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Water World

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If the Canadian government were to ban bulk water exports tomorrow, companies could sue the government for billions of dollars under the terms of NAFTA. It could be construed as protectionism, or as an attempt to monopolize fresh water as a commodity rather than a provision to protect the sovereignty of Canda’s fresh water.

There are three key provisions in NAFTA and one provision under the proposed FTAA (Free Trade Area of the Americas) that Canada has to watch out for.

The first is "national treatment," whereby no country can discriminate in favour of its own private sector in the commercial use of its water resources. If even a private Canadian company were to sub-contract to handle water treatment in Canada, or if a permit were granted to a domestic company to export water (and permits have already been issued) – the other NAFTA countries have the same "right of establishment." It becomes an established industry, and any attempt to limit investment or speculation can be construed as protectionism.

The second provision is "Chapter 11," or the "investor-state" clause. It can apply to water in two ways:

First, if any NAFTA country tries to allow only domestic companies to export water, corporations in the U.S. and Mexico can sue for financial compensation for the money they might have made if the doors had been open to them as well. Canada has already been sued successfully for $20 million under Chapter 11 for attempting to ban a potentially harmful gasoline additive.

Second is a Catch-22. If we sell the water, it becomes a commodity and Canada would be unable to prevent foreign companies from buying the rights to collect and sell our fresh water to whatever markets they choose. If we don’t sell the water, companies can argue that we’re essentially protecting a commodity, and the same thing occurs. The moratorium, while on shaky ground, is the only means the government has to prevent either of these scenarios from taking place and it can’t last forever. And the concept of sovereignty, in today’s global economy, is weak at best.

The third provision is under Article 315 of the document, called "proportional sharing." While you can argue that selling a little bulk water here and there can’t hurt, under Article 315, once a trade has been established, no country can reduce or restrict the export of a resource. You can’t add export taxes, or charge more than the accepted price in the other NAFTA countries. You would also have to guarantee quantity – if we sold a billion litres of fresh water in 2002, we would be bound to sell a billion litres in 2003.