ARBITRAL PANEL ESTABLISHED
PURSUANT TO
THE NORTH AMERICAN FREE TRADE AGREEMENT
Article 2008

Tariffs applied by Canada to certain U.S.-Origin Agricultural Products
(Continued)

VII. DECISION OF THE PANEL

(1) Analysis

A. Preliminary matters

(a) Identification of the issue

113. The issue in this case is whether the customs duties imposed by Canada on certain U.S.-origin agricultural products following "tariffication" in accordance with the agreements reached as a result of the Uruguay Round are in breach of the relevant provisions of the NAFTA. The United States argues that these duties are in breach of NAFTA Article 302 paragraphs (1) and (2), which provide:

1. Except as otherwise provided in this Agreement, no Party may increase any existing customs duty, or adopt any customs duty, on an originating good.

2. Except as otherwise provided in the Agreement, each Party shall progressively eliminate its customs duties on originating goods in accordance with its Schedule to Annex 302.2.

114. Canada's response is that the obligation to "tariffy" arising out of the Uruguay Round agreements (in particular the WTO Agreement on Agriculture) has been incorporated into the NAFTA. In Canada's view, this was done by FTA Article 710 which was itself made part of the NAFTA by NAFTA Annex 702.1(1).

115. FTA Article 710 provides: Unless otherwise specifically provided in this Chapter, the Parties retain their rights and obligations with respect to agricultural, food, beverage and certain related goods under the General Agreement on Tariffs and Trade (GATT) and agreements negotiated under the GATT, including their rights and obligations under GATT Article XI.

116. According to Canada, this provision takes precedence over the obligation in NAFTA Article 302 not to "increase" or "adopt" any customs duty.

117. This case then involves the complex interrelationship of the FTA, the NAFTA, the GATT, and the agreements of the WTO, in particular the WTO Agreement on Agriculture. In seeking to support their differing interpretations of these various agreements, the disputing Parties ("the Parties") have directed the Panel to the actual wording used, to the object and purpose of the agreements, to preparatory work, and to the practice of the Parties, both contemporaneous and subsequent. Needless-to-say, the Parties are not in agreement as to the relevance or weight to be given to these considerations. It is therefore to the question of the proper approach to the interpretation of treaties that the Panel first turns.

b) Approach to interpretation

118. The starting point in the interpretation of the NAFTA is NAFTA Article 102(2), which provides: The Parties shall interpret and apply the provisions of this Agreement in the light of its objectives set out in paragraph 1 and in accordance with applicable rules of international law.

119. The applicable rules of international law include, the Parties agree, Articles 31 and 32 of the Vienna Convention on the Law of Treaties 1969 ("the Vienna Convention"), which are generally accepted as reflecting ¹⁰⁶ customary international law.¹⁰⁷

120. The basic proposition of Article 31 is as follows: "A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose". The Panel must therefore commence with the identification of the plain and ordinary meaning of the words used. In doing so, the Panel will take into consideration the meaning actually to be attributed to words and phrases looking at the text as a whole, examining the context in which the words appear and considering them in the light of the object and purpose of the treaty.

121. Subsequent agreement and subsequent practice are also factors which Article 31 of the Vienna Convention specifically directs should be taken into account together with the context. The Panel further notes the admissibility of recourse to supplementary means of interpretation, including preparatory work, pursuant to Vienna Convention Article 32 in order to confirm the meaning resulting from the application of the rule in Vienna Convention Article 31 or to determine the meaning when an interpretation in accordance with Vienna Convention Article 31 leaves the meaning ambiguous or obscure or leads to results which are manifestly absurd or unreasonable.

122. The Panel also attaches importance to the trade liberalization background against which the agreements under consideration here must be interpreted. Moreover, as a free trade agreement the NAFTA has the specific objective of eliminating barriers to trade among the three contracting Parties. The principles and rules through which the objectives of the NAFTA are elaborated are identified in NAFTA Article 102(1) as including national treatment, most-favoured-nation treatment and transparency. Any interpretation adopted by the Panel must, ¹⁰⁸ therefore, promote rather than inhibit the NAFTA's objectives. Exceptions to obligations of trade liberalization must perforce be viewed with caution.¹⁰⁹

123. The interpretation of these agreements is complicated by a number of factors. The NAFTA incorporates obligations from other agreements including both the FTA and the GATT. The terminology used in the drafting of various provisions, both within and across these agreements, is not marked by uniformity or consistency. As discussed more fully below, words like "existing", "retain" or "successor agreements", appear in some contexts yet do not appear in others where their presence might have been thought apposite. As a result, the Panel has been faced not only with the task of determining meaning from the presence of certain words, but also with the more difficult task of divining meaning from the absence of particular words.

