IN THE NEWS ~ Water Export Ban Law -not Tackle NAFTA

5th December 2008
Water Export Ban Law -not Tackle NAFTA
EDITOR -EMBASSY Foregin Policy Newsweekly

Water Export Ban Law will not Tackle NAFTA

The government's plan to introduce legislation banning bulk water exports has been met with cautious applause but also a flurry of questions from both sides of the debate on the true benefits of such a law.

Those questions include trying to pindown what prompted the government to act now and whether a federal law will be enough given that water is normally a provincial responsibility.

At the same time, some say no matter what legislation the federal government proposes, only renegotiating the North American Free Trade Agreement will be enough to protect Canadian water, while others doubt any federal legislation is necessary in the first place.

On Nov. 19, the Conservative government signalled its plan of action in the Speech from the Throne, read by Governor General Michaëlle Jean.

"To ensure protection of our vital resources, our government will bring in legislation to ban all bulk water transfers or exports from Canadian freshwater basins," Ms. Jean said, speaking on behalf of the government.

Canada currently owns the world's largest freshwater reserves, at an estimated eight per cent of the world inventory. Yet the issue of bulk water exports has long been a sensitive one to Canadians. Not only do they identify with water as a national symbol, but they are opposed to any commercialization of water for fear of exploitation of a life-giving resource.

Those fears have been heightened by groups that have long opposed NAFTA, arguing the agreement's Chapter 11 and its proportionality clause have weakened Canadian sovereignty over its own resources.

On May 15, 2007, the Standing Committee on International Trade adopted a motion noting that "NAFTA covers all services and all goods, except those that are expressly excluded, and water is not excluded."

"This situation puts the provincial and federal laws concerning the protection of water including the prohibition of bulk water exports at risk," it added.

The committee recommended the government begin talks with American and Mexican counterparts to exclude water from the scope of NAFTA.

The government repeatedly stated such action was unnecessary.

"It is already Canadian law and it is built into the NAFTA that water in its natural state is not covered by the NAFTA, full stop," said then-trade minister David Emerson on May 1, 2007. "It is not covered."

When asked last week why the government had changed its tune, Environment Minister Jim Prentice said: "There's been a great deal said about that subject and we've indicated that to make sure the situation is clear...we would introduce legislative measures to ensure that those kinds of large-scale commercial bulk exports would not be permitted under Canadian law. We think that is something Canadians have spoken about quite clearly."

However, he would not expand further, prompting others to put forward guesses.

"Has the issue of water and inter-basin transfers been raised on a continental basis within the confines of what are effectively secret discussions on the SPP?" asked Liberal Trade critic David McGuinty. "Does this mean the government has now been informed by its officials that it is now legal?"

One thing Mr. McGuinty said he was sure about was the government has failed to put forward a water strategy that was promised during the last Parliament, and his understanding is there has been no progress made on water management issues.

"It's a very important move, but in what context?" Mr. McGuinty said of a ban. "It's just sort of there, but how does this connect to other fundamental issues around water?"

NAFTA Issue

Maude Barlow, chair of the Council of Canadians and recently-appointed senior adviser on water issues to the UN General Assembly president, pointed to a recent Montreal Economic Institute report that called on the Quebec government to begin exporting water.

The report, published in August, said water in its natural state is indeed not subject to NAFTA obligations. However, water becomes a product when it is collected, stored, bottle or conditioned. At that point, the paper says, water is subject to NAFTA, including national treatment, investors' rights and proportionality.

"It is true that NAFTA could create new constraints and impose them on us if fresh water were to be sold commercially," the report reads. However, it goes on to argue, approving the commercialization of water would "push the trade partners into developing and adopting water management models that are more efficient and thus socially more acceptable."

Ms. Barlow surmised the fact the right-leaning institute found water would fall under NAFTA if made a product, "perhaps that caught the attention of the government."

Either way, she described the move as "a welcome change of heart and mind" that, if done right, "will set back the push for exports from Canada for a long, long time."

