A common refrain against the NAFTA deal is the perception that NAFTA can be used by corporations to circumvent sovereign law in the name of profits, particularly health and safety and environmental law. To illustrate their case, many detractors point to the case of Ethyl Corporation and the additive MMT in gasoline. MMT is an additive to gasoline that reduces engine knocking. Several studies have been conducted to determine the health effects of the chemical and have found varying degrees of threat, from relatively benign in the form expelled by automobiles to hazardous in its pure concentrated form. For the purposes of this missive, it will be assumed that all safety concerns are valid, and MMT is a harmful chemical.
In 1997, the Canadian government became aware of the health effects of MMT. This was spurred by the 1995 lift of the MMT ban in the US that had been in effect since 1977 but was overturned by US courts when it was found that the EPA overstepped it’s authority. As a result of this court case, MMT became a legal additive in the US once again. Using EPA studies that showed that MMT had negative health effects, California and subsequently the entire eastern seaboard have passed state laws banning MMT additives in fuels sold in their states (as a result 85% of gasoline now sold in the US is MMT free). The Canadian government, reacting to the media exposure of MMT, also sought to ban MMT in fuel sold in Canada. In order to ban the chemical as hazardous, the government had both Health Canada and Environment Canada file reports.
The Health Canada report said that while manganese is known to be a "neurotoxic" linked to brain disorders such as Parkinson's disease, the level of manganese released by MMT in gasoline "is unlikely to pose a risk." That from Grace Wood, senior evaluator in Health Canada's environmental health directorate and author of its MMT report. In a briefing paper, Environment Canada cites ongoing U.S. concern over MMT as a reason for moving against the substance. While acknowledging that the Canadian government's own study did not find any direct negative health impact from MMT, it says that the neurotoxicity issue is not the only health concern. As a result of the lack of substantive evidence sourced by Canadian ministries, the federal government passed a law banning the import, export and interprovincial transport of MMT as they wanted (for good or ill) to look like they were moving on this file. This is the key to Ethyl Corporations lawsuit brought against the Canadian government. Nowhere in the legislation did the government cite safety concerns. Though intended to be a quick method to ban a substance for safety reasons, and in their haste to appear to be doing something, the government’s ham-fisted attempt to circumvent Health Canada or Environment Canada policy by investing in further detailed study into MMT that would have resulted in an appropriate ban on MMT, the government of the day crafted a poorly written law.
Ethyl Corporation (EC), the only manufacturer of MMT in the world, subsequently contested this ban under NAFTA provisions. The essence of the EC argument was that the Canadian MMT ban was an expropriation of EC assets and that the ban was a performance requirement forbidden under NAFTA articles 1110, 1102 and 1106. EC successfully argued that EC could still manufacture and sell MMT under the existing Canadian law, including the new law, if EC created a manufacturing facility in each Canadian province and territory, thus circumventing the new law’s provisions that made the import or interprovincial transport of MMT illegal. The Canadian government’s failure to craft the legislation under health or environmental guidelines was the only reason for the failure of the Canadian law to stand under the articles of NAFTA. EC was paid $13 million and withdrew the $250 million NAFTA based suit.
Detractors of NAFTA point to this case as an example of how NAFTA allows corporate profits to trump sovereign law, that corporate interests are elevated above the public interest and that the Canadian government has subjugated its authority to the corporate interest. These arguments are incorrect. The Canadian governments own studies failed to show sufficient risk to either the environment or to individual health to ban MMT through either Health Canada or Environment Canada. So to look good, they crafted sloppy legislation to curtail the trade of MMT which was overturned utilizing provisions within NAFTA. Had the government instead banned MMT for health or environmental concerns based on scientific evidence, the ban would have proceeded and there would be no recourse for EC under NAFTA or any other treaty, just as there was no recourse for EC to overturn the bans in California or the Eastern Seaboard states. There is nothing stopping the Canadian government from proceeding with investing in additional studies through Health Canada to proceed with a future ban (unless there was some provision in the 1997 settlement with EC that is unknown to the author at this time).
The following links were used as sources for the above article:
Stumble It!
I'm not necessarily opposed to modifying the Canada Health Act, for example, to allow for greater private delivery of health services, but I'm chilled by the notion that some private health company could issue a NAFTA challenge to our public health system. Similarly, private parcel companies like UPS have already sued to try and get Canada Post out of the parcel delivery business...never minding that Canada Post provides a cheap alternative for many small businesses, and I haven't heard of UPS being in any financial difficulty or otherwise being shut out of any markets because of it. Wasn't there another NAFTA lawsuit that resulted from the B.C. government's refusal to allow bulk fresh water exports for one reason or another?
I have my disagreements with the likes of Linda McQuaig and Mel Hurtig, but I think they're still making a very prescient warning about the potential dangers of the Chapter 11 provisions, even if the Ethyl case was spurious. What were the circumstances of the other cases?
I will agree with you that we need to maintain vigilance with respect to Chapter 11, but we have to remember that corporations, like people, have the right to sue for any perceived slight. So long as the laws are written properly and the courts uphold those laws, we should be OK. When a specific law or provision causes an actual issue, that should be addressed immediately. My only commentary is that I can find no actual case in which Chapter 11 or NAFTA in general has been used to overturn a sovereign issue regarding health or safety. I would be willing to concede the point if someone could point out a specific use of NAFTA that did result in our loss. I took issue with the Ethyl Corporation because it seems to be the casus belli for the anti-NAFTA crowd, when in fact it was the result of rushed legislation trying to plug a hole that Health Canada couldn't at the time.
I don't disagree that we need to have the right to pass laws to ban things that cause harm. The issue with MMT was that the Health Canada study didn't show that it did. The report from Environment Canada didn't show any health effects either. You don't get to ban something on speculation. What the government should have done was to send the experts back to the lab to get a more detailed study and to incorporate findings from the EPA and the UK. And then they could have made a ban for safety reasons. But they didn't do that, they tried an end run around the law by making the business climate intolerable for Ethyl Corp. They never tried to ban it. And that, not any finding of health or safety, was what sunk the law in Canada.
I'm cognizant of your warnings. I hear your arguement. It's just that there is no evidence that shows that any of the issues you raise have occurred.
You don't get to ban something on speculation.
Um.....pot?
LOL. Although they have produced studies that show that it does impair brain function - as does alcohol. But it's ban isn't a NAFTA issue.
I will say that the increase in life expectancy in the past 20 years is directly related to NAFTA.
Perhaps a better question might be why the Danny Williams government was sued under NAFTA for trying to make sure more of the oil produced from the Newfoundland projects at Hibernia and the Grand Banks were refined in Newfoundland & Labrador itself.
Perhaps the oil companies were "encouraged" by the success of Abitibibowater:
http://www.cbc.ca/news/canada/newfoundl ... fight.html
when the Harper government meekly paid out $130 million, instead of "standing tall" with Danny Williams and Newfoundland/Labrador.