Aug 31 2010
A Canadian group is arguing that the North American Free Trade Agreement is the central problem behind a dispute over water and timber rights that could cost Canadian governments and businesses considerable money in the wake of a major lawsuit.
The group Council of Canadians offered this analysis on August 27:
The provinces and territories should not be held financially responsible for costly NAFTA lawsuits or expensive out-of-court settlements, as suggested by Prime Minister Harper yesterday, says the Council of Canadians.
The social justice advocacy group is also calling on the federal government to make the terms of the settlement with AbitibiBowater public because the settlement may have included payment for water and timber rights the company does not own.
“Canadians are rightfully angry that the Harper government has wasted $130-million of their money on a NAFTA settlement with AbitibiBowater. But to blame Newfoundland Premier Danny Williams, as the prime minister is trying to do, is a deflection from the real problem of letting companies sue the federal government,” says Maude Barlow, national chairperson of the Council of Canadians.
The $130-million NAFTA settlement with AbitibiBowater is the largest since the trade agreement came into force in 1994. By law, the federal government is bound to defend NAFTA challenges to provincial or territorial policy, and to cover the associated costs. Using the public anger at the size of the payout, Prime Minister Harper said yesterday he will be establishing a legal mechanism to force the provinces and territories to pay for future trade-related settlements.
“Danny Williams was absolutely right and within his provincial powers to take back the water, timber and land of a company that was giving up on Newfoundland,” says Barlow. “There’s no proof that giving companies the power to sue countries in trade deals actually attracts foreign investment. The high costs could be avoided by pulling the Chapter 11 investor-dispute process out of NAFTA.”
The Council of Canadians is concerned that the settlement included payment for water rights the company doesn’t have. If the terms of the deal state that the $130-million will broadly satisfy the value of AbitibiBowater’s NAFTA claim, which included a claim to water and timber rights lent to the company by the Newfoundland government nearly 100 years ago, the Harper government has created a de facto private property right to water where none exists in Canadian law.
“There are vast constitutional consequences in the AbitibiBowater settlement if in fact Harper is compensating a private company for water rights as if that company owned the land and water to begin with because it doesn’t,” says Steven Shrybman, trade lawyer and Council of Canadians board member.
The settlement must be court-approved and will be discussed at a hearing Sept. 14 in U.S. Bankruptcy Court in Delaware, where the company is incorporated. The Council of Canadians is calling for a public airing of the terms of the AbitibiBowater settlement, which would then inform possible constitutional issues.