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Holding Water

Control of Canada’s fresh water could go south if GVRD plan goes through

By Andrew Mitchell

While the leaders of 34 American countries were shaking hands on a framework agreement reached that would promote free trade from Alaska to the southernmost tip of Tierra del Fuego, Argentina, Quebec City police were turning water cannons on a crowd of thousands of protesters.

The protesters were frustrated that most of the agreement was penned behind close doors, and that there will likely be no provisions within the rough Free Trade Agreement of the Americas (FTAA) to protect either the environment, native culture, or jobs.

Canada was later condemned for its heavy-handed crowd control measures at the Summit of the Americas in April, and for turning one of Canada’s oldest and most beautiful cities into a police state complete with barbed wire fences. Nobody condemned us for wasting water.

That’s because it’s widely recognized that Canada harbours approximately 20 per cent of the world’s freshwater in our lakes, rivers, and underground aquifers. Only nine per cent of it, however, is renewable.

This valuable substance – I hesitate to use the word "commodity" for reasons to be explained later – is destined to become as valuable as oil as populations boom and countries run dry. Ismail Serageldin, the vice president of the World Bank, said as much when he commented that: "The wars of the next century will be about water."

If you think this is an exaggeration, look at the facts:

• Global consumption of water is doubling every 20 years.

• Available fresh water amounts to one-half of one per cent of all the water on earth.

• Fresh water is renewable only by rainfall, which at 40,000 to 50,000 cubic kilometres per year, is not enough to refill the world’s reservoirs. If current trends continue, by 2025, the demand for freshwater is expected to rise by 56 per cent over what is currently available.

• According to the UN, 31 countries face regular water shortages and one billion people don’t have clean drinking water.

• There are now 38,000 dams in the world trying to trap fresh water, each one having an environmental impact to the natural water biology – only two per cent of U.S. streams and rivers are free-flowing, and they have lost over half of their wetlands. Eighty per cent of China’s rivers no longer support fish, either as a result of pollution or as a result of damaged river ecosystems.

Our neighbours to the South want our water. Large cities, green lawns, irrigation for farming and cattle, and dams have placed such a large demand on the U.S. water supply that the mighty Colorado River is completely tapped before it even reaches Mexico.

We could sell easily sell it to them, and increase our GDP by leaps and bounds without inconveniencing ourselves in the slightest. There may be a few ethical and environmental questions to answer, but it could become a good resource industry for Canada.

The only problem is that Prime Minister’s Brian Mulroney and Jean Chretien committed Canada to the North American Free Trade Agreement (NAFTA) with a few provisions that could cost us public control and national sovereignty over our water supplies, and even resulted in our utility bills going up.

When NAFTA was being put together, opponents urged that water be exempted. The U.S. under George Bush said absolutely not, this will not stand; Mexico – a dry country in its own right – said "no Senor" and Mulroney agreed because he’s the same man who took the Progressive Conservative party from a majority government to political ruin of just four seats.

Although Chretien opposed free trade his entire political career, one of the first things he did when he assumed office was to sign the NAFTA accord.

No water was being traded commercially at the time, and therefore water in its natural state was considered to be safe. It was incredibly short-sighted – the nineties were one of the hottest decades in the past 10,000 years, and water supplies began to run dry south of the border. There have since been offers from the American companies for our water, and in every case the federal and provincial governments have put their feet down – the moment water becomes a commodity under NAFTA, the whole 20 per cent is up for grabs.

According to the Council of Canadians, there are three key provisions of NAFTA that place water at risk once it is traded:

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 – once a permit is granted to a domestic company to export water, the ‘investors’ (i.e. corporations) of the other NAFTA countries have the same ‘right of establishment’ as the domestic companies. This also applies to the provinces as well.

If B.C. allows the commercial export of bulk water – and a plan is currently in the works whereby the Greater Vancouver Regional District is planning to privatize a $200 million water treatment plant for the Seymour reservoir – all provinces will have to allow national treatment rights to the same foreign companies.

