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AbitibiBowater files NAFTA challenge

The Canwest News Service reports today that, “Legislation used by Newfoundland and Labrador to ‘kick out’ AbitibiBowater Inc. and expropriate most of its assets purports to be ‘rational public policy’ but is really the ‘populist rhetoric’ of a vindictive premier, according to papers served on the federal government Thursday. The forestry giant formally notified Ottawa that it will challenge that action under North American Free Trade Agreement and seek more $300 million in direct compensation for the rights and assets expropriated after it announced the closing of its Grand Falls, N.L., mill.”

“The legislation ‘simply singled out one (natural resources) company for retaliatory expropriation and dressed up its punitive actions with populist rhetoric designed to loosely suggest (but not really reflect) rational public policy goals,’ according to the 40-page document. ‘The real motivation, and the real consequence of the act, was simple. It was to kick a single foreign investor out of the province because that investor had angered Premier Williams and some of his constituents.’”

(The document hasn’t been posted yet, but it should be available soon at http://www.international.gc.ca/trade-agreements-accords-commerciaux/disp-diff/gov.aspx?lang=en.)

The Canwest article notes that, “The December expropriation of various assets, including timber and water rights plus several hydroelectric assets – but not the Grand Falls mill – was arbitrary, discriminatory and illegal, according to the company which is currently under bankruptcy protection in Canada and the U.S. And it violates Canada’s obligations under several NAFTA articles including its failure to ensure payment for the fair market value of its expropriated assets and rights. The Williams government contends that by closing its last mill in the province, putting hundreds of people out of work, the company broke a century- old covenant and shouldn’t have access to provincial resources.”

The Globe and Mail reported late yesterday that, “The company sent the federal government “notice of intent to submit a claim” under the North American Free Trade Agreement Thursday and spelled out how it feels it has been wronged by the province…On Thursday the company laid out the basis for such a claim, calling the province’s move ‘retaliatory expropriation’ that breached the agreement in multiple ways.”

“The government of Newfoundland and Labrador did not comment on Thursday’s development beyond a brief statement. ‘A Notice of Intent is one of the first steps in the arbitration process,’ said Natural Resources Minister Kathy Dunderdale. ‘The fact that a Notice of Intent has been filed does not establish the merits of a challenge.’ Her statement noted also that the treaty ‘falls under the responsibility of the Government of Canada’ and that the province ‘will let the established process unfold.’”

Council of Canadians trade campaigner Stuart Trew will blog on this today, and we will be looking at ways to intervene. To read Stuart’s blog this afternoon, go to http://canadians.org/tradeblog/. The Canwest News Service report noted that, “The Communications Energy and Paperworkers Union will seek standing in the NAFTA dispute, union president Dave Coles said. Canada should not be subject to ‘private-sector pillage,’ said Coles noting that the company last week told bankruptcy court that it couldn’t pay severance to the Newfoundland workers.”