124. Additionally, Mexico has expressed its concern to the Panel that the NAFTA be interpreted as an agreement on its own terms, and that that interpretation not be governed by the interpretation of the FTA to which Mexico is not a party. The Panel has borne this concern in mind in carrying out its task of interpreting the NAFTA.

(c) Burden of proof

125. In its deliberations, the Panel has been guided by the NAFTA Model Rules. Rules 33 and 34 state as ¹¹⁰ follows:

33. A Party asserting that a measure of another Party is inconsistent with the provisions of the Agreement shall have the burden of establishing such inconsistency.

34. A Party asserting that a measure is subject to an exception under the Agreement shall have the burden of establishing that the exception applies.

126. Canada points out that, as complainant, the United States has the initial burden of proving its complaint, citing Rule 33. The United States does not contest this point, but contends that it has satisfied this burden by its demonstration that Canada has increased customs duties on certain agricultural products contrary to NAFTA Article 302. The United States further argues that Canada's justification of its actions amounts to an argument that an exception to NAFTA Article 302 must apply, and that Rule 34 of the Model Rules places the burden of establishing the exception on Canada.

127. The Panel finds that the United States has met the requirement of Rule 33 of the Model Rules by establishing a prima facie case of inconsistency with the NAFTA. The increase in Canadian tariffs by the imposition of tariffs on the over-quota imports of the goods in question on its face violates the straightforward prohibition contained in the words of NAFTA Article 302.

128. Since the United States has established a prima facie case, the Panel's principal concern has been to determine whether Canada has shown either that its actions are not inconsistent with, or that they fall under an exception to, NAFTA Article 302. The principal focus of Canada's argument has been on the provisions of NAFTA Chapter Seven relating to agricultural products. Both Parties have offered considerable evidence and argument concerning the interpretation and relevance of these provisions, and the Panel does not find it necessary to resolve any issue on the basis that a Party has failed to discharge the burden of proof resting on it.

B. The central issues in dispute

129. Canada does not deny that it has established the tariffs in question and has applied them to the U.S.-origin agricultural goods. Nor does it deny that NAFTA Article 302 operates to prevent the NAFTA Parties from increasing customs duties or imposing new duties. It argues, however, that its actions in imposing tariffs on over-quota imports of agricultural products were in fulfilment of its obligations under the WTO Agreement on Agriculture. These obligations, according to Canada, are binding under the NAFTA by virtue of FTA Article 710 which is one of the provisions incorporated into the NAFTA by paragraph 1 of NAFTA Annex 702.1.

130. The United States disputes this on the ground that the reference in FTA Article 710 to the GATT and agreements negotiated under the GATT is not prospective and hence does not apply to agreements resulting from the Uruguay Round. The United States also argues that in any event the WTO Agreement on Agriculture imposes no obligation to tariffy. Even if it did, the United States claims, FTA Article 710 could not serve to carry such an obligation into the NAFTA. FTA Article 710 is focused on non-tariff barriers. Nothing in FTA Article 710 could override the obligations in NAFTA Chapter Three not to increase tariffs and not to introduce new tariffs.

131. The Panel will now address in turn each of these considerations - the temporal application of FTA Article 710, the substantive application of FTA Article 710, and the relationship between NAFTA Chapters Three and Seven.

(a) The temporal application of FTA Article 710

132. Canada argues that the effect of FTA Article 710 is to make rights and obligations under the GATT, and under any agreement negotiated under the GATT, even subsequent to the entry into force of the NAFTA, part of the NAFTA. This has the effect, in Canada's view, of making obligations under the WTO Agreement on Agriculture part of the NAFTA. The WTO Agreement on Agriculture, Canada claims, is an "agreement negotiated under the GATT". The United States, on the other hand, argues that FTA Article 710 refers only to rights and obligations under the GATT or under agreements negotiated under the GATT existing at the time that the FTA entered into force or, at the most, existing at the time the NAFTA entered into force^.111

133. The Panel is therefore confronted with the question whether the rights and obligations retained under FTA Article 710, as subsequently incorporated into the NAFTA, are limited to those established under the GATT and its related agreements as at the time of the entry into force of the FTA or of the NAFTA, or whether they extend to later established rights and obligations. Given the incorporation of FTA Article 710 into the NAFTA, the critical date for the operation of FTA Article 710 is, in the Panel's view, the date of entry into force of the NAFTA. However, the most convenient way to approach the matter is to look initially at the meaning of FTA Article 710 in the context of the FTA and then determine whether that meaning was changed when FTA Article 710 was brought into the NAFTA.

