Great Lakes Environmental Directory Great Lakes Great Lakes environment Great Lakes grants exotic species water pollution water export drilling environment Great Lakes pollution Superior Michigan Huron Erie Ontario ecology Great Lakes issues wetlands Great Lakes wetlands Great Lakes Great Lakes environment Great Lakes watershed water quality exotic species Great Lakes grants water pollution water export oil gas drilling environment environmental Great Lakes pollution Lake Superior Lake Michigan Lake Huron Lake Erie Lake Ontario Great Lakes ecology Great Lakes issues Great Lakes wetlands Great Lakes Resources Great Lakes activist Great Lakes environmental organizations Great Lakes Aquatic Habitat air pollution alien species threatened rare endangered species ecological Great Lakes information Success Stories Great Lakes Directory Home/News Great Lakes Calendar Great Lakes jobs/volunteering Search Great Lakes Organizations Take Action! Contact Us Resources/Links Great Lakes Issues Great Lakes News Article About Us Networking Services

Great Lakes Article:

The Great Lakes Region And Bulk Water Exports - Issues of International Trade in Water

Isabel Dendauw

ABSTRACT

The article provides an overview of the latest developments in the debate concerning the bulk water export of Great Lakes water. It examines the policy and legal dimensions of this new debate. The policy dimension focuses on the public attention and concern, in Canada, regarding bulk water removals of water from the Great Lakes basin. This concern has triggered the new Canadian federal legislation banning water exports from the region (Bill C-15). Is this a sign that the Canadian government now embraces a water conservation ethic? Is its position in line with the recent recommendations on the topic of the International Joint Commission (IJC), the joint body created by the United States and Canada to manage their shared waters? The attempt by investors to export water from the Great Lakes basin raises issues regarding Canada's obligations under international and regional trade agreements, most notably the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA). The article examines the provisions of those two trade agreements in the context of the water export debate in Canada and concludes that increased clarity on Canada / US shared water issues is required. KEYWORDS: The Great Lakes - Canada - United States - Bulk Water Exports - International Trade Agreements, GATT, NAFTA, water law, International Joint Commission, NGOs, trade, investment, water markets.

INTRODUCTION The purpose of this article is to establish how the Canadian and U.S. federal governments could avoid the potentially restrictive effects of the application of the General Agreement on the prohibition of withdrawals from the Great Lakes basin. The United States and Canada have a history of successful co-operation in the Great Lakes region. They discovered early on that the shared natural resources of this region had to be managed adequately so as to prevent lasting damage to the watershed. To this end, they signed the 1909 Boundary Waters Treaty, thus regulating the quantity levels of the water in the lakes. The Boundary Waters Treaty only regulates the waters that are running along the boundary between the United States and Canada, and do not regulate the flow of transboundary waters. The Treaty is an example of an early "conservation ethic" on a regional level.

In order to provide institutional support to this co-operation, the United States and Canada created the International Joint Commission (hereinafter the "IJC"). The International Joint Commission issued two reports recently, an interim and a final report, in which it encourages the environmental conservation ethic as a means to preserve the Great Lakes water levels. At the same time, the Canadian public, mainly voiced by a Non-Governmental Organisation called the 100,000-member "Council of Canadians", chaired by Maude Barlow, made clear its concerns concerning bulk export of water from the Great Lakes. It also expressed concerns as to the possibility that the NAFTA and the GATT would prevent Canada from prohibiting the contentious bulk exports.

As a result, the issue of bulk water exports had acquired a notorious policy dimension, which could not be ignored by the Canadian federal government. Consequently, the Canadian federal government enacted an amendment to the International Boundary Waters Treaty Act. Bill C-15, which is the name of this amendment, establishes a system of licenses for water diversions, and prohibits any removal of water from the basins. Bill C-15's raison d'Ítre is to diminish the possible negative effect of bulk water removals from the Great Lakes on the U.S. side. This legislation uses a specific terminology, namely "prohibition of removal". It does establish a "ban on exports". The former would be allowed under the GATT and NAFTA. The latter would not. Thus, terminology is of paramount importance in this context. This is the issue at stake when discussing the impact of GATT and NAFTA on Canada's freedom to regulate the waters in the Great Lakes basin. It will become clear that the only way Canada can retain that freedom under the GATT and NAFTA is only through the adoption of a conservation ethic, together with the United States, whose co-operation is much needed.

