Mr. Speaker, under the terms of the NAFTA agreement attempts by government to impose restrictions on corporations to protect the environment, to preserve natural resources, to defend public health, to ensure labour rights or protect culture can now be challenged as a trade barrier. When governments attempt to impose restrictions they can find themselves subject to expensive legal challenges from corporations.
Take the case of Guadalcazar, a town located in the Mexican state of San Luis Potosi. A NAFTA tribunal found that Mexico violated NAFTA's chapter 11 investor provisions by not allowing California based Metalclad to open a hazardous waste treatment and disposal site. The tribunal ordered the Mexican government to pay $16.7 million to Metalclad.
The decision was appealed by the government of Mexico but in upholding the NAFTA tribunal's decision the judge pointed out that the language in NAFTA was so broad that the government's action amounted to a violation of the company's rights. Even when the government acts in the public interest, as it did in Mexico, and follows legitimate procedures but interferes with corporate profit making, it can be forced under NAFTA to pay millions of dollars in damages to corporations. Therefore the government of Mexico had to pay Metalclad $16.7 million.
In 1998 the Government of Canada caved in to corporate pressure under NAFTA. Ethyl Corporation, the producer of a fuel additive, MMT, filed a $350 million NAFTA lawsuit against Canada. Our government banned this product by an act of parliament in 1996 because MMT was deemed a hazard to human health. However, anxious about losing in court, Ottawa settled out of court and paid Ethyl $19 million. It also issued a statement denying that MMT was a health hazard.
In the United States of America we now have the yet unresolved issue of California's ban on the additive MTBE, produced by a Canadian company called Methanex. It is basing its NAFTA lawsuit on the notion that it has not been proven beyond a shadow of a doubt that MTBE causes cancer in humans, only in rats and mice.
These three cases permit us to note that: first, corporations have more success at NAFTA tribunals than in domestic courts when opposing environmental and health regulations; second, NAFTA tribunals reject the precautionary approach and promote investment and trade above all; third, acting under NAFTA corporations can pressure foreign governments in the expectation they will back off; and finally, NAFTA tribunals can and effectively do overturn laws passed by democratically elected legislatures.
NAFTA tribunals are not open to the public and conduct their proceedings in secret. One of the many problems with NAFTA is that it grants investors a powerful new set of rights in their business dealings abroad, but assigns no new responsibilities. As a result, NAFTA increases the powers of corporations and diminishes the power of governments.
It is therefore most alarming and distressing to see democratically elected governments become less relevant and lose power to corporations. Signing international trade agreements should not lead to a reduction of the state role in protecting the public good.
In essence, what NAFTA does is it allows corporations to make profits which corporations would not be able to make under national laws. In addition, NAFTA allows a perverse reversal of democratically adopted rules by a non-democratically chosen tribunal acting in secrecy.
For these reasons I am asking the parliamentary secretary the following questions. Is the Government of Canada proposing an interpretive statement of the scope of article 1110 on expropriation for adoption at this year's meeting of the free trade commission? Is corrective language being proposed to deal with the thorny issue of investor rights in chapter 11? Will the commission on environmental co-operation in Montreal be assigned the task of resolving this deeply disturbing issue?