of Article XXIV of the General Agreement on Tariffs and Trade. In addition, NAFTA liberalizes investment rules, requires protection of intellectual property, provides for temporary entry of business persons, and disciplines the parties' customs procedures, government procurement practices, administration of antidumping and countervailing duty laws, use of technical barriers to trade, and application of sanitary and phytosanitary measures. Several academic and government studies suggest that these NAFTA rules are causing a shift of some labor-intensive production to Mexico and some production requiring high-skilled labor to the United States and Canada.

While party governments may employ NAFTA's general dispute settlement procedures (chapter twenty), natural or legal persons other than the party governments generally lack standing to participate in NAFTA dispute settlement. However, nationals of the parties may appeal party antidumping or countervailing duty determinations directly to a NAFTA dispute settlement panel (chapter nineteen), and certain disputes between a party and an investor of another party may be settled by binding arbitration (chapter eleven).

The Free Trade Commission, comprising cabinet-level representatives of the parties or their designees, carries out the agreement's implementation, elaboration, and supervision. Commission decisions must be taken by consensus. The commission is serviced by a secretariat that is often referred to as a "virtual secretariat," because each country houses in its capital its own "national Section" of the trinational secretariat.

Environmental and labor concerns associated with North American trade liberalization led to the conclusion of three supplementary international agreements: the North American Agreement on Environmental Cooperation, the Agreement Concerning the Establishment of a Border Environment Cooperation Commission and a North American Development Bank, and the North American Agreement on Labor Cooperation.

Of several challenges to NAFTA's constitutionality, three have generated significant debate. First, since congressional debate began on approval and implementation of NAFTA, Laurence Tribe and others have asserted that NAFTA should not have been concluded as a congressional–executive agreement, a device that is nowhere contemplated in the Constitution and that Tribe argues is unconstitutional. Instead, they assert that NAFTA should have been concluded as a treaty pursuant to Article II, subject to approval by two-thirds of the Senate present—a proportion of Senate support that NAFTA did not garner. Despite this challenge, the prevailing view set forth in the Restatement (Third) of Foreign Relations Law of the United States is that the congressional–executive agreement can be used as an alternative to the treaty method in every instance. Legal scholars Louis Henkin, Myres McDougal, and Detlev Vagts have advanced this latter view at various times in the last fifty years. And in the context of this NAFTA debate, Bruce Ackerman and David Golove offered a political–historical explanation for the development and legitimacy of congressional–executive agreements as interchangeable with treaties.

Second, some have argued that NAFTA's chapter nineteen provision for appeal of a party's antidumping or countervailing duty decision to NAFTA dispute settlement contravenes Article III, which vests "[t]he judicial Power of the United States … in one supreme Court, and in such inferior Courts as the Congress may establish." However, the prevailing view appears to be that chapter nineteen dispute settlement panels are legitimate "courts" because the governmental interest in establishing and maintaining NAFTA outweighs individual traders' interests in review by constitutional courts. Therefore, chapter nineteen would survive the balancing test set forth in Commodity Futures Trading Commission v. Schor (1986).

Finally, some have argued that chapter nineteen of NAFTA contravenes the appointments clause because chapter nineteen dispute settlement panelists are required to interpret and apply U.S. antidumping and countervailing duty law. Hence, the panelists appear to be "exercising significant authority pursuant to the laws of the United States," which would place them within the definition of "Officers of the United States" set forth in buckley v. valeo (1976) and so require compliance with the appointments clause procedure. However, the prevailing view among commentators who advised Congress during the NAFTA debate is that the panels will in actuality be international bodies exercising their authority pursuant to an international agreement, thus rendering the clause inapplicable. Despite the view that chapter nineteen would survive constitutional scrutiny, the NAFTA implementing legislation did establish special procedures for constitutional challenges to the panel system.

Richard H. Steinberg
(2000)

(see also: Executive Agreement.)

Bibliography

Ackerman, Bruce and Golove, David 1995 Is NAFTA Constitutional? Harvard Law Review 108:799–929.

Bello, Judith H.; Holmer, Alan F.; and Norton, Joseph J., eds. 1994 The North American Free Trade Agreement: A New Frontier in International Trade and Investment in the Americas. Washington, D.C.: American Bar Association.

Boyer, Ethan 1996 Article III, the Foreign Relations Power, and the Binational Panel System of NAFTA. International Tax and Business Lawyer 13:101–142.

Davey, William J. 1992 The Appointments Clause and International Dispute Settlement Mechanisms: A False Conflict. Washington and Lee Law Review 49:1315–1328.

Tribe, Laurence H. 1995 Taking Text and Structure Seriously: Reflections on Free-Form Method In Constitutional Interpretation. Harvard Law Review 108:1221–1303.