such laws be applied to products independent of where they are
produced. For example, it would be against NAFTA rules to require a
specific level of fuel efficiency on imported cars but not on those cars
produced and sold in Canada.
The principle of national treatment allows each member country a
maximum of policy independence while preventing national policies from
being used as trade barriers. In the absence of national treatment, Canada
could impose stringent environmental or product standards on the
products of foreign firms only and thereby offer effective protection to its
domestic firms who need only satisfy less stringent standards.
Dispute Settlement
A key provision of NAFTA is its dispute-settlement mechanism. Under it,
the justifications required for levying antidumping and countervailing
duties are subject to review by a panel of Canadians, Americans, and
Mexicans. The international panel has the power to suspend any duties
until it is satisfied that the domestic laws have been correctly and fairly
applied.
The establishment of NAFTA’s dispute-settlement mechanism was path
breaking: for the first time in its history, the United States agreed to
submit the administration of its domestic laws to binding scrutiny by an
international panel that often contains a majority of foreigners.
Other Major Provisions