Pursuant to a congressional request, GAO reviewed the U.S.-Canada Free Trade Agreement's (FTA) binational panel process to resolve trade disputes, focusing on: (1) U.S. and Canadian expectations for the binational panel process; (2) a statistical overview of panel activities and decisions; (3) participants' satisfaction with the panel process; and (4) other factors that may have contributed to the controversy over the binational panel process.

GAO found that: (1) the U.S. and Canadian compromise on the binational panel process occurred when U.S. and Canadian negotiators could not agree on harmonizing their trade remedy laws in FTA; (2) the panels' goals included protecting each country's sovereignty, creating trade benefits, reducing political pressures, and providing a fair and expeditious review process; (3) expectations on how the panels would accomplish these goals differed because the countries' underlying concerns about the use of trade remedy laws remained unresolved; (4) it was difficult to identify any patterns in panel operations because of the small number of completed cases; (5) some participants were satisfied with the binational panel process because they thought the process was faster than traditional judicial review, operated smoothly, and gave thorough and in-depth review of the cases; (6) some participants were dissatisfied with the process due to the misinterpretation of U.S. law, improper substitution of panelists' judgment for U.S. agencies' judgment, excessive use of remands, emergence of a separate U.S. case law applicable only to Canada, and the adverse impact of panelist and agency discord or conflicts of interest on the process; and (7) the controversy over the binational panel process was heightened due to the conflict between panel behavior and some participants' expectations of how the panel process should have worked.