INTERNATIONAL COOPERATION (U.S. - CANADA): TOWARDS AN ECOSYSTEM MANAGEMENT OF THE GREAT LAKES BASIN The United States and Canada have an impressively good history of joint management of the Great Lakes basin. Both countries are signatories to a treaty regulating the water uses. Recently, the Canadian federal government enacted a law to prohibit the removal of water from the basin. This law came about subsequently to much protest from the public in Canada calling the federal government to take appropriate action to ban bulk removal of water from the Great Lakes.

Questions arise now as to the adequacy of the federal government's strategy. This strategy is in line, though, with the repeated recommendations of the IJC, and there is little doubt that this strategy is consequent with the past history of the Great Lakes cooperation between the United States and Canada. The 1909 Boundary Waters Treaty (hereinafter "BWT") is the main legal instrument regulating the use of the Great Lakes waters. It establishes both legal principles regarding the boundary and transboundary waters of the Lakes and an institutional arm, the IJC, having the task to ensure the implementation of the legal principles underpinning the Treaty. The primary focus of the Treaty is on water quantity, although the BWT is limited in this respect.

A first limitation of the BWT is that it does not treat the waters of the basin as a coherent whole. This means that boundary waters entail different rights and duties than waters tributary to boundary waters or waters of rivers flowing across the boundary. Concerning boundary waters, the United States and Canada have "equal and similar rights in the use of the waters" (BWT, Article VIII). Concerning waters tributary to boundary waters or waters of rivers flowing across the boundary, on the other hand, each nation reserves "the exclusive jurisdiction and control over [their] use and diversion" (BWT Article II).

The BWT has a second limitation, which is the limited jurisdiction of IJC with respect to water uses, proscribed by the Treaty. The IJC is obliged to give precedence to certain uses over others in the following hierarchy of uses: domestic and sanitary uses, navigation uses and uses for power and irrigation. A use "which tends materially to conflict with or restrain" any higher use is forbidden (BWT Article VIII). It is clear from this list of criteria that this reflects the interests in the Great Lakes in 1909, and there is no provision for in-stream uses related to fish and wildlife, for example, as we would expect to find today.

Despite these limitations, the BWT establishes a very strong and flexible regime that is able to meet the environmental challenges that arose during the past century. When the United States and Canada made a joint reference to the IJC concerning the future of the Great Lakes, it issued two reports, an interim and a final one, which advocate a joint strategy of water conservation. In February 1999, the United States and Canada gave a reference to the IJC to study the effects of water consumption, diversion and removal, including for export, from boundary waters, with an initial emphasis on the Great Lakes. The Treaty defines boundary waters as "the waters from main shore to main shore of the lakes and rivers and connecting waterways, or the portions thereof, along which the international boundary between the United States and Canada passes, including all bays, arms, and inlets thereof..." The Great Lakes constitutes a good example of boundary waters. In August the IJC released an Interim Report on the Protection of the Waters of the Great Lakes.The IJC commenced its work on this reference on February 10th, 1999.

In spring of that year, public hearings were held in 4 Canadian and 4 U.S. cities, and concerned citizens from both the United States and Canada, as well as interested organisations, participated in the consultation process. In addition, the IJC consulted with interested provinces and territories. On August 18th, 1999, the IJC submitted an interim report to the Canadian and U.S. governments. The key recommendation consisted of the implementation of an immediate moratorium on bulk removal of water from the Great Lakes .

The main conclusions of the Interim Report are threefold.

First, the IJC concluded that water is a non-renewable resource.

Second, the IJC made clear that there never is a surplus of water, as every drop of water has several potential uses.

