An American company that manufactures the controversial farm chemical lindane wants $100 million in damages from the Canadian government.
Crompton Corp., formerly known as Uniroyal, is unhappy about the way the chemical used in canola seed treatments was removed from the market this past summer.
It says the federal government violated the North American Free Trade Agreement and arbitrarily broke an agreement to conduct a complete review of lindane before making a final decision on the product’s fate.
“By banning the use of lindane product after July 1, 2001, and by failing to live up to its undertaking to conduct a review of lindane, the government has taken measures tantamount to expropriation,” the company said in its Nov. 6 notice of intent to submit a claim.
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Not only does it want compensation for alleged financial losses, but it also wants the government to reinstate its registration for lindane products used on canola seed.
Ironically, lindane’s canola seed registration was withdrawn in Canada to ease trade tensions with the United States, where it has never been registered for canola seed. Farmers in the U.S. said it gave Canadian growers an unfair competitive edge.
Oussamah Tamim of the federal department of foreign affairs and international trade, said it’s too soon to comment on the specifics of the case.
“We’ll see if it’s going to go any further, and if so, start preparing our case and make sure everybody is consulted,” he said.
The action is being brought under a controversial section of NAFTA that allows foreign companies to sue the government if their investments in Canada have been hurt by Canadian laws.
The two sides have 90 days to try to resolve the dispute. If that fails, the case could eventually go before a three-member international arbitration panel.
Crompton spokesperson Bob Harwood said the company hopes a compromise can be negotiated without having to go through the entire legal process. But he wouldn’t say under what conditions Crompton would be willing to settle.
“All the options are still open, the reinstatement of the registration, some monetary award,” he said in an interview from the company’s headquarters in Connecticut. “We need to sit and talk and we have not had that discussion yet.”
He said the company believes Ottawa should either reinstate the registration or complete a promised review of the product. Either way, he said, lindane should be approved for use on canola seed.
In its notice, the company said there is “no conclusive scientific evidence that a ban is necessary to protect human health or the environment.”
Lindane was first registered for use in seed treatment of canola and other crops in 1978. While it became a popular product in Canada for the control of flea beetles, it was never registered for use on canola in the U.S.
In 1998, canola growers in the U.S. protested against the import of Canadian seed treated with lindane, arguing they were being put at a competitive disadvantage. The U.S. Environmental Protection Agency ruled lindane-treated crop residue should not be allowed across the border.
The Canadian canola industry responded by negotiating with the four lindane manufacturers of the day a voluntary withdrawal of lindane’s registration for canola by Dec. 31, 1999, and no further use of the product after July 1, 2001.
In its notice, Crompton said it didn’t agree to the July 2001 date, and negotiated a separate agreement with the government calling for a joint Canadian-U.S. scientific review of lindane by the end of 2000. It says the government never lived up to that agreement.
The company also said the actions and statements by the regulatory agency regarding future use of lindane damaged the company’s sales and led to substantial loss of revenue and profits and increased costs.
Jo Anne Buth, vice-president of crop production for the Canola Council of Canada, said it’s a good question whether lindane will ever be registered again for use on canola.
“It’s going to depend on who you talk to in the industry,” she said.
“If you talk to the manufacturers, they think there’s a chance. If you talk to the regulators, they won’t say one way or the other, but they hint at the fact it’s not going to make it.”
