The BC Government's Questions On NAFTA (& Some Answers!)

Question #1: Will the NAFTA affect the powers of the provinces to legislate in their designated policy areas?

In April 2004 a committee of the New Brunswick legislative assembly recommended to the government that they consider legislation to create a no-fault, publicly-funded auto-insurance plan. [1] It would be much cheaper and more efficient than the current private system as evidenced by the net loss of 300 jobs (1100 vs. 800) to do the same amount of work, and this would reduce the average premiums by $220 to $993. Similar systems already exist in the provinces of British Columbia, Saskatchewan and Manitoba. Ten years ago the government of Rob Rae in Ontario proposed a system like this, and unintentionally provided us with a valuable cautionary tale: when the legislation was proposed, it was challenged by American insurance corporations (like State Farm) who claimed that it would be an illegal interference in free trade since in the current free-trade agreements (FTA/NAFTA) nationalization is equated with expropriation. The Lord government asked for legal advice on their insurance plan, and found that creating such a system would be excessively costly (they would have had to pay off the investors); so they decided against it, incidentally for the same reasons the Ontario government dropped its plans for such a system. [2]

I presume that the committee of the BC government asked whether or not it would affect provinces’ abilities to legislate in their designated areas simply because it was a provincial committee, but by no means is the federal government free to legislate in its policy areas. So far, there have been 10 NAFTA lawsuits against Canadian governments, provincial or federal; there have also been 12 against Mexican governments and 13 against US governments. [3] The NAFTA claims have been in response for the Canadian governments attempting to protect our environment, for reducing exports, or to regulate the use of hazardous chemical in order to protect people’s health. Most often, they use the infamous Chapter 11. In particular, article 1102 (national treatment, which prevents governments from discriminating against US or Mexican corporations, but allows discrimination against other Canadian corporations), article 1110 (expropriation and compensation, which says that nothing can be directly or indirectly nationalized without compensation, nor without compensation for loss of future profits) are used to keep governments from imposing regulations on investors. [4]

Here are some of the chemicals we were obligated under the NAFTA to allow into the country to bury in the ground to contaminate our drinking water, or to allow for public consumption, and what the harmful effects are, according the scientific community:
- gamma benzene hexachloride (commercial name is Lindane, an insecticide used on Canola and in lice medicine), which the scientific community regards as a “confirmed carcinogen with experimental carcinogenic [causes cancer] and neoplastigenic [causes abnormal cell growth, like tumors] data. A human systemic poison by ingestion. Also a poison by ingestion, skin contact, intraperitoneal, intravenous, and intramuscular routes. Human systemic effects by ingestion: convulsions, dyspnea [difficulty breathing], cynanosis [blood not properly oxygenated in lungs] … when heated to decomposition it emits toxic fumes of chlorine, hydrochloric acid and phosgene [which is on the EPA’s “extremely hazardous” list]”. [5]
- polychlorinated biphenyls (a.k.a PCBs), which are “…confirmed carcinogens with carcinogenic and tumorigenic data. Moderately toxic by ingestion. Some are poisons by other routes… The higher chlorine content of the biphenyl compound, the more toxic it is likely to be… In persons who have suffered systemic intoxication, the usual signs and symptoms are nausea, vomiting, loss of weight, jaundice, edema, and abdominal pain. If the liver damage has been severe the patient may pass into a coma and die… Combustible when exposed to heat or flame. When heated to decomposition they emit highly toxic fumes of chlorine gas.” [6] This case involved a 7-year ban on PCBs and American corporation S.D. Myers which didn’t like our ban on PCB dumping. A spokesperson for S.D. Myers complained that they were “penalised by the Canadian government, solely on the grounds that they were American.” [7]
- methycyclopentadienyl manganese tricarbonyl (“MMT”, used to treat gasoline), which is a certain manganese compound, and it is generally the case with manganese compounds that “…the central nervous system is the chief site of damage…” and it “…increases the incidence of upper respiratory infections & pneumonia… langour and sleepiness. This is followed by weakness in the legs… slow monotonous voice… muscular twitching…” etc. The federal government initiated a ban on importation and interprovincial sale of this gasoline additive, following the lead of the EU and California, saying that it wanted more studies done on it before allowing it into the country. The government eventually paid $13 million. [8]

