Settlement of international disputes between Canada and the USA.
Author | King, Henry T., Jr. |
Position | P. 46-84 |
PART I. A SURVEY OF DISPUTES BETWEEN CANADA AND THE UNITED STATES
The 5000-mile boundary between the United States and Canada is the longest between two States in the world. It was drawn originally through uninhabited wilderness, and now much of it passes through the middle of a highly industrialized metropolitan area. From the beginning, there were problems about the actual location of the boundary lines, and some of these problems have persisted to this very day. Most of the current problems relate, however, to the numerous economic, political, and cultural activities which constantly cross or have effects across the boundary lines, raising a variety of jurisdictional issues. (32) Because of the many transnational links, what happens in one country is likely to affect the other one, and very few matters are so domestic that they are of no concern to the neighboring country. As the relationships are on many levels, the disputes which have arisen are not purely intergovernmental but have involved both local interests of various states and provinces and claims of individuals and corporations.
The history of peaceful settlement in North America begins with boundary delimitation. Periodically from 1794 to 1903, different portions of the common boundary were submitted to mixed commissions or to arbitration. Several disputes over marine boundaries are still extant. Ownership of Machias Seal Island and North Rock in the Gulf of Maine is in question, and it was suggested in 1973 that the dispute be referred to the International Court of Justice. Also unresolved is a dispute as to whether a line drawn by a 1903 joint commission at the northern end of the Dixon Entrance between Alaska and British Columbia separates only land areas of the two countries or constitutes a maritime boundary. Canada has proposed that this matter be considered in the light of state practice of the two parties, as well as on the basis of international law as it developed over the years. Canada and the United States also continue to discuss questions relating to the delimitation of their continental shelf boundaries. (33) The marine boundaries in the Gulf of Maine, the Arctic, and the Pacific have not been definitively determined; nor has the boundary in the Pacific, off the west coasts of the two countries.
These delimitation questions have become more complex in the last couple of years because of declarations by the two countries of 200-mile fishing zones, the boundaries of which overlap. Other disputes have arisen with respect to particular fisheries practices. For instance, in 1975, as a result of United States court decisions relating to Indian fishing rights, the United States withdrew its approval of certain regulations of the bilateral International Pacific Salmon Fisheries Commission. Canada claimed that this action was not consistent with the terms of the relevant convention. Since 1964, the drawing of various fishing lines by Canada has led to United States protests.
These maritime boundaries and marine resources questions are not likely to be resolved automatically by any convention which might come out of the current United Nations Conference on the Law of the Sea. The recent Cadieux-Cutler negotiations have encountered great difficulties in trying to settle both sets of problems.
Various economic, trade, and investment questions continue to arise between the two countries. (34) Until World War II, these questions primarily related to import or export restrictions enacted by one country or the other. A recent example of such a problem is the 1973 United States imposition of countervailing duties on tire imports from Michelin plants in Nova Scotia. Although no international determination of the point was ever made, United States officials, relating their action to the General Agreement on Tariffs and Trade, took the position that Canadian federal and provincial subsidies to Michelin constituted "bounties" which are "unfair practices" by the terms of United States tariff laws.
Since World War II, the principal mutual economic concerns of the two States have been those relating to investment and other activities in Canada by United States-based corporations. A well-known example of Canadian problems with such activities is the "auto pact" case.
The auto pact case began with the institution by Canada in 1962 and 1963 of a duty remission scheme to encourage United States car manufacturers to increase parts production and assembly in their Canadian facilities. The United States Government, in response to a petition by a private United States company, considered countervailing duties to raise the cost of importing Canadian parts benefitting from these remissions. Negotiations, begun under the auspices of the Joint Ministerial Committee on Trade and Economic Affairs, a cabinet-level body established in 1953, resulted in the conclusion in 1965 of the so-called Auto Pact, a type of free trade agreement, in which Canada was guaranteed ratable participation in increased production. The economic effects of the agreement are debatable. The agreement continues in effect, although demands have been made for its renegotiation.
Another example of a problem related to United States economic presence in Canada is the "magazine tax" case. Since 1956, the Canadian Government has made various attempts to encourage advertising in domestically-owned periodicals. In 1965, the Canadian business tax deduction was eliminated for advertising in Canadian editions of Time and Reader's Digest, which enjoyed a very high readership in Canada and overshadowed Canadian competitors. An exemption from this legislation was later obtained as a result of United States governmental and private representations, but when the exemption was tightened up in 1975, Time decided to discontinue its Canadian edition as it found it uneconomical to try to comply with the new conditions. Reader's Digest, however, was able to qualify for the exemption. Somewhat similar problems have arisen in connection with Canadian advertising on United States television programs broadcast over the border into Canada or rebroadcast by Canadian cable companies. Restrictions designed to discourage these practices were adopted by the Canadian Government; a permanent solution satisfactory to both sides is still being sought. In these cases, the cultural impact of the United States activities may perhaps have been as important as the economic considerations in determining the Canadian response.
For the United States, private investment in Canada has been a source of concern since the early 1960s when the United States balance of payments position began to erode. An unexpected 1963 presidential proposal for an interest equalization tax caused some difficulty in Canada because it would have encouraged withdrawal of United States funds from Canada. Arrangements were made for prior consultations in the future, and as a result of such consultation an exemption for Canada was built into United States payment guidelines promulgated in mid-1965. Lack of such consultations produced some problems later in 1965 and again in 1968 when mandatory guidelines were imposed; a Canadian exemption, however, was eventually negotiated. Canadian concern in the last few years over the level of foreign investment led to the passage of the Foreign Investment Review Act. At the moment, this provides for the survey and assessment of foreign investment in Canada, and also for limited federal control over new investment and over expatriation of the benefits of such investment. The Canadian Government's efforts in this direction are still in the tentative and experimental stage. While the legislation has been criticized as both too strong and as too weak, there has been a widespread tendency to reserve judgment on it until practice and policy develop further. (35)
The two countries have become increasingly concerned with trade in energy resources and energy policy. (36) In the late 1970s, oil transmission was a significant problem. With natural gas, the changing supply situation is the principal difficulty. This was not always so. Throughout the 1950s and 1960s, United States oil producers pressed the federal government, successively, for guidelines, voluntary quotas, and, in 1959, mandatory quotas on imports, invoking various national security grounds. Canadian officials, with the de facto alliance of the so-called "northern tier" United States refineries, successfully worked throughout this period to maintain a preferential position for oil imports from Canada, including exemption from quotas. Natural gas imports are handled by a licensing system administered through the Federal Power Commission (FPC) in the United States and the National Energy Board (NEB) in Canada. Through the 1950s and 1960s, northern United States users seeking long-term Canadian import contracts combined with Canadian companies who sought market penetration. On the other hand, United States producers, wishing to establish their own subsidiaries in Canada, joined forces with the FPC, which was concerned about the uncertainty of supplies controlled by Canadian companies.
In 1970, the positions of the two countries with respect to trade in energy resources began to reverse. In that year, the NEB began for the first time to limit licenses for export of natural gas. In 1973, the Minister of Energy announced that both oil and gas exports would be restricted through that winter, and an export tax was imposed. Friction over this action was apparently minimal, partly because of prior notification by the Canadian Government. Continued increases in prices of both oil and gas, as well as further export restrictions, led to diminishing Canadian exports to the United States beginning in 1974, and Canadian officials announced that all exports of oil and gas would probably be cut off by the end of the decade. However, changes in technical estimates of reserves...
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