CANADIAN POLITICS:

DOW VERSUS DEMOCRACY:

The following story is the Embassy Online site via the Harper Index. It seems that Dow Chemical, having failed in previous court challenges to various chemical bans, both provincial and municipal, across Canada is trying a new tack. Dow has launched a NAFTA appeal against a Quebec ban on lawn pesticides, claiming that this ban "amounted to an unfair expropriation" of its business, illegal under NAFTA. This sort of challenge adds credence to critics of NAFTA who say that such international trade deals restrict democracy in the interests of powerful business. While not wishing to get into the ins and outs of the effects of pesticides Molly has to say that she agrees with this claim. It is, in fact, obvious, and this case is only one of many that demonstrate this fact. If Canada is be a truly democratic country, or at least more democratic than it is now, then it will have to withdraw from pacts such as NAFTA as a preliminary.

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Dow suit puts NAFTA Chapter 11 to the test:
Dow Chemical claims pit rights of communities to ban pesticides vs rights of companies to sell them.
Let's get one thing straight. The recently-launched NAFTA arbitration by Dow Chemicals against the Government of Canada is about much more than $2 million.

As was first reported in these pages last autumn, Dow claims that a Quebec ban on lawn pesticides has amounted to an unfair expropriation of Dow's Canadian pesticide business.

On March 31, the company filed for formal arbitration under NAFTA's Chapter 11, seeking at least $2 million in compensation from Canadian taxpayers.

However, $2 million won't even cover Dow's legal fees. So, what gives?

Quite simply, foreign investors are not obliged to tally up potential losses at the outset of these NAFTA arbitrations, which is why the Dow claim looks so modest, at least for now. In the months (or even years) to come, you can be sure that Dow will up the ante.

Indeed, Dow may expand its claim to challenge pesticide bans in other parts of Canada. With other municipalities and provinces looking at cracking down on such chemicals — an Ontario-wide ban comes into effect later this month — the $2 million figure may be the tip of the iceberg.

The wider ramifications of this dispute have spurred environmental groups to mobilize for battle. Some hint of the coming fireworks could be glimpsed on Parliament Hill late last month.

In hearings of the Standing Committee on International Trade, environmental groups signalled their plans to intervene in any forthcoming NAFTA arbitration proceeding.

These groups insist that governments should be permitted to act on a precautionary basis to shield vulnerable groups such as children — even when the scientific evidence is uncertain as to the long-term health impacts of certain substances. They plan to present their own views to the arbitration panel presiding over the NAFTA case.

However, the groups complain that the NAFTA Chapter 11 arbitration process is less than welcoming when it comes to hearing from concerned citizens and other interests.

In testimony to Parliament last month, environmental advocates observed that the NAFTA — unlike more recent trade pacts — allows foreign investors to sue a NAFTA government behind closed doors.

Will Amos, an Ottawa-based lawyer representing the David Suzuki Foundation and the Quebec group Equiterre, notes that his clients can submit written arguments to a NAFTA arbitration panel, but they may be blocked from showing up and watching or participating in these high-stakes arbitration proceedings.

"There is no guarantee that the investor won't request confidential proceedings," Mr. Amos said, "which would further limit our ability to understand what case they're bringing, and there will be no opportunity for us to make oral representations before the tribunal.

"This is totally unlike the Supreme Court of Canada," he adds.

Indeed, it's unfortunate that the arbitration proceedings could be conducted in private. Otherwise, some of Canada's Supreme Court justices might benefit from sitting in on the arbitration hearings, and gaining a better appreciation of this NAFTA process. If permitted into the hearing room, the justices might be taken aback by the extent to which NAFTA tribunals can now review the actions of governments.

Indeed, one of the things that has incensed many members of the environmental community — and which might also bemuse members of the Supreme Court — is that pesticide bans in other parts of Canada have already been upheld by the Supreme Court of Canada.

In 2005, the court dismissed an effort by a pesticide industry association to challenge a ban introduced by the City of Toronto. Environmentalists assumed that this ruling affirmed the right of governments to act proactively so as to minimize potential health risks. However, it now appears that the Supreme Court was merely engaged in a dress rehearsal.

Sure, pesticide bans in different parts of Canada have been declared constitutional by the highest court in the land, but in the 21st century, constitutions are not the only law of the land.

Rather, it will fall to three arbitrators — one appointed by Dow, one by Canada, and the third by mutual assent — to determine whether our North American constitution — the NAFTA — sanctions the actions of the Quebec government.

The Dow arbitration promises to be of seminal importance.

Dow protests that Quebec lawmakers failed to take heed of several risk assessments, including one by Canada's federal government, which showed that the pesticide ingredient 2,4-D "does not entail an unacceptable risk of harm to human health or the environment."

Of course, others, including some governments, have questioned whether risk assessments should be the final word on such matters. Environmental and medical groups like the Canadian Cancer Society have long argued that no amount of risk is worth taking when it comes to "unnecessary" chemicals, such as lawn pesticides, which are used for purely cosmetic purposes.

However, where governments wish to drive certain risks closer to zero, it will fall to a panel of NAFTA arbitrators to decide who shall pay the price for doing so: the chemicals industry or the Canadian taxpayer.

Luke Eric Peterson is an Embassy columnist and editor of Investment Arbitration Reporter, an online news service tracking NAFTA-style investor-state arbitrations.
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