The NAFTA lawsuits have not been limited to peoples’ health and safety. There have also been cases where governments restricted lumber exports for whatever reason, such as to reduce the amount of clearcuts, or because we would not have enough lumber for ourselves, and so on. This is in spite of the fact that a clear majority of the general public does not agree that a private corporation should be able to sue a government directly if policy decisions cut into their profits. [9] US water-exporting corporation Sun Belt tried to sue the federal government for prohibiting water exports from British Columbia. In 1990 Sun Belt signed a deal with BC water company Snow Cap, that had obtained rights to export BC water. The general public fought this decision, and the government backed down, banning water exports in 1996. The BC government settled out of court for $400,000, while Sun Belt got nothing, and then tried using NAFTA’s infamous Chapter 11. Some observers said that Sun Belt simply did not have the resources (like good lawyers) to endure a long legal battle, and this is presumably the only reason the case did not go forward. At any rate, the CEO of Sun Belt vowed revenge, and we will have to see if Sun Belt tries to sue the government again. [10] (after 3 three years they still haven’t)

Even Canada Post has been threatened; United Parcel Service (UPS) claimed that Canada Post’s practices were monopolistic and that it competes unfairly. If Canada Post loses this case it may have to pay $230 million and would lose its courier service. [11] Pope & Talbot of Portland, Oregon is a pulp and paper producer which claimed that the federal government imposed discriminatory export controls (and, incidentally, owns the landmark Harmac mill in Nanaimo) on their exports to the United States. They made five claims related to this, but won only one of them, relating to “very invasive” auditing. Although the damages Canada had to pay were greatly reduced from the $500 million that Pope & Talbot wanted, the taxpayer was still on the hook for Pope & Talbot’s legal fees, about $600,000. [12]

It is quite clear, then, that the NAFTA has affected the powers of not only the provinces (as the BC committee asked), but also of the federal government. Just as clear should be the fact that our elected representatives are virtually unable to regulate industry in ways that will protect us from harmful chemicals, conserve the environment for future generations, or to provide public services such as auto insurance. Perhaps these things alone are not enough to change people’s minds on whether we need to scrap FTA/NAFTA, but there is much more to come!

[1] Legislative Assembly of New Brunswick, Select Committee on Public Auto Insurance. Final Report on Public Auto Insurance in New Brunswick. Fredericton: 1st Session, 55th Legislature 2004
[2] see CBC News Online Staff. N.B. Report Calls for Public Insurance System 2 Apr 2004 http://www.cbc.ca/2004/04/02/canada/insurance_nb040402 and
Peterson, Eric Luke. “How Trade Deals Hurt Policy” Globe and Mail. [Toronto]. 20 July 2004: A17.
[3] http://www.naftaclaims.com
[4] NAFTA Secretariat http://www.nafta-sec-alena.org/DefaultSite/legal/index_e.aspx?articleid=160
[5] Lewis, Richard. Sr., ed. Hazardous Chemicals Desk Reference. New York: Van Nostrand Reinhold, 1997. 115-116.
[6] Lewis, 953-954.
[7] “Canada gets $8.2 million fine” Toronto Star. 22 Oct 2002, C02.
[8] Lewis, 696 and
Steffenhagen, Janet. “Province to call on Ottawa to ban gas additive MMT: B.C. Environment Minister Cathy McGregor says she wants a study of the ‘octane- booster's’ effect on health and the environment” Vancouver Sun. 9 Sept 1998: B06.
[9] Ipsos-Reid. Canadians’ Views on Trade Agreements 6 May 2004 http://www.ipsos-na.com/news/pressrelease.cfm?id=2224&content=full
[10] see CBC News Online Staff. US Firm Sues Canada for $10.5 Billion Over Water 10 Nov 2000 and
Jack, Ian. “U.S. firm eager to take another run at water exports: Using NAFTA's Chapter 11: Decade-old plan for B.C. water not sunk yet, Sun Belt vows” National Post [Don Mills]. 26 Mar 2001: C03
[11] CBC News Online Staff. Canada Post Facing Lawsuit from UPS 30 Nov 2001 http://www.cbc.ca/story/canada/national/2001/04/07/purolator010407.html
[12] see Levant, Ezra. “Canada’s NAFTA Disgrace” National Post [Don Mills]. 12 Mar 2003: FP15. and
“NAFTA Orders Canada to Pay Damages” Nanaimo Daily News. 1 Jun 2002: C03.

Note: http://www.leg.bc.ca/CM...