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NEWS: AbitibiBowater NAFTA settlement sets dangerous precedent

Political commentator Frances Russell writes in the Winnipeg Free Press that, “Ottawa’s $130 million out-of-court settlement with forestry giant AbitibiBowater has created a precedent undermining provincial ownership and control of resources under Canada’s constitution, (Scott Sinclair,) an international trade policy expert says.”

“Last February, AbitibiBowater launched a $500-million lawsuit against Newfoundland and Labrador under the North American Free Trade Agreement’s notorious Chapter 11 ‘investor rights’ clause. Premier Danny Williams had expropriated the Delaware-incorporated but Montreal-based company’s assets and returned its water and timber rights to the Crown after the company put 800 people out of work by closing its mill in Grand Falls-Windsor and the two sides failed to reach a settlement. The Newfoundland legislation compensated AbitibiBowater for the fair value of its real property (land, buildings, dams, etc.) but denied it compensation for the loss of its timber and water rights.”

“Under Canadian law, water and timber rights belong to the Crown in the name of the people and provinces of Canada, (Sinclair) says ‘and are not considered compensable rights under Canadian law. These are publicly owned resources so how can there be an expropriation if the company doesn’t even own them?’ …Sinclair expects the federal government’s move will trigger a wave of corporate claims to Canadian natural resources using NAFTA’s Chapter 11.”

“This is the second time Canada has not even defended itself against a Chapter 11 claim. In 1997, the Liberal government paid U.S. chemical giant Ethyl Corporation $19.5 million and repealed its ban on the gasoline additive MMT, a suspected neurotoxin. Sinclair says that surrender triggered a wave of Chapter 11 lawsuits challenging environmental regulation and he suspects the Harper government’s capitulation will lead to a similar rash of claims over rights to natural resources.”

“NAFTA’s Chapter 11 stems from U.S., not Canadian, law. The American constitution enshrines property rights; Canada’s does not. The Harper Conservatives make no secret of the fact they believe private property rights should be in the Canadian Constitution. …Since NAFTA’s inception in 1994, Canada has paid $157 million in damages to corporations under Chapter 11. Mexico’s Chapter 11 tab is $187 million. The U.S. wrote the rules, has never lost a case and has paid nothing.”

The full column can be read at http://www.winnipegfreepress.com/opinion/columnists/troubling-precedent-in-trade-104843459.html.

Councl of Canadians commentary on this can be read at http://canadians.org/campaignblog/?p=4412.