Remember Ethyl, NAFTA & MMT? Ethyl Corporation of Virginia launched a NAFTA suit against the Government of Canada when legislation that prohibited the importation and inter-provincial transport of MMT (used as a gasoline additive) was introduced in April 1997.

In a 1991 letter, Jean Chretien called on the Tory government of the day to ban MMT. He referred to it as "a substance that threatens the health of millions of Canadians, particularly our children" and added, "Some of our leading neurotoxic scientists, as well as studies and documents from medical schools and universities, in addition to other institutions, outline in detail the truly horrific effects that allowing the continued use of this neurotoxin could have on the Canadian people."

The Liberals had to wait until they assumed power for the opportunity to do what the Tories wouldn't. But, when Chretien's government legislated the ban - citing evidence giving rise to both environmental and health concerns on behalf of Canadian citizens, Ethyl promptly launched its suit, claiming $300 million in compensation for "expropriation" of future profits.

To their credit, the Liberals did endeavour to do the right thing when they established the ban. However, they fell prey to what free trade critics have been warning of all along - indeed, to what the Liberals themselves warned of while still in opposition and promising not to sign the free trade agreement. They came up against the harsh reality that Canada's sovereign right to institute regulations for the protection of the environment and the health of its citizens has, in effect, been surrendered under NAFTA.

Federal legal counsel reportedly advised that a NAFTA ruling would not favour Canada, and so the government backed down in July of 1998. Not only was the legislation revoked, but Canada paid more than $13 million to 'settle' with Ethyl, and issued a statement announcing that MMT posed "no health risk".

Certainly, Canadians have ample cause to wonder about the Liberal flip-flop on MMT. The U.S. Environmental Protection Agency banned the use of the substance until the courts overturned that ban in 1995. Even so, U.S. suppliers reportedly refuse to stock the additive because of its environmental and health implications. There is evidence of the potential for harm - but presumably not enough to justify a ban when our government is restrained by the terms and conditions of NAFTA.

This begs the question: who really calls the shots when it comes to advancing and protecting the interests of Canadian citizens?

Dalton Camp, in the Toronto Star (July 29) suggests that the substance of the matter is not "whether MMT poisons the air, destroys catalytic converters, is harmful to children, older people, and those suffering from respiratory ailments…[rather] the Canadian government and Parliament, whether certain, uncertain, or indifferent, has the sovereign power to pass whatever law it wishes. At least that has been the case…[however] a government bill approved by the Parliament of Canada has been vetoed by Ethyl Corporation of Virginia."

Liberal MP Charles Caccia, chairman of the Commons Environment Committee, described his government's decision as a triumph of "market forces over health protection" and "the troubling product of free trade".

Caccia issued a joint statement with veteran Liberal Clifford Lincoln who said, "I can't believe that a foreign corporation can almost dictate its terms and we as a sovereign nation are completely powerless to do anything about it…it's astounding that the onus is on us as a country to prove MMT is not harmful."

Who Is Calling the Shots?

The Ethyl case is not the only one based on a NAFTA provision similar to that on which the controversial MAI was based. The provision empowers corporations to directly sue governments for cash damages for any government action tantamount to an indirect expropriation or "taking". This provision allowed Ethyl to characterize Canada's MMT ban as an illegal seizure of assets, namely its opportunity to profit through the interprovincial transport and sale of MMT.

• Ohio-based S.D. Meyers, Inc. is claiming $15 million in compensation for lost profits during a brief period of time between which Canada banned the export of PCB waste while the U.S. still permitted the import of such waste.

• Oregon-based Pope & Talbot is claiming $30 million in compensation for profits it claims to have lost because of the B.C. softwood lumber agreement. The company claims that B.C.'s tariff amounts to a discriminatory practice, because a similar tariff is not applied elsewhere in the country. Hence, it [the company!] is not being granted "most favored nation" status [something to which it claims to be entitled to under the terms of NAFTA!]

• California-based Sun Belt Water Corporation is seeking $300 million (see Whose Water Is It)