Thirdly, the IJC concluded that provisions of the NAFTA and WTO agreements, including the GATT do not prevent Canada and the U.S. from taking measures to protect their water resources and preserve the integrity of the Great Lakes basin ecosystem so long as there is no discrimination by decision makers against individuals from other countries in the application of those measures. It added that Canada and the U.S. cannot be compelled by trade laws to endanger the waters of the Great Lakes. In addition to those three conclusions, and importantly, the IJC also recommended that governments should exercise caution and called for a moratorium on any bulk removals pending its final report. In conclusion, it is fair to say that the Government of Canada's strategy is fully in line with the conclusions and recommendation of the IJC, which was generally supportive of the environmental approach by the federal government of Canada.

Indeed, on February 10, 1999, the Canadian Government announced a strategy to prohibit the bulk removal of water, including for the purposes of export, from Canadian water basins. The federal strategy was - and still is - based on an environmental approach. The water basin approach treats water as a resource and not as a good, and is considered by the federal government of Canada to be the most comprehensive and environmentally sound way to protect our water basins from environmental damage that can be caused by bulk removals.

Following six months of broad consultations on the Interim Report, the IJC submitted its final report to the U.S. and Canadian governments in March 2000. The Final Report, entitled Protection of the Waters of the Great Lakes, recommended that the governments should not permit any new proposal for removal of water from the Great Lakes Basin to proceed unless the proponent could demonstrate that the removal would not represent a danger for the integrity of the ecosystem of the Great Lakes Basin. The Commission recommended strict criteria should be applied, including giving full consideration to the potential cumulative impacts of single and future such removals, that there should be "no net loss" of water to the area from which it is taken, and that the water is returned in a condition that protects the quality of and prevents the introduction of alien invasive species into the waters of the Great Lakes. Application of these criteria would effectively prevent any large-scale or long distance removal of water from the Great Lakes Basin.

It is important to understand the policy dimension before moving on to the legal dimension. There is dissatisfaction among Canada's public with the IJC's reports mentioned above and with the Federal government's watershed approach. Since 1998, a major Canadian non-governmental organisation, the Council of Canadians, has been asking the federal government to prohibit the export of water. They feared that corporations would turn Canada's water resources into an export commodity. They urged the government to enact a moratorium on the export of water immediately, in December 1998 (Council of Canadians, Our Water is Not for Sale). At the same time, the Canadian Environmental Law Association (hereinafter "CELA") expressed the same fears. In December 1998, Sarah Miller, spokesperson for CELA, said "There is no forum examining the many environmental impacts of taking water from its natural setting.

The Great Lakes are experiencing the lowest water levels in 34 years thanks to the growing impact of climate change. Big business is banking on water becoming the oil of the next century and Canadians need to say no" (Council of Canadians, Our Water is Not for Sale). In February 1999, she added: "Allowing water to be traded away is certain to harm the environment since it will inevitably place growing numbers of lakes and rivers beyond the reach of governments and the rule of law. Canada must act now" (Council of Canadians, National Organisations Urge Chretien to Ban Bulk Water Exports Before it's too Late).

The Canadian Government took action by launching a three-fold strategy. On February 10, 1999, the federal Government of Canada announced a strategy to prohibit the bulk removal of water, including for the purposes of export, from Canadian water basins.

The federal strategy is threefold.

Part I of the strategy is to amend the International Boundary Waters Treaty Act, which is intended to give the Minister of Foreign Affairs the power to prohibit bulk removals from boundary waters, principally the Great Lakes. The federal government is demonstrating commitment by taking action within its jurisdiction, and on November 22, 1999, the Minister of Foreign Affairs Lloyd Axworthy introduced in the House of Commons an Act to Amend the International Boundary Waters Treaty Act (hereinafter "IBWTA"). The principal effect of the proposed amendments is to prohibit removal of water out of boundary water basins between Canada and the U.S., especially the Great Lakes. The Great Lakes and other boundary waters now have protection from bulk removals under federal Canadian law. This is important as the Great Lakes could attract developers, including for the purposes of export or diversions schemes (DFAIT, Letter from Minister Lloyd Axworthy).

Part II of the federal government's strategy is to make a joint Canada-U.S. reference to the International Joint Commission to examine the effects of water consumption, diversion and removal, including for export, from boundary waters, with an initial focus on the Great Lakes. As mentioned above, the IJC released its final report in March 2000 (DFAIT, Q & A - General Issues on the Legislation).