(i) The meaning of Article 710 in the FTA

134. The United States argues that the use of the verb "retain" in FTA Article 710 is conclusive. That word, in its view, means "to continue to have, use, recognize, accept etc." and one cannot continue to have something that is not yet in existence. In the view of the Panel, the issue of the temporal application of FTA Article 710 ¹¹² is not resolved simply by reference to the terms of the article itself. The Panel does not accept that the meaning of the word "retain" is as restricted as the United States contends; one can "retain" rights that exist in the present, and one can also "retain" rights under a regime that evolves and extends into the future. An obvious example of this is found in FTA Article 1608(2) under which, "[e]ach Party and investors of each Party retain their respective rights and obligations under customary international law ...." Clearly, this reference to "customary international law" is a reference to an evolving system. Yet the Parties found it quite appropriate to use the word "retain".

135. As the words of FTA Article 710 are on their face capable of bearing two meanings, either GATT rights and obligations in existence at the date of the incorporation of FTA Article 710 or both existing rights and obligations and those which come into existence through subsequently negotiated agreements, the Panel must look elsewhere for guidance regarding which of the two meanings more closely represents the intention of the Parties.

136. The Panel does so, in accordance with Article 31 of the Vienna Convention, by considering the words of FTA Article 710 in their context and in the light of the object and purpose of the agreement as a whole. It is apparent that in the FTA the Parties had other means available to them for limiting the operation of FTA Article 710 to existing rights and obligations if this is what they had intended to achieve. The word "existing", which according to FTA Article 201 means "in effect at the time of the entry into force of this Agreement", could have been introduced. "Existing" was used in FTA Article 104, which constitutes a general affirmation of rights and obligations under bilateral and multilateral agreements to which both states are parties. The use of the word "existing" would have made it clear that the "rights and obligations" referred to were only those in existence at the time that the agreement entered into force.

137. In other contexts the Parties were able to express their intention to preserve only existing GATT rights and obligations. Thus, FTA Article 501 provides that each Party is to accord national treatment to the goods of the other "in accordance with the existing provisions of Article III of the General Agreement on Tariffs and Trade (GATT) ...." (emphasis added). Paragraph 2 provides that national treatment is to be applied "in accordance with existing interpretations adopted by the Contracting Parties to the GATT" (emphasis added). Moreover, when the Parties made express provision that subsequent modifications to the GATT Agreement in Government Procurement "shall automatically be incorporated into and made part of" the FTA, it was where ¹¹³ they had already provided in the title to the preceding article that they were reaffirming only "existing ¹¹⁴ obligations" under that Agreement. But such explicit language limiting the scope of FTA Article 710 to existing rights and obligations cannot be found. The absence of such wording carries an implication that future rights and obligations were not excluded.

138. This inference is strengthened by the use of similar wording elsewhere in the FTA where a prospective application must surely have been intended. FTA Article 1801(2) falls into this category. This article provides that disputes "arising under both this Agreement and the General Agreement on Tariffs and Trade, and agreements negotiated thereunder (GATT) may be settled in either forum, according to the rules of that forum

..." It seems unlikely that the Parties agreed in FTA Article 1801 that the option of choosing between GATT and FTA dispute settlement applied only to disputes arising under the GATT and negotiated agreements, or to the rules of either forum, only as they existed on January 1, 1989, and that no such right would have applied in respect of any developments under the GATT or to any agreements negotiated after that time. In other words, ¹¹⁵ reference to the GATT and agreements negotiated under the GATT must have been a reference to the GATT not as a fixed body of law but as one that was capable of developing.

