Danny Williams goes to bat for Newfoundland: A NAFTA challenge?
|GREG LOCKE FOR THE TORONTO STAR, 2008|
The Newfoundland bad boy is at it again and, again, there's an uproar from outside his province. His government passed legislation revoking AbitibiBowater's timber and water rights in the province after the paper giant announced it would close its Grand Falls-Windsor newsprint mill. Williams said he took the action because the company broke its side of a contract, albeit one signed by an ancestral entity in 1905. Company officials warn of legal action and pundits suggest the premier's action contravenes the North American Free Trade Agreement (Canada, the U.S., Mexico). There was a delicious moment yesterday on CTV Newsnet when Nfld. union official George McDonald (Local 63 of the CEP) was asked if he's worried about all the talk of legal action coming from outside Newfoundland. "A lot of people," said McDonald, "are talking about things they don't understand."
Exactly. This thing still has to work itself out but, from what I've heard so far, it could be difficult to take legal action under NAFTA. Any action would be taken against Ottawa, not Newfoundland, but consider the options available under the agreement. Most critics talk about NAFTA's Chapter 11, which covers both expropriation and national treatment. National treatment says all companies from the three signatory countries must be treated the same. For example, it says a country/province/other entity can't force "an investor of another party, by reason of its nationality, to sell or otherwise dispose of an investment in the territory of the party."
AbitibiBowater is a Canadian company, based in Montreal. It's hard to see how the national treatment clause could apply but, in any case, it would be tricky to argue it's being treated any differently than Williams would treat any company under similar circumstances.
The other appropriate article says:
- No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment ("expropriation"), except:
for a public purpose;
on a nondiscriminatory basis;
in accordance with due process of law and Article 1105(1) ; and
on payment of compensation in accordance with paragraphs 2 through 6.
Perhaps AB lawyers would go to battle under this banner. However, Newfoundland argues the timber and water rights were included in a contract binding on AbitibiBowater — or rather the original signatory to the charter/lease in 1905 — to provide jobs in the mills it would build. AB broke the contract and the province is revoking its rights to resources. Williams has said his government would determine compensation for physical assets, like the mill itself.
It's too easy to call Williams Danny Chavez. But it doesn't make sense that a company can break its side of a contract and continue to benefit from the resources included for a specific purpose spelled out in that contract. Isn't the public good served by the restoration of resources no longer being used for purposes of the contract?
It's not clear who would win in court. Still, most discouraging has been the parade of opinions outside Newfoundland so quickly assuming Williams is wrong and worrying about fallout for Newfoundland and the country. What if other big corporations got mad? Oh me, oh my.
It reminds me of covering a Parliament Hill hearing a long time ago when, in the midst of a west coast fishing dispute between Canada and the U.S., Conservative minister John Crosbie argued the logic of the American side. I can't remember if he was trade or fisheries minister at the time, but it was bizarre. He described the U.S. position so well and explained the reasoning, as if he had already determined American negotiators were right and Canada would lose. He was so good representing the U.S. side — but that wasn't his job. I remember wondering as I took notes: Who was standing up for Canada?
The answer over the past two decades of free trade could well be, nobody, at least no politicians. Now there's uneasiness over what President-Elect Barack Obama wants to do with NAFTA. So what? Maybe Canada should look at, say, the energy section giving the U.S. proportional rights to Canadian oil and gas even in times of shortage, and ask themselves if this is really such a good deal for the country.
We are such timid souls. Maybe Canada needs more politicians like Danny Williams.