Part III of the federal government's strategy is a proposal to develop, together with the provinces and territories, a Canada-wide accord to prohibit bulk water removals which would apply to all waters. The federal strategy to prohibit the bulk removal of water out of major drainage basins acknowledges the primary responsibility of provinces and territories for water management and proposes the development of a Canada-wide accord on bulk water removal. Under the accord each jurisdiction would promise to adopt this approach, if they have not already done so. The federal government does not have jurisdiction over all waters in Canadian territory, as mentioned earlier. The Boundary Waters Treatygives the federal government clear jurisdiction over boundary waters to the extent stipulated in the Treaty. That is why the Government chose the option of amending the International Boundary Waters Treaty Act as the most adequate way to achieve their objectives, while respecting provincial jurisdiction.

However, in March 1999, the Council of Canadians issued a press release stating "one month after federal announcement, state of Canada's water as precarious as ever". The reason for this being, according to the Council of Canadians, that while the federal government invited the provinces to join in the moratorium as a temporary measure before negotiating a national accord, few provinces seemed willing to jump on board and Quebec had refused (Council of Canadians. One month after federal announcement, state of Canada's water as precarious as ever). Maude Barlow qualified the Government's plan for a voluntary moratorium as a plan full of holes, and her reasons were that "This deal can't protect water because it's simply not NAFTA-proof. Corporations are turning up the pressure to export water and a voluntary accord between the provinces means that, if one province gives in, the floodgates to sell water are open everywhere" (Council of Canadians, Council of Canadians supports BC call for federal action on water export ban). Jamie Dunn, the Council of Canadians' water campaigner added, "... the government will have to deal with NAFTA" (Council of Canadians, Council of Canadians supports BC call for federal action on water export ban). The Council of Canadians did congratulate the IJC's on its report released in August 1999, calling for a ban on bulk export of water (Council of Canadians, Council of Canadians releases legal opinion on water exports; congratulates IJC). The Council subsequently released a legal opinion that echoed the need for the federal government to act immediately to ban bulk water exports. The Council wants the government to ban exports of water.While the federal government agrees that measures need to be taken to protect the integrity of Canada's water resources, the federal government believes in the adequacy of its strategy of prohibiting the bulk removal of water from all major drainage basins in Canada.

According to the Government of Canada, prohibiting bulk water removal from water basins is better than an export ban because a prohibition is more comprehensive, environmentally sound, in line with constitutional responsibilities and consistent with Canada's international trade obligations. The federal government believes that an export ban may appear as a fast and easy solution, but that it does not focus on the environmental dimension, has possible constitutional limitations and that it may be subject to trade challenges.

The reasons why the Government chose the option of prohibiting bulk removal of water are the following.

A first reason is that in that way, water is protected in its water basin, before the issue of exporting arises.

A second reason is that, under the Canada-wide accord, each level of government has a responsibility and each level must take action. Thus, sovereign control over water as a natural resource would rest with Canadian and not foreign governments.

A last reason is that water is regulated in its natural state, beforeit has become a commercial good or a tradable commodity. This is in line with Canada's international trade obligations (DFAIT, Q & A - General Issues on the Legislation). In March 2000, the Council of Canadians expressed deep disappointment with the IJC's final report on water exports, in which the IJC supports the federal government's strategy to prohibit water removals (Council of Canadians, International Joint Commission Fails Canadians and Opens Door To Bulkwater Exports).

In June 2000, the Council criticised the federal government for trying to get the provinces to agree to its voluntary water accord, instead of negotiating with trading partners to protect water from the NAFTA (Council of Canadians, Sixteen months later, Government still pushing futile water accord). And finally, in June 2000, the Council urged the federal government to adopt a comprehensive national water policy that explicitly bans bulk water exports (Council of Canadians, Federal Government Must Adopt a Comprehensive, National Water Policy to Respond to Looming Water Crisis).

The policy dimension is obviously closely tied to the legal issues at stake. Therefore, the article will now examine the legal options that are available to Canada under the NAFTA and the GATT 'to ban bulk water exports' or 'to prohibit bulk water removals'. The discussion below focuses on the implications of both the GATT and NAFTA for water withdrawals in the Great Lakes basin.