The second provision is Chapter 11, the investor-state clause, and it applies to water in two ways. First, if any NAFTA country tries to allow only domestic companies to export water, corporations in the other NAFTA countries would have the right to sue for financial compensation – Canada had to pay US $20 million for attempting to ban a potentially harmful additive from our gasoline under this clause. Second, if any NAFTA government introduced legislation to ban bulk water exports, water would automatically become a commercial good, and the first part of Chapter 11 would come into play.

It’s a Catch-22 – if we sell water, it becomes a commodity that we have to sell. If we try to protect it, it becomes a commodity that we have to sell. Either way we are selling.

The third provision, is Article 315, called "proportional sharing" – this is the same provision that has created a continental market for Canada’s energy supplies and the reason why the U.S. has to go to such lengths to put a countervailing duty on Canadian softwood exports.

Under Articles 315 and 309, no country can reduce or restrict the export of a resource once the trade has been established. Furthermore, no country can place an export tax or charge more to the consumers of another NAFTA country than they charge domestically. Therefore Canadian exports of water would be guaranteed to the level they had acquired over the preceding 36 months – the more water we send south, the more water we are required to send south. Even if new evidence was found that massive movements of water were harmful to the environment, these requirements would remain in place.

The proposed FTAA accord poses another threat as water treatment and delivery could be labeled an environmental service. Public water services could be challenged under


the national treatment provision of the proposed agreement, forcing us to privatize or contract out control to international water corporations like Vivendi and Suez Lyonnaise des Eaux. If any government tries to maintain public control, these corporations could sue us under Chapter 11.

If either NAFTA or FTAA could allow water to be exempt, we could start to sell water, but that will never happen because the current arrangement works in the favour of the U.S. – the moment we sell one drop of our freshwater south, it becomes a commodity. Right now it’s a waiting game with the federal government saying no and provinces asserting their rights over their resources. The first province to open the tap will open the floodgates.

In 1991, B.C. actually gave six Canadian companies licenses to export bulk shipments of water, but the province reversed the decision and imposed a lasting moratorium on bulk water exports. The province had to compensate the Canadian company in the joint venture, but has never compensated an American company involved in the deal – incidentally, Sun Belt Water of Santa Barbara, California, is suing the Canadian government for $14 billion under Chapter 11.

In February of 1999, the federal government announced a temporary moratorium on the sale of water until they can either ratify our free trade agreements or ban water exports.

The announcement came after one company in Newfoundland attempted to "harvest" over 50 billion litres of pristine lake water from Gisborne Lake in Labrador and ship it by tankers to the U.S. and Asia.

Alberta Premier Ralph Klein, whose province has benefited immensely from NAFTA in oil and energy exports, has also put his foot down on bulk water exports – if Albertans were forced to pay market price for water, irrigation farming throughout the province would become uneconomical. It’s hypocritical expecting a have-not province like Newfoundland not to sell a resource, while Alberta gets rich selling a resource that Newfoundland doesn’t have, but it’s that kind of issue, and people are frightened by the fallout.

The GVRD hosted a public forum on June 5 to debate the NAFTA threat to our drinking water posed by the privatization of the filtration plant at the Seymour Reservoir. According to lay expert Steven Shrybman, if the GVRD contracts with a foreign corporation, or a Canadian contractor is taken over by a foreign corporation, NAFTA obligations make it impossible to terminate the deal and return the plant to public control. Canadians could be put in a position where we are forced to buy our own water back from American companies.

"This proposed undertaking puts at risk the capacity of government to maintain the highest standards of water quality," says Shrybman. "Any effort by the GVRD to sever the investor relationship could leave taxpayers liable to the company for the loss of future profits – damages that would run well into the tens of millions of dollars."

The Society Promoting Environmental Conservation is just one of the environment groups that plans on voicing their opposition to the privatization plan.

The GVRD’s own lawyers insist that NAFTA won’t be a factor in water privatization.

But with the future of our water potentially up for grabs if an international water company can establish that water is being treated as a commodity in Canada, it pays to go slowly.

Once the finger’s out of the dam, the water is gone.