139. This, it seems to the Panel, is the essence of Canada's argument that the reference to the GATT in FTA Article 710 had to be understood as a reference to "an evolving system of law". The GATT is more than a static ¹¹⁶ set of rights and obligations. Based on a set of principles embodied in the General Agreement, the GATT has been developed, clarified and supplemented by subsequent legal instruments through successive negotiating rounds, into a complex of substantive and procedural rules. That process was continuing even as the Parties negotiated the FTA. They could hardly have been unaware of such considerations when they referred in their agreement to the GATT and to agreements negotiated under it.

140. Canada claims that the United States argument deprives the reference to "agreements negotiated under the GATT" in FTA Article 710 of any content if the expression does not extend to Uruguay Round agreements. There were, Canada argues, no agreements of significance dealing with agricultural matters negotiated under the GATT that existed at the time the FTA was concluded that would have induced the Parties to include such a reference in FTA Article 710. The United States response is that FTA Article 710 was referring to the agreements negotiated within the framework of the Tokyo Round, citing the "Standards Code" and the "Subsidies Code". Although Canada argues that the relevance of these agreements to the agricultural regime contemplated by FTA Article 710 is minimal if not non-existent, the Panel accepts that there is some possible content to which the FTA Article 710 reference to "agreements negotiated under the GATT" could apply if it is construed as applying to the agreements in existence at the time of the entry into force of the FTA. Thus, the Panel does not find this particular Canadian argument conclusive.

141. On examining statements made by officials following the conclusion of the FTA, the Panel is unable to find any definitive support there for either Party's interpretation of FTA Article 710. Canada cites several examples of such statements made by United States officials to the effect that liberalization in agriculture had not been achieved in the FTA and that it had been put off to the Uruguay Round. But these statements do not deal with the critical issue of whether the results of the Uruguay Round would be incorporated automatically into the FTA.

142. The United States, for its part, refers to statements made by Canada before the GATT Working Party on the FTA. The GATT Working Party Report indicates that the representative of Canada stated that "[o]nly ¹¹⁷ in government procurement was there an explicit commitment in the FTA to incorporate Uruguay Round results". This, the United States claims, is a clear affirmation by Canada that "Article 710 does not incorporate ¹¹⁸ Uruguay Round results". Canada replies that this was simply a statement of fact; FTA Article 1303(3) ¹¹⁹ provides the only "explicit" commitment in the NAFTA to incorporate Uruguay Round results. Canada points ¹²⁰ out that other parts of the paragraph in question are supportive of its position. The Panel is unable to attribute ¹²¹ conclusive effect to paragraph 27 of the GATT Working Party Report.

143. The United States also refers to paragraph 77 of the GATT Working Party Report where it is stated that, the Parties to the Agreement [Canada and the United States] noted that, of necessity, the FTA could only have reaffirmed GATT rights and obligations as these existed at the time the FTA entered into force but that, nevertheless, they would consider how Uruguay Round results would apply with respect to the FTA once these had been implemented. 144. On its face, if this statement was referring to FTA Article 710, then it would seem to be of considerable significance. However, an examination of the GATT Working Party Report suggests that paragraph 77 was referring to a Canadian statement in paragraph 30 of the same document about FTA Article 104 under which the Parties had affirmed their "existing" rights and obligations. As a result, the Panel does not find the above extract from paragraph 77 to be helpful in clarifying the meaning of FTA Article 710.

145. The Panel concludes therefore that the terms of FTA Article 710, considered in their context and in light of the object and purpose of the FTA as required by the Vienna Convention, are forward-looking.

(ii) The effect of the incorporation of FTA Article 710 into the NAFTA

146. The Panel must now consider whether the forward-looking character of FTA Article 710 was changed when it was incorporated into the NAFTA. Neither Party has suggested that the use of the word "incorporate" in NAFTA Annex 702.1 alone affects the content of FTA Article 710 or changes its forward-looking character. However, the United States regards the wording of paragraph 4 of NAFTA Annex 702.1 to be particularly significant. Paragraph 4 provides as follows:

The Parties understand that Article 710 of the Canada-United States Free Trade Agreement incorporates the GATT rights and obligations of Canada and the United States with respect to agricultural, food, beverage and certain related goods, including exemptions by virtue of paragraph (1)(b) of the Protocol of Provisional Application of the GATT and waivers granted under Article XXV of the GATT.