EXPORTING CANADA'S FRESHWATER: THE LEGAL DIMENSION

The NAFTA being rooted in the GATT, the major rights and obligations of the former are found in the latter. There are, however three major differences. Firstly, the NAFTA trade obligations contain limitations on the use of the GATT exceptions. Secondly, NAFTA has so-called "proportional sharing provisions" not found in the GATT. And thirdly, NAFTA contains investment obligations, not found in the GATT either. When examining whether water export control measures such as put in place by the Canadian federal legislation prohibiting bulk removal of water from the Great Lakes basin are in line with Canada's obligations under the GATT and NAFTA, it is of considerable importance to know whether these agreements include water in its coverage. This preliminary question must be addressed before digging into the substantive obligations of the agreements in question. One major argument in favour of a positive answer to this preliminary question is that, in the GATT, both Canada (Schedule V) and the U.S. (Schedule XX) include water as a tariff item (item 220): "Waters, including natural ... waters". However, the fact that water is included in the tariff heading does not necessarily mean that water in all its forms is included. The reason for this is that the GATT obligations only extend to "products". There is no definition of a "product" under the GATT, but the ordinary meaning of the word is that it is a "creation, commodity, produce or an end result", according to many a dictionary. So, it would appear that water in a lake is not a product, and that it would thus not be subject to the GATT obligations. On the other hand, when water has been transferred into bottles, tankers or pipelines, it has been "captured" and would then attract GATT obligations. The same tariff headings apply under the NAFTA, which means that the same reasoning would apply. This is also the reasoning of the federal government of Canada, and the reason why Bill C-15 "prohibits removal of water" before it has become a good or commodity. There are, unfortunately, several reasons to doubt the Canadian federal government's analysis, as the Council of Canadians warn. Firstly, the tariff schedules do not include a limitation to water that has been taken out of its natural state. Secondly, water in its natural state is considered a commercial good under U.S. law (Sporhase v. Nebraska ex rel. Douglas). In Sporhase v. Nebraska ex rel. Douglasthe Supreme Court of the US concluded that water was an article of commerce in part because of the nature of, and trade in, the commodities that were produced with its use. Thirdly, water is a good under international law, as the European Court of Justice has interpreted the term "good" to include anything capable of monetary valuation and of being an object of a commercial transaction (Commission v Italy, Case 7/68). Fourthly, a very large part of Canada's water resources can already be considered as subject to commercial use. In British Columbia, as of 1993, approximately 40,000 licenses for the withdrawal of surface water were in existence in the province (Shrybman, 1999). Under NAFTA, however, there is a Joint Statement, made in 1993 by the U.S. and Canada, providing: Unless water, in any form, has entered into commerce and becomes a good or product, it is not covered by the provisions of any trade agreement, including the NAFTA. And nothing in the NAFTA would oblige any NAFTA Party to either exploit its water for commercial use, or to begin exporting water in any form. Water in its natural state, in lakes, rivers, reservoirs, aquifers, water basins and the like is not a good or product, is not traded, and therefore is not and never has been subject to the terms of any trade agreement. This joint statement confirms the argument advanced by the Canadian federal government according to which the watershed approach it follows is consistent with Canada's trade obligations. It is unfortunate, though, that a recent study by the U.S. State Department describes the use of joint statements as follows (Shrybman, 1999): It has long been recognised in international practice that governments may agree on joint statements of policy or intention that do not establish legal obligations. In recent decades, this has become a common means of announcing the results of diplomatic exchanges, stating common positions on policy issues, recording their intended course of action on matters of mutual concern, or making political commitments to one another. These documents are sometimes referred to as non-binding agreements, gentlemen's agreements, joint statements or declarations. Because of these uncertainties, it has to be assumed that water in some form is indeed subject to GATT and NAFTA disciplines. The key provision in the GATT is Article XI. This is a common element between GATT and NAFTA. GATT Article XI.1 reads as follows: No prohibition or other restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party. Article XI of the GATT is the provision that is most likely to cause problems if Canada wants to put in place water export control measures, as the article prohibits restrictions on the exportation of any product. NAFTA Article 309 is similar to Article XI of the GATT, and it prevents contracting parties from restricting or prohibiting the export of goods. The real debate is to be found in the exceptions to article XI, Article XX of the GATT. Under the GATT obligations, contracting parties have recourse to the exceptions under Article XX. Article XX (g) permits measures "relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production and consumption". Article XX: General Exceptions, provides in part: Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures: .... (g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production and consumption;It is clear that Article XX (g) of the GATT could provide for a justification for a violation of Article XI of the GATT. However, there is a fair amount of controversy as to whether or not water in its natural state falls under Article XX (g) of the GATT. More exactly, the question is whether or not surface water qualifies as an 'exhaustible' resource and whether the latter term was intended to be restricted to non-living finite resources such as oil, gas or coal. According to the 1996 Reformulated Gasolinecase, the renewability of a resource does not prevent the resource being exhaustible. In that case, the U.S. said that this could apply to lakes. In the 1998 Shrimp-Turtlecase, the term 'exhaustible' has been interpreted broadly, and this leads to the conclusion that the Great Lakes could be considered an 'exhaustible natural resource' within the scope of Article XX (g). As far as the NAFTA is concerned, there are some limitations to the exceptions of Article XX. The NAFTA provides that, in relying on the exceptions in GATT Article XX (g), parties are obliged to ensure that any such measures meet additional criteria set out to limit the disruptive effects of any cutbacks in exports. This is to be found in Article 315(1) of NAFTA. However, as this limitation is based on the existence of some significant trade in the resource in question, it is highly unlikely to have much consequence, unless, of course, such trade was to really develop between Canada and the United States. This is a unique feature of NAFTA, that has no equivalent in the GATT, and it is called the 'proportional sharing' provisions of the NAFTA. Article 315 provides: 1. Except as set out in Annex 3.15, a Party may adopt or maintain a restriction otherwise justified under Articles XI:2(a) or XX(g),(i) or (j) of the GATT with respect to the export of a good of the Party to the territory of another Party, only if: a. the restriction does not reduce the proportion of the total export shipments of the specific good made available to that other Party relative to the total supply of that good of the Party maintaining the restriction as compared to the proportion prevailing in the most recent 36-month period for which data are available prior to the imposition of the measure, or in such other representative period on which the Parties may agree; b. the Party does not impose a higher price for exports of a good to that other Party than the price charged for such good when consumed domestically, by means of any measure, such as licenses, fees, taxation and minimum price requirements. The foregoing provision does not apply to a higher price that may result from a measure taken pursuant to subparagraph (a) that only restricts the volume of exports; and c. the restriction does not require the disruption of normal channels of supply to that other Party or normal proportions among specific goods or categories of goods supplied to that other party.[emphasis added]

