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Water World

The question over whether to sell Canada’s water will come to a boil in an upcoming national debate

In September, a special all-party House of Commons committee will convene to hear expert testimony on both sides of what could very well turn into the most controversial trade issue in a long, long time.

Dennis Mills, a Liberal MP from Toronto, will chair the discussion on the future of Canada’s abundant supplies of fresh water – is it a commodity that should be for sale on the world market, or is it a resource that should be protected, with a significance that goes beyond economics and politics? Is there a middle ground in all this, where some water can be sold and some protected for all Canadians.

While the committee won’t answer these questions, whatever conclusions it reaches could influence the Liberal government, which in all likelihood will have to make a decision regarding this issue and soon.

The federal moratorium on bulk fresh water sales was first implemented in 1999 when the Canadian and U.S. governments, and state governments bordering on the Great Lakes, passed a joint resolution to ban bulk water exports from Great Lakes waterway.

The accord, which falls under the International Boundary Waters Act in Canada, was a response to a proposal by an Ontario company, the Nova Group, to siphon off 600 million litres of water from Lake Superior and ship it to markets as far away as Asia as early as 2002. The Ontario government went as far as to issue a permit, but the federal government stepped in when environmental and trade issues came to light.

Environmental groups objected to this plan, pointing to the fact that the water levels in the Lakes were declining dramatically, and that less than one per cent of the water currently siphoned off from the lakes for use in municipal water systems, industry, and agriculture was making it back into the water system.

While those who would profit from Great Lakes water argued that the water would just end up in the Atlantic Ocean anyway, environmentalists argued that even a slight additional drop in the level of the Great Lakes could impact on the lakes’ battered ecosystems and the ecosystems downstream.

Although the impact of skimming off the surface water is debatable, environmentalists and various consumer groups worry that such a large scale trade in water will result in water becoming a commodity under Canada’s existing trade agreements in North America. After it becomes a commodity, they argue, every drop of water in the country is potentially up for sale.

Newfoundland, which is looking into the possibility of selling freshwater from inland lakes in Labrador, to bolster an economy that had all but collapsed as a result of the demise of the cod fishery, supported the national moratorium on bulk water exports until further studies could be done.

It’s been over two years since it was first imposed, however, and Newfoundland is getting antsy. If the Liberal government doesn’t make a decision to either allow or outright ban the sale of fresh water, the Newfoundland government is threatening to take matters into its own hands.

In April, Rober Grimes, the new premier of Newfoundland, revived the plan to sell water from Gisborne Lake, a crystal clear body of water that is just 16 kilometres long and 10 km wide, 30 km inland from the Labrador coastal town of Grand Le Pierre.

Grand Le Pierre currently has about 40 per cent unemployment as a result of the collapse of the fishery. Gerry White, the entrepreneur who first proposed selling the Gisborne Lake water, envisions a system whereby the water can be piped to Grand Le Pierre, where it can be bottled or loaded onto tankers. The original plan had the pipeline extending to the U.S., where it would be distributed to so-called "water poor" regions. It would create jobs and bring money to a town that is at the end of its tether.

Although the plan was to siphon off 500,000 litres of fresh water a week – less than an inch of water that would be replenished every 10 hours – the real possibility that giving the Gisborne Lake project the go-ahead would set events into motion that could see Canada’s water come under corporate and foreign control is enough to make both government and opposition nervous.

On Aug. 6, sensing a weakness in the Liberals’ opposition to bulk water sales, NDP leader Alexa McDonough called on the government to take the next step and ban the exports of fresh water. Since waterways come under the jurisdiction of the federal Department of Fisheries and Oceans, it would be well within the federal government’s jurisdiction to initiate this kind of legislation. Under NAFTA and GATT agreements, once one province allows bulk water exports, all of the provinces would have to do the same.

With the federal government under pressure and the provincial governments divided on the issue, the Liberals will likely be forced into making a decision by the time the year is out.

They have to proceed carefully, however. International companies are already trying to get a foothold in the water business in Canada, most recently bidding to build a $400 million water treatment facility for the Seymour watershed in North Vancouver. The Greater Vancouver Regional District, short of funds to build the facility itself, entertained four proposals from multinational water companies. In the end, under tremendous public pressure and clearly not willing to be the government agency that gave the green light to bulk water exports in Canada, the GVRD opted to build the facility itself.