147. This paragraph, the United States points out, makes no reference to "agreements negotiated under the GATT". If the Parties had intended to include agreements negotiated under the Uruguay Round within the ambit of FTA Article 710, the United States argues, they would have made reference to these agreements in this understanding. The fact that they did not do so indicates that they did not intend to bring WTO agreements into the NAFTA.

148. The Panel does not find this argument persuasive. NAFTA Annex 702.1(4) can only be viewed as having been included to provide greater certainty. It clarifies FTA Article 710 by mentioning explicitly the GATT PPA exemptions and the GATT waivers that were not referred to in the text of FTA Article 710 itself, thereby overcoming any possible inference that FTA Article 710, which explicitly refers to GATT Article XI, might otherwise omit those exemptions and waivers. Moreover, the language of NAFTA Annex 702.1(4) appears to be inclusive not exclusive. Thus, the Panel would require more explicit evidence of the intention of the Parties to be convinced that NAFTA Annex 702.1(4) changed the meaning of FTA Article 710 or somehow narrowed its scope.

149. The Panel is also unable to find in the general circumstances of the conclusion of the NAFTA anything that would assist in the interpretation of FTA Article 710 as a NAFTA provision. Quite clearly, the Parties used different words in the NAFTA when referring to agreements negotiated under the Uruguay Round than were used in the FTA. In particular, the term "successor agreement" was used frequently as a drafting device in the NAFTA, although it was not so used in the FTA. In the United States view, failure to use such terminology, or to use the terminology of "tariffication" on the incorporation of FTA Article 710 into the NAFTA, when such terms were used elsewhere in NAFTA Chapter Seven, is indicative of the Parties' intention. Canada argues that the Parties intended simply to incorporate into the NAFTA what they had already agreed to under the FTA in respect of agriculture. Since, in the Canadian view, FTA Article 710 as drafted was already "forward-looking" there was no need for additional wording to be included in the NAFTA text.

150. The Panel does not regard the failure of the Parties, when incorporating FTA Article 710 into the NAFTA, to amend it to include words such as "successor agreements" or "tariffication", to be a compelling consideration. The absence of such terms is most striking when the relationship between FTA Article 710 and NAFTA Article 309 is considered. Both cover agricultural non-tariff barriers but NAFTA Article 309 refers ¹²² expressly to "successor agreements" while FTA Article 710 does not. It is unlikely, in the Panel's view, that the one provision (NAFTA Article 309) was intended to be prospective and the other (FTA Article 710) was intended to be static. But the fact that these provisions have been worded differently does not mean that they are ¹²³ different in effect. If the words of FTA Article 710 were not capable of applying to the future, then additional wording relating to successor agreements or tariffication would have been necessary, and their absence would have been revealing. However, as the Panel has already pointed out, the wording of FTA Article 710 is just as capable of being forward-looking as it is of referring only to existing rights and obligations. Although the Parties P>could have reworded FTA Article 710 to make it conform more closely to the terminology of the NAFTA, there was no need to do so. FTA Article 710 simply retained the prospective effect in the NAFTA that it had had in the FTA.

151. The Panel is also referred to practice of the Parties in the context of the Uruguay Round. In particular, Canada emphasizes the United States own adoption of tariffs on over-quota imports of agricultural products and their application to Canada - a position seemingly at variance with that being advanced by the United States under the NAFTA against Canadian over-quota tariffs applying to the United States.

152. The Panel notes that even before Canada indicated that it was going to tariffy, the United States had submitted draft schedules to the Uruguay Round under which it was apparent that the United States would apply over quota tariffs to Canada in respect of certain products. Moreover, the United States made no objection to the Canadian tariff schedule filed under the WTO Agreement on Agriculture. In neither instance did the United States reserve its position with respect to the interpretation of FTA Article 710 or make it clear that its actions were "without prejudice" in respect of its disagreement with Canada over the effect of NAFTA Article 302(1). However, the Panel also notes that the United States explains that its conduct in establishing over-quota tariffs was a response to action taken by Canada. The Panel observes as well that all of this conduct occurred after 1991 by which time the Parties had identified a difference between them over the consequences of tariffication for their rights and obligations under the NAFTA.