This means that the U.S. is entitled to a proportional share of Canada's water resources forever, once exports have started. This has specific implications for 'turning off the tap' on water exports from the Great Lakes. Once exports get underway, Canada will be unable to place a ban on exports, due to these proportional-sharing obligations under NAFTA. Once Canada's obligations under the trade provisions of the GATT and NAFTA have been spelled out, it is now time to investigate the investment provisions of the NAFTA. Chapter 11 of the NAFTA, its investment chapter, has caused a great deal of concern among environmental groups, such as the Council of Canadians mentioned earlier. The disciplines of Chapter 11 of the NAFTA apply to Canadian water resources, including access rights to Canadian water in its natural state. Once governments allow water to be withdrawn from its natural state - as they have done on numerous occasions for purposes that include large-scale industrial uses to personal consumption - the same rights will then have to be accorded to foreign investors. This is a consequence of the National Treatment obligation to be found in Article 1102 of NAFTA: Each Party shall accord to investors of another Party treatment no less favourable than it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments. The requirement of national treatment at the stage of the establishment of investment is clearly an obligation that goes beyond that recognised by customary international law. However, it only assures treatment as favourable as that extended to nationals. So, if Canada decides to close certain areas of potential enterprise to investment generally- such as resource development in national parks - this would not offend the National Treatment provision of the NAFTA, as long as foreign and national investors are treated equally.

