AS A COMMODITY
Isabel Dendauw, LLM
University of Dundee
Department of Law
Dundee DD1 4HN
June 14, 2000, Dr. Dendauw presented an extremely lucid
and controversial paper entitled: Water as a Commodity
before the Third International Water Law Symposium at
the University of Dundee.
Dendauw's central premise is that water shortages are
the driving force underlying the privatization and trade
in water. The temporal and geographic imbalance
of supply and demand has caused companies to look for
water to sell internationally. When blocked by national
legislation, the companies have resorted to the 1947 and
1994 General Agreement on Trade and Tarrifs (GATT) and
the North American Free Trade Agreement (NAFTA).
the case of the Sun Belt Water Company, Sun Belt applied
to export water from British Columbia. The Government
of Canada denied their application under legislation enacted
under intense pressure from the Council of Canadians,
a non-governmental organization (NGO), to prohibit bulk-water
sales. Sun Belt sued Canada and the Province of British
Columbia for $600 million.
constrains the 142 high contracting parties from imposing
measures that restrain or distort international trade.
The NAFTA establishes a free market for trade and
a comprehensive framework for investment in Canada, the
United States, and Mexico. Under GATT, the most
evident and probable cause of conflict between water-export-control
measures and trade disciplines arises under Article XI
prohibition or other restriction 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 an contracting
party on the importation of any product or any other
contracting party or on the exportation or sale for
export of any product destined for the territory of
any other contracting party.
contains rules for environmental exceptions for exhaustible
natural resources that justify violations of Article XI
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 conservation of exhaustible natural
resources if such measures are made effective in
conjunction with restrictions on domestic production
question then becomes is water an "Exhaustible Natural
Resource?" under Article XX(g) of GATT? Does
GATT only apply to exhaustible minerals and fossil fuels?
Was water even contemplated when GATT was drafted?
NAFTA, it is unlikely that a ban on the export of water
as a good such as bottled water could be sustained because
NAFTA Article 309, which is similar to GATT Article XI,
prevents contracting parties from restricting or prohibiting
the export of goods.
1993 Joint Statement by the Governments of Canada, Mexico
and the United States stated:
NAFTA creates no rights to the natural water resources
of any Party to the Agreement ... nothing in the NAFTA
would oblige any NAFTA Party to either exploit its water
for commercial use or to begin exporting its water in
any form. Water in its natural state in lakes,
rivers, reservoirs, aquifers, waterbasins and the like
is not a good or product, it is not traded, and therefore
is not and never has been subject to the terms of any
does Canada have a Sovereign right to prohibit removal
of water from its natural state for use outside the watershed?
However, Chapter 11 of NAFTA is the investment chapter.
Its disciplines apply to 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 range from
large-scale industrial use to personal consumption - the
same rights must now be accorded to foreign investors.
Water would be subject to the services provisions of the
NAFTA, for similar reasons. This means that a water
service provider operating in Canada would have the same
rights to supply water services to U.S. consumers as to
1102 of NAFTA goes on to 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.
Dr. Dendauw's presentation focused on the export of Canadian
water, the issue is of global importance because the GATT
applies to 142 contracting parties. The only
mechanism by which the bulk-export of water could be prevented
is to establish non-discriminatory conservation programs.
the United States, the Supreme Court has ruled that water
is an article of interstate commerce. In all states
of the United States, when a permit has been issued for
the capture of water, and water has been captured, its
export cannot be prevented.
the July, 2000 meeting in Dundee, Congressmen from the
State of Michigan announced an agreement that would prevent
the export of water from the Great Lakes until the United
States Congress approves standards developed by shoreline
governors. This agreements comes amid recognition
from the International Joint Commission that trade law
permits nations to protect their natural resources but
that they cannot use environmental legislation to deliberately
Dendauw's presentation was particularly provoking because
the GATT and the NAFTA and possibly other regional trade
agreements are supernational. They trump national
laws and place international trade above national social
policy and the policy of NGOs.
position of NGO's is set forth in their discussion paper
prepared for the 2nd World Water Forum convened in the
Hague in March 2000 wherein they state: "Water
is the common heritage of mankind and should not be negotiated
as a commodity." (NGOs and Water - Perspectives
on Freshwater, Issues and Recommendations of NGOs, 2000,
ed. Danielle Morely, United Nations Environmental and
Development Forum, London, p. 1). This position
is in direct conflict with existing trade treaties.
- DECEMBER 2000
December 2000, Dr. Dendauw published a more comprehensive
and authoritative peer reviewed paper on this subject
Great Lakes Region and Bulk Water Exports: Issues in International
Trade in Water in Water International the official
publication of the International Water Resources Association
UPDATE - OCTOBER 18, 2001
Dr. Dendauw's presentation, debate within Canada has risen
to new levels. In early July 2001, the Council of
Canadians held their annual conference in Vancouver in
opposition to water exports and the privatisation of water
systems. The Province of Newfoundland, led by Roger Grimes,
had planned a public participation process in the Fall
of 2000 on the topic. Grimes intended to introduce legislation
to permit the export of fresh water from Lake Gisbourne
in the Spring of 2002.
late September 2001, Ottawa apparently prevailed on Grimes
to take the issue off the table. As of October 4,
2001 Grimes did not plan to oppose Ottawa. On October
18, 2001, the Prime Minister's Office released its report
on the export of bulk water from Newfoundland & Labrador.
full report is on the Internet. It would
seem that the Prime Minister has determined that the economic
benefit to Newfoundland & Laborador is not worth the
political effort to change the Water Resources Protection
Act of 1999. In fact, it is more likely that Ottowa
exerted financial pressure as Newfoundland relies on the
central government to pay its bills and balance its ledgers.
The economic feasibility analysis in the report commissioned
by Grimes relies heavily on information from the WaterBank®
website and is based on incorrect assumptions as
to the destination of the water proposed for export from
It is unfortunate that Acts passed as a
knee jerk reaction to pressure from special interest groups
become bad experiments on society which may never be corrected.
This website recommends to New Brunswick, which has not
yet passed restrictive legislation (October 2001), that
it not follow in the footsteps of the remaining provinces
UPDATE AUGUST 30, 2002
In preparation for the Rio + 10 Summit in
Johannesburg, Dr. Dendauw was querried on the subject
of water as a commodity by Bloomberg News. Her written
response is contained as Newsletter
Dr. Dendauw graduated in 1997 with her law
degree from the Catholic University of Leuven in Belgium.
She earned her LLM degree from the Collelge of Energy
Petroleum and Mineral Law at the University of Dundee
in 2000.. She completed her Ph.D from the Department
of Law at the University of Dundee in October 2002.