153. The United States points out that Canada had made proposals to it for an agreement that would provide formally for tariffication under the WTO Agreement on Agriculture to be brought within the framework of the NAFTA and considers that the rejection of these proposals precludes the Panel from endorsing the Canadian interpretation of FTA Article 710. However, the Panel does not regard such actions by themselves as establishing the validity of the United States position. In the Qatar v. Bahrain case, the International Court of Justice pointed out that the rejection in negotiations of a form of words corresponding to the position asserted by one party did not imply that the thesis of the other party had to be upheld. Moreover, the proposals for a negotiated ¹²⁴ settlement, to which the United States refers, occurred after it became clear that the Parties differed in their interpretation of FTA Article 710 and were seeking to resolve this difference through political rather than legal means.

154. Accordingly, the Panel finds nothing in the circumstances of the incorporation of FTA Article 710 into the NAFTA to alter the conclusion that the intention of the Parties was that FTA Article 710 was not limited in its application to the GATT and agreements negotiated under the GATT as they existed at the time that the FTA or the NAFTA entered into force.

Continue on to Sub-section (iii): The consequences of the respective interpretations of FTA Article 710

Article 31: General rule of interpretation

1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.

2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:

(a) any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty;

(b) any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.

3. There shall be taken into account, together with the context:

(a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;

(b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;

(c) any relevant rules of international law applicable in the relations between the parties.

4. A special meaning shall be given to a term if it is established that the parties so intended.

Article 32: Supplementary means of interpretation

Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31:

(a) leaves the meaning ambiguous or obscure; or

(b) leads to a result which is manifestly absurd or unreasonable.

¹⁰⁷ See Territorial Dispute (Libyan Arab Jamahiriya/Chad), ICJ Reports 1994, p.6, at p.21, para.41, reaffirmed in Maritime Delimitation and Territorial Questions Between Qatar and Bahrain (Jurisdiction and Admissibility), ICJ Reports 1995, p.6, at p.21, para.33. This view is also reflected in the decisions of the WTO Appellate Body; see, most recently, Japan - Taxes on Alcoholic Beverages, at section D; AB-1996-2, adopted on November 1, 1996.

¹⁰⁸ Article 102 provides, inter alia:

1. The objectives of this Agreement, as elaborated more specifically through its principles and rules, including national treatment, most-favoured-nation treatment and transparency are to:

(a) eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between the territories of the Parties; ....

¹⁰⁹ The principle that exceptions to general obligations are to be construed narrowly is well accepted in the interpretation of the GATT:

see, inter alia, Report of the Panel on Canada - Import Restrictions on Ice Cream and Yoghurt, note 94, supra, at para.59.

¹¹⁰ See note 2 supra.

¹¹¹ The United States stated to the Panel that the difference between the date of entry into force of the FTA and the date of entry into force of the NAFTA is of no significance since no new GATT rights or obligations emerged nor were any new agreements negotiated in the intervening period.

¹¹² Supplementary Written Submission of the United States, at para.58.

¹¹³ FTA Article 1303(2).

¹¹⁴ FTA Article 1302.

¹¹⁵ It is to be noted that the equivalent provision in NAFTA Article 2005 adds the words "or any successor agreement (GATT)". The terminology of a "successor agreement" was not employed at the time the FTA was drafted although it was commonly used as a drafting device in the NAFTA. This matter is discussed further at paragraphs 149-150 infra.

¹¹⁶ Second Submission of Canada, at para.42.

¹¹⁷ See note 83 supra.

¹¹⁸ Ibid., at para.27.

¹¹⁹ Supplementary Written Submission of the United States, at para.68.

¹²⁰ Second Submission of Canada at para.54.

¹²¹ An earlier reference in paragraph 27 of the GATT Working Party Report refers to the submission by Canada that, "...where Canada and the United States agreed to the Uruguay Round results, these would apply between the two parties and to all other contracting parties". The Report also refers to agriculture and intellectual property rights and adds that "[o]utside of these areas, there was no specific requirement to incorporate the results of the Uruguay Round into the FTA" (emphasis added).

¹²² See paragraph 43 supra.

¹²³ As the Panel has already noted, the drafting device "successor agreements" was used throughout the NAFTA. In addition to NAFTA Article 309, see, for example, NAFTA Article 2005 where the same "successor agreement" drafting device was employed with respect to dispute resolution mechanisms whereas in the equally forward-looking FTA equivalent (FTA Article 1802 previously discussed) it was not.

¹²⁴ ICJ Reports 1995, p.6, at p.22, para.41.