Thank you, Mr. Chair.
Good morning, members of the committee.
I am going to address the impact of Canada's decision to settle this claim under chapter 11 on public ownership and control of natural resources, and in particular, water, a principal concern of the Council of Canadians.
I've provided a copy of my remarks to the clerk. Unfortunately, they were prepared only yesterday, so I don't have them translated, but he has indicated that they will be translated and placed on the record. I commend them to you. I'll give you a short praecipe of that paper. It begins with the following summary.
The settlement by the Government of Canada of an investor-state claim by Abitibi effectively allows foreign investors to assert a proprietary claim to Canadian water, including water in its natural state, where those investors have acquired a right to use water resources by permit or otherwise. By doing so, the Government of Canada has essentially transformed Canadian freshwater resources, most of which are owned by the provinces as a public trust, into a private property right, to the benefit of foreign investors that have acquired a right to use water by provincial permit.
It would be difficult, in my submission, to overstate the consequences of such a profound transformation of the right that Canadian governments have always had to own and control public natural resources. Moreover, by recognizing water as private property, the government has gone much further than any international arbitral tribunal has dared to go in recognizing a commercial claim to natural water resources.
For this reason, not only will the AbitibiBowater settlement invite similar claims against Canada, but it is likely to also be taken up internationally by corporations seeking to establish proprietary rights to water in a world where this non-renewable resource is becoming increasingly scarce.
That's the summary and introduction.
I go on to describe briefly the circumstances that gave rise to the claim. I know that the committee has considered them in some detail this morning and I won't repeat or try to cover that ground, but I will say that I have reviewed Bill 75. It clearly did expropriate some of the assets that belonged to AbitibiBowater, but also, it recovered to public use water and forest licences that were never the private property of AbitibiBowater.
It's in asserting a claim to those rights, the right to use resources for a particular public purpose--in this case, to create employment in Newfoundland--that the government settlement of the claim gives rise to the concerns that I have just summarized.
I'll just note one point in regard to Bill 75 that may have been overlooked this morning. Bill 75 did not take Abitibi's property without the consideration of compensating the company for that taking. The legislation explicitly provided the government the opportunity to compensate Abitibi for property; it simply didn't set out a value for the property that was taken or the compensation that might be paid to the company.
That is the way our Constitution works in Canada. Governments have always had the right to appropriate private property for a public purpose, and whether or not or the extent to which compensation would be paid was a matter for governments to determine. That's the way our Constitution works.
When it was proposed in the early 1980s that we incorporate to the Constitution a protection of private property, Canadian governments rejected that norm, a norm which you know is embedded in the U.S. constitutional framework.
So what we've done is effectively transform the constitutional landscape of the country by writing into an international agreement a right to compensation in all cases that property is taken--and to the fair market value of that property. That's not our constitutional arrangement, but it is the rule that Canada agreed to when it negotiated, first, the Free Trade Agreement with the United States in the mid-eighties, and then consolidated that commitment with chapter 11 in NAFTA, which also established for the first time the right of foreign investors to assert a claim for compensation should Canada violate the norms of that international agreement.
The settlement of the dispute between Abitibi and Canada is set out in a consent order of the arbitral tribunal. You can find that on the NAFTA secretariat website. The committee may have already done this, but if you review the terms of the settlement, you will find in article 5 this statement: “As consideration for the above-cited final settlement” with AbitibiBowater “relating to the assets and rights cited therein...”.
You'll have my remarks, and I re-cite this provision of the settlement agreement, but what's important about it is that it's clear from the terms of settlement that compensation is being paid not just for the assets of the company--the power plant and the mill--but also for the rights that it was asserting. If you look at the company's claim, you will see a long list of water licences, forest permits, and other interests the company had acquired over the years, and in fact over decades, under various political administrations and through various transactions with other companies: rights to use provincial forest resources and provincial water resources.
The settlement clearly indicates that compensation is being paid on account of those rights, but doesn't distinguish among them in any way. So in effect, on the face of the settlement itself, every assertion of right made by Abitibi is deemed worthy of compensation by the Government of Canada, because it made no attempt to exclude from its settlement agreement any of the rights that Abitibi was asserting. Moreover, by recognizing a proprietary claim to water-taking and forest-harvesting rights in this manner, Canada has gone much further than any international tribunal established under NAFTA rules or, to my knowledge, under the rules of any other international investment treaty.
What's even more problematic about the settlement is the precedent it will create. If you look at the terms of the settlement, you will find a provision that stipulates that.... I'll read it for you:
This Settlement Agreement shall not constitute a legal precedent for any person, and shall not be used except for the sole purpose of giving effect to its terms, and shall not prejudice or affect the rights or defenses of the Parties or the rights of any other person except to the extent provided herein.
Now, that proviso is entirely ineffective, and the Government of Canada knows it, because it fully understands that under article 1102 of NAFTA, it is obliged to provide “national treatment” to all other foreign investors in like circumstances. It cannot contract or legislate its way out of that obligation. If it wants to amend that obligation, it has to go back to the United States and to Mexico and say that article 1102 needs to be revised.
This is so we are not stuck having to pay precisely this type of compensation to every other company operating in Canada that has a water-taking permit or a forest licence when a government of this country decides that, for whatever reason, for the purposes of sustainable development, because there's some higher and better use for those resources, or because the company has no longer honoured its obligation to create employment as a condition of accessing those forest and water resources. Those conditionalities are a feature of laws from one end of this country to another. Canada would be on the hook to honour the kinds of claims or to pay the kinds of claims that would be asserted by companies in like circumstances to those of AbitibiBowater.
Therefore, in my view, it's not an overstatement to describe the consequences of this settlement as effectively representing a coup de grâce for public ownership and control of water and other natural resources with respect to which some licence or permit has been granted.
I'm out of time. If you have regard to my remarks, you'll see that I attempt to explicate what this means in terms of a company with a permit to use water to water a golf course in Quebec, to run a power plant in Ontario, or to provide the water resources for bitumen extraction in Alberta.
It has profound and far-reaching consequences and implications for Canadian ownership and control of natural resources from one end of this country to the other. If this were a settlement for $1.3 billion, it wouldn't be about the money: it would be about this profound loss of public right with respect to public natural resources.
Thank you, Mr. Chair.