A $100 million lawsuit against the Canadian government by an
American-owned maker of lindane highlights a serious flaw in the North
American Free Trade Agreement.
Agreements to improve trade are generally good for agriculture, but
certain provisions of NAFTA are inhibiting the ability of governments
to protect their citizens and the environment. They could even cause
trade irritations.
Compton Corp. is suing Canada for banning lindane canola seed treatment
and not completing a promised scientific review by the deadline
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promised.
Compton argues this amounts to expropriation of its business in
contravention of Chapter 11 of NAFTA and demands compensation.
Ironically, the move to end lindane canola treatments in Canada began
with trade complaints from American canola growers.
Lindane was not registered for the crop in the United States and the
Americans could stop entry of canola produced from treated seed.
To avoid a trade battle and protect its American market, the Canadian
canola industry worked with Canadian lindane makers for a voluntary
withdrawal of lindane.
For its part, Canada’s Pest Management Regulatory Agency says it
deregistered lindane at the industry’s request. Its scientific review,
conducted in tandem with the U.S. Environmental Protection Agency, will
be complete soon and will define the future of lindane in both
countries.
Compton’s case is based upon Chapter 11 of NAFTA, which protects
investors against expropriation without compensation. But expropriation
is defined widely, including government actions that devalue an
investment. This appears to put property rights above any concept of
public interest.
Increasingly, corporations are using Chapter 11.
Ethyl Corp. used a $250 million US lawsuit to pressure Canada to drop a
planned ban on the fuel additive MMT. It is banned in most places
because of evidence it is a health and environmental hazard.
Meanwhile, Vancouver-based Methanex, maker of MBTE, another gasoline
additive, is suing the U.S. government over California’s decision to
phase out MBTE use because of environmental concerns.
These and other cases restrict a government’s ability to protect its
citizens and land and to respect the safety and environmental laws of
other countries.
In the worst cases, they would require governments to pay polluters not
to pollute.
Corporations should be protected from capricious expropriation but this
part of NAFTA is extreme and is shifting the responsibility of
government from protecting citizens to protecting corporate profits.
It should be repealed.
