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The Union War on Water Privatization – Steven Shrybman Responds to the National Post

Steven Shrybman

November 02, 2001

This is not Steven Shrybman

This is not Steven Shrybman

In the fall of 2001, the National Post printed several editorials slamming the Canadian Union of Public Employees and the Council of Canadians for their campaign against water privatization.

National Post writers said that Steven Shrybman’s legal opinion –  which warned of the consequences arising from the loss of local control over the delivery and regulation of water services – read like a Steven King novel.

After a delay of several months, the National Post finally printed Steven’s response to the first of these editorials:


National Post
Fri 02 Nov 2001
Financial Post: Editorial

The Union War on Water Reform
Steven Shrybman

The Financial Post recently published three editorials criticizing legal opinions I have prepared for the Canadian Union of Public Employees. My advice concerned the impact of international investment and services treaties on proposals to contract out municipal water supply projects to the private sector — usually to one of a small number of transnational water service corporations based outside Canada.

My opinions underscored the loss of local control over the delivery and regulation of water services that would result from such privatization initiatives in light of the commitments Canada has made under NAFTA and the WTO. My views are unpopular with those who represent or speak for the international companies that would like to profit from supplying our water. They have compared my opinions to Stephen King novels. I am glad they find my work so engrossing. I agree it is scary. I wish it was fiction.

The international trade and investment regimes I describe are the product of the dramatic transformation of international trade law that has taken place over the past 10 years or so. During this period, the ambit of international trade rules has grown to encompass broad spheres of policy, programs and law that have heretofore been entirely matters of domestic and local concern — including decisions by local governments about municipal services such as water.

Furthermore, unlike the treaties they supersede, the new generation of international trade agreements are enforceable. Moreover, under NAFTA investment rules, corporations may now enforce treaties to which they are not parties and under which they have no obligations.

The rules they may invoke are complex, unprecedented and largely untested. It is reasonable to expect that opinions will differ about their meaning and application. But unlike the speculative concerns that were raised during free trade negotiations, and that were also discounted as alarmist, we now have the considered wisdom of international trade and investment tribunals to guide us.

My legal opinions relate the outcomes of these international investment and trade cases. The decisions of these international bodies are often alarming. They reveal that if anything, the concerns of free trade critics underestimated the impact of trade disciplines on Canadian policy and law. Here are two examples.

The B.C. Supreme Court recently reviewed one of the first awards made under NAFTA investment rules. That award ordered Mexico to pay a U.S.-based hazardous waste company more than US$16-million because a local municipality refused to allow the company to build a hazardous waste dump on land already seriously contaminated by toxic wastes. By doing so, the tribunal concluded, the local municipality had expropriated the company’s investment — so had the state government by creating an ecological preserve that included the waste site.

The B.C. Supreme court upheld the damage award because it concluded that under the rules for reviewing such awards, it had little authority to set the tribunal’s decision aside even if it was wrong. Accordingly, it had no power to overrule the tribunal’s “extremely broad definition of expropriation” — even though it was broad enough to “include a legitimate rezoning by a municipality.” No wonder municipalities are worried.

Equally problematic is another NAFTA award — this one against Canada but also in favour of a U.S. hazardous waste company. Canada’s offence was to ban PCB waste exports. The company involved had hoped to profit from treating Canadian wastes at its U.S. facilities and had successfully lobbied the U.S. Environmental Protection Agency to waive a law prohibiting PCB imports. The waiver was highly dubious and a U.S. court soon overturned it. Nevertheless, the NAFTA tribunal found Canada liable for banning PCB exports even after the court decision concluding that such transborder shipments were illegal. Canada is appealing the award. Not even the most strident anti-free trader could have foreseen such an outlandish use of NAFTA investment rules.

But my critics protest that there really haven’t been that many investor claims. Well, part of the answer is that there hasn’t needed to be. In his telling review or NAFTA investment claims for the International Institute for Sustainable Development, lawyer Howard Mann relates the fact that since NAFTA came into force, only two new environmental laws have been adopted at the federal level and both have been challenged under NAFTA investment rules. Neither survived. It may not be Stephen King, but that is scary.


Steven Shrybman