Another novelty in the NAFTA investment chapter is the investor-state arbitration procedure that allows an investor to settle disputes between itself and a NAFTA party (Section B of Chapter 11). Sun Belt Water, Inc. a U.S. company that sought to export Canadian water to California, tried - unsuccessfully - to submit a valid Notice of Arbitration to the NAFTA secretariat so as to start a NAFTA chapter 11 investor-state arbitration. The government of Canada's position is that their submissions of a Notice of Arbitration do not meet NAFTA's requirements, and no arbitration has started yet. In this dispute, British Columbia denied an export permit to Sun Belt Water and the latter sued the former before the domestic courts on the grounds that Sun Belt Water was prevented to export water to the U.S. and Mexico. Sun Belt Water's attempted notices under NAFTA do not claim damages on the allegation that British Columbia water export controls breach the NAFTA. Sun Belt Water's attempts to claim damages under NAFTA Chapter 11 are due to assertions relating to its treatment by the British Columbia Governments and courts in a domestic lawsuit. As a concluding note to this trade and environment section, it is important to keep in mind the three main lines of thought underpinning the discussion: First, under both GATT and NAFTA, restrictions on exports of any good are forbidden (Article XI GATT & 309 NAFTA). Pertaining to this, it is not certain whether or not water in its natural state could be qualified as a good or product. Second, exceptions are valid if for the protection of an 'exhaustible natural resource' (Article XX (g) GATT; also valid under NAFTA, although care has to be taken not to 'open the tap' under NAFTA). Third, under NAFTA, the National Treatment obligation of Article 1102 requires foreign investors to be given the same treatment as national investors.

CONCLUSION - TOWARDS A COHERENT AND PRINCIPLED APPROACH IN ORDER TO SAVE THE GREAT LAKES? The key to unlock the door to bulk water export control measures resides in the necessary co-operation between the United States and Canada, as advocated by Saunders (Saunders, 2000). Although it seems that the federal government of Canada needs to take drastic measures to ban the bulk water export, as pressed by Canada's environmental NGO's, this would not be a good strategy considering Canada's obligations under the NAFTA. This is conversely true for the United States as well. What is needed is joint action. In the Great Lakes basin, there is a history of bilateral and regional co-operation, and this factor could weigh heavily on a GATT or NAFTA panel's decision whether or not to allow export control measures for the Great Lakes' water. In the United States-Restrictions on Imports of Tunait was the unilateral dimension of some of the U.S. actions that led to the conclusion that the U.S. measures were not in conformity with WTO obligations, as noted by Saunders (Saunders, 2000). Were the U.S. and Canada to develop a coherent and principled approach in order to save the Great Lakes, they would stand more chances to win a WTO or NAFTA dispute settlement procedure. This approach should focus on ecosystem management, and be supported by a co-operative spirit. This would constitute a good argument in favour of water export controls or bans from the water of the Great Lakes basin. REFERENCES Babbage, M. 1999. Canada Seeks To Dam The Flow Of Water Exports.http://www.earthsystems.org/.

Barlow, M. 1999. Report Summary, BLUE GOLD, The Global Water Crisis and the Commodification of the World's Water Supply.http://www.ifg.org/bgsummary.html. Bill C-15. 1999. An Act to Amend the International Boundary Waters Treaty Act. Boyd, J.W. 1999. "Canada's Position Regarding an Emerging International Fresh Water Market With Respect to the North American Free Trade Agreement." NAFTA: Law and Business Review of the Americas325. Canada-Mexico-United States. 1993. North American Free Trade Agreement. December 1992 (in forceJanuary 1, 1994). International Legal Mat. 32:289, 605. Canada-Mexico-United States. 1993. North American Agreement on Environmental Cooperation. September 13, 1993 (in forceJanuary 1, 1994). International Legal Mat. 32:1480. Commission v Italy, Case 7/68. Council of Canadians. 2000. International Joint Commission Fails Canadians and Opens Door to Bulkwater Exports.http://www.canadians.org/. Council of Canadians. 2000. Sixteen months later, Government still pushing futile water accord. http://www.canadians.org/.