If the Canadian government were to ban bulk water exports tomorrow, companies could sue the government for billions of dollars under the terms of NAFTA. It could be construed as protectionism, or as an attempt to monopolize fresh water as a commodity rather than a provision to protect the sovereignty of Canda’s fresh water.

There are three key provisions in NAFTA and one provision under the proposed FTAA (Free Trade Area of the Americas) that Canada has to watch out for.

The first is "national treatment," whereby no country can discriminate in favour of its own private sector in the commercial use of its water resources. If even a private Canadian company were to sub-contract to handle water treatment in Canada, or if a permit were granted to a domestic company to export water (and permits have already been issued) – the other NAFTA countries have the same "right of establishment." It becomes an established industry, and any attempt to limit investment or speculation can be construed as protectionism.

The second provision is "Chapter 11," or the "investor-state" clause. It can apply to water in two ways:

First, if any NAFTA country tries to allow only domestic companies to export water, corporations in the U.S. and Mexico can sue for financial compensation for the money they might have made if the doors had been open to them as well. Canada has already been sued successfully for $20 million under Chapter 11 for attempting to ban a potentially harmful gasoline additive.

Second is a Catch-22. If we sell the water, it becomes a commodity and Canada would be unable to prevent foreign companies from buying the rights to collect and sell our fresh water to whatever markets they choose. If we don’t sell the water, companies can argue that we’re essentially protecting a commodity, and the same thing occurs. The moratorium, while on shaky ground, is the only means the government has to prevent either of these scenarios from taking place and it can’t last forever. And the concept of sovereignty, in today’s global economy, is weak at best.

The third provision is under Article 315 of the document, called "proportional sharing." While you can argue that selling a little bulk water here and there can’t hurt, under Article 315, once a trade has been established, no country can reduce or restrict the export of a resource. You can’t add export taxes, or charge more than the accepted price in the other NAFTA countries. You would also have to guarantee quantity – if we sold a billion litres of fresh water in 2002, we would be bound to sell a billion litres in 2003.

Under the FTAA, water treatment itself will be labelled an environmental service. The whole idea of public water systems could be challenged by companies as a monopoly. This would force us to contract our water services out to the highest bidder, which would open the doors to multinational water companies such as Vivendi and Suez Lyonnaise des Eaux.

One Canadian author argues that the concern over the sovereignty of fresh water is moot. Marq de Villiers, the author of "Water" – which won the 1999 Governor General’s Award for non-fiction – argues that there is no market for Canada’s water. The cost of shipping it to Asia or Europe is prohibitive, and far more expensive that the cost of new desalination technology that allows countries to convert seawater to fresh water. "The whole debate is about something purely hypothetical," de Villiers told CBC News. "There is no market. We are getting our nationalist shorts in a knot over NAFTA and free trade, but water is not an issue."

While he may be right and there is no lasting foreign market for Canada’s fresh water, and it might be a good idea to profit from it while we still can, there’s still the issue of Canada’s domestic water.

More than 30 million people using over 350 litres a day, per capita (we’re second in the world in water wasting, next to the U.S.) is a potential market.

Anywhere that water has been privatized in the past, rates have gone up. Canadians could wind up in a position where we’re forced to buy our water back from foreign companies who are operating for a profit.

In 1999, the Bechtel Group – one of the companies shortlisted to operate the Seymour filtration plant – assumed control over water in Cochabamba, Bolivia, with the help of the World Bank. The company immediately doubled its rates.

The outraged public organized a general strike that brought the city to its knees. The Bolivian government, overwhelmed by the situation, was forced to nullify Bechtel’s contract. Furthermore, whenever water has been privatized in the U.S., rates have doubled or tripled.

Mills, the Liberal MP who will chair September’s hearings on water exports, denied that the Liberals were caving on the issue, but said it would be wise to look into the nature of water treatment and the export of water treatment technology to developing nations.

"There are Canadians out there that have thoughts on bulk water sales, selling water the same way we sell beer," Mills told the National Post in April. "Now all these people frighten the hell out of me, but what we have to do is bring this debate into the light of day."