However, she was adamant the only way to ensure Canada doesn't lose control of its water resources is to reopen NAFTA and take water out.

"If they are going to bring in this legislation, they have to correct the situation in NAFTA," she said. "They could just take a chance that [the legislation] wouldn't trigger a NAFTA challenge, but it could."

Mr. Prentice said the government has no intention of reopening any trade agreement.

"The intent is the legislation would be the best way to address it," he said. "That is something that we're working on."

In an attempt to pre-empt the government, Liberal Water critic Francis Scarpaleggia tabled a private member's bill on Tuesday that would "eventually result in consistent rules across the country for preventing large-scale displacements of freshwater outside major drainage basins."

Mr. Scarpaleggia also cited concerns about water and NAFTA, though he made no mention of reopening the deal.

"These rules would also translate into an effective ban on bulk-water exports to the United States, or anywhere else in the world," a statement from the critic's office said. "The bill would also ensure water is de facto fully exempted from the North American Free Trade Agreement, something that has been a source of considerable uncertainty for years."

Debra Steger, an expert on international trade law at the University of Ottawa, said while Canada and the U.S. may try to negotiate specific new agreements on water, it will not be the driver to re-open NAFTA.

In fact, Ms. Steger was adamant that a federal prohibition was unnecessary given that the trade pact does not cover water, and any move to make water a commodity would face an impossible uphill political battle.

"There's never been any sign from any government, whether it's left, right or centre of the political spectrum, that's going to allow private ownership of waterways and lakes and things," she said. "So how could this ever happen?"

Rather, Ms. Steger believed the government may be sending a signal to interest groups, and possibly the private sector.

"If anything it provides clarification as to how we're going to deal with it," she said, "and doesn't allow the private sector to come in and start dreaming up schemes to export it in bulk."

Provincial Jurisdiction

In addition, Ms. Steger said, the government may be sending a signal to individual provinces that the federal government will not play ball with any thoughts of exporting water in bulk.

While the federal government is responsible for boundary waters, such as the Great Lakes, provinces control resources solely within their borders. The Montreal Economic Institute made that point clear in its report calling for Quebec to begin selling water.

"Despite the federal government's intention to prohibit water exports, it nonetheless remains the case that the provinces have primary responsibility for managing water on their territory," the report reads.

In 1999, the federal and provincial governments entered into a voluntary agreement banning bulk water exports. According to Environment Canada, all provinces have in place legislation, regulations, or policies prohibiting the bulk removal of water.

While Ms. Steger said no province has yet made any moves to start exporting water, NDP Trade critic Peter Julian said all it takes is one to start a potential chain reaction.

"Any province deciding to bring about bulk water exports, approving bulk water exports, would automatically put pressure on every other province," he said, "because the chapter 11 provisions that exist right now allow companies who apply for bulk water exports and [who] are denied, to sue those governments for having taken that decision. So we've been on a tightrope for years."

Mr. Julian said the plan to ban bulk water exports was "one of the few bright lights in the Throne Speech," but opposition members will be looking at the proposed legislation closely to ensure it wasn't trying a "political whitewash."

"If the legislation is very clear that bulk water exports are not allowable under any circumstances, that would be a very tight, I think," he said, "tight legislation that would allow us to say with some comfort that we've closed this massive loophole."

Yet because water is a provincial jurisdiction, Mr. Julian said the only way to ensure total confidence Canada will not lose control of the resource would be changing NAFTA.

"That's the problem we are facing now," he said. "It's not a federal government decision, it's the provincial governments who could choose, because of the vacuum that exists, to press ahead with bulk water exports. So NAFTA has to be reopened for that reason and a number of other reasons."

But Stephen Clarkson, a professor of political economy at the University of Toronto, said all of this is "legal speculation" because no one knows what would happen if water were made a commodity.

"It's a good thing to do it," he said of a ban. "But it doesn't resolve the issue definitively, nor would a NAFTA agreement resolve it definitively because the U.S. doesn't comply."

lee @embassymag.ca

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