Council of Canadians. 2000. Federal Government Must Adopt a Comprehensive, National Water Policy to Respond to Looming Water Crisis. http://www.canadians.org/. Council of Canadians. 1999. Council of Canadians: Campaigns: Water:... Five Things You Should Know About Water.http://www.canadians.org/. Council of Canadians. 1999. One month after federal announcement, state of Canada's water as precarious as ever. http://www.canadians.org/. Council of Canadians. 1999. Council of Canadians supports B.C. call for federal action on water export ban. http://www.canadians.org/. Council of Canadians. 1999. Council of Canadians releases legal opinion on water exports; congratulates IJC. http://www.canadians.org/. Council of Canadians. 1999. National Organisations Urge Chretien to Ban Bulk Water Exports Before it's too Late.http://www.canadians.org/. Council of Canadians. 1998. Our Water is Not for Sale. http://www.canadians.org/. DFAIT (Canada. Department of Foreign Affairs and International Trade). 1999. Background information on bulk water removal and water export. http://www.dfait-maici.gc.ca/. DFAIT (Canada. Department of Foreign Affairs and International Trade). 1999. Paper on Bulk Water Removal and International Trade Considerations. http://www.dfait-maici.gc.ca/.

DFAIT (Canada. Department of Foreign Affairs and International Trade). 1999. Letter from Minister Lloyd Axworthy. http://www.dfait-maici.gc.ca/. DFAIT (Canada. Department of Foreign Affairs and International Trade). 1999. Q & A - General Issues on the Legislation. http://www.dfait-maici.gc.ca/. General Agreement on Tariffs and Trade, in GATT Secretariat. 1994. Results of the Uruguay Round of Multilateral Trade Negotiations [Final Act Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations], April 15, 1994, Legal Instruments, International Legal Mat. 33:1140-1272. International Joint Commission. 2000. Final Report to the Governments of Canada and the United States, PROTECTION OF THE WATERS OF THE GREAT LAKES. http://www.ijc.org/. International Joint Commission. 1999. Interim Report to the Governments of Canada and the United States, PROTECTION OF THE WATERS OF THE GREAT LAKES, Internet, http://www.ijc.org/. International Joint Commission.1999.IJC recommends moratorium on bulk removals and sales of Great Lakes water.http://www.ijc.org/. International Joint Commission. 1999. The International Joint Commission ≠ What it is, How it Works.http://www.ijc.org/.

Saunders, O. 2000. "Law and Management of the Great Lakes Basin." Canadian Water Resources Journal 25(2): 209. Shrybman, S. 1999. Legal Opinion Commissioned by the Council of Canadians re: Water Export Controls and Canadian International Trade Obligations.http://www.canadians.org/. Sporhase v. Nebraska ex rel. Douglas.Treaty Relating to Boundary Waters and Boundary Questions, [Boundary Waters Treaty]. 1909, United States-Great Britain, 36 Stat. 2448 (1909), T.S. No. 548. United States - Import Prohibition of Certain Shrimp and Shrimp Products. 1998. AB-1998-4, 12 October 1998 (Shrimp-Turtle case).United States-Standards for Reformulated and Conventional Gasoline.1996. International Legal Mat. 35: 274 (Reformulated Gasoline case).United States-Restrictions on Imports of Tuna. 1991. Unadopted GATT Dispute Settlement Panel Report, submitted to the Parties 16 August 1991. International Legal Mat. 30:1594 (Tuna-Dolphin case).

Isabel Dendauw is currently doing her PhD in International Trade and Water Law at the University of Dundee. She also completed her LL.M. in International Energy Law and Policy at the Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee. She presented a paper on the topic of this article at the Dundee Water 2000 International Conference. EMAIL ADDRESS IDendauw@hotmail.com

This information is posted for nonprofit educational purposes, in accordance with U.S. Code Title 17, Chapter 1,Sec. 107 copyright laws.
For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for
purposes of your own that go beyond "fair use," you must obtain permission from the copyright owner.


Great Lakes environmental information

Return to Great Lakes Directory Home/ Site Map