The Council of Canadians is demanding that the terms of the recent NAFTA settlement between pulp and paper company AbitibiBowater and the federal government be made public. The Council believes that within this settlement exist possible constitutional repercussions affecting provincial jurisdiction over regional water rights.
AbitibiBowater used Chapter 11 of NAFTA to sue Canada over the alleged illegal seizure of company property by the province of Newfoundland following the closure of the Grand Falls paper mill and ensuing bankruptcy of the company. The property was seized in response to the cancellation of severance packages worth thousands of dollars for 500 workers within the province as a result of the company filing for bankruptcy protection.
Fred Wilson goes into further detail in an article from rabble.ca:
Danny Williams and the Newfoundland government were furious with the company and they proceeded to take back the company’s timber and water rights and expropriate their hydro-electric dam and power station. After all, the hydro operation depended entirely on a water license issued by the province to provide power for the mill.
A negotiation then ensued over the appropriate compensation for the investments that the company had made in the hydro operation. But just what is the value of a hydro station that is based on a license to provide power for a mill that the company has now closed?
Danny Williams was nicknamed “Hugo” over the expropriation of the assets. Even though the government’s actions did not save their jobs, the mill workers have nothing but admiration for Williams. A lesser known part of this story is that the Premier and the government then stepped in and paid over $30 million in severance pay that was owed to the people who lost their jobs at Grand Falls. To my knowledge, this is unprecedented by any government in Canada.
Needless to say, any deal between the province and AbitibiBowater would have to take into account the millions of dollars of company obligations to workers already paid by Newfoundland. The larger question is whether AbitibiBowater was using public resources to run a paper mill or to be a private power producer. Put another way, are the licenses to use resources for economic development just another kind of private property that can be used or not used or sold regardless of the public benefit?
In any event, the NAFTA challenge was from day one a bargaining chip in these negotiations, and the NAFTA proceedings will now be just another bargaining table where the company thinks it will have a stronger hand.
The NAFTA suit also offends on another level. AbitibiBowater is presumably still a Canadian company (although 51% of its shares are held by the former Bowater shareholders). Its headquarters is a landmark in downtown Montreal and the majority of its mills are in Canada. The company has a $100 million loan guarantee from the province of Quebec and it is negotiating with the federal government for further assistance to restructure and emerge from CCAA protection.
As it turns out, whether the company is Canadian or not doesn’t matter. As long as there are US investors or shareholders, a Chapter 11 case can be brought. In other words, this NAFTA provision is much less about trade between countries, and much more about the privileges of capital to trump the rights of citizens and governments.
So Newfoundland is in effect being dragged to the World Bank building and forced to defend the actions of its legislature before an unelected and non-judicial, unconstitutional NAFTA star chamber. Of course, all that can be avoided by giving the company everything it wants.
The case was ultimately settled at the end of August of this year, with the federal government agreeing to compensate AbitibiBowater $130 million for the expropriated assets.
Originally published on cbc.ca
Newfoundland and Labrador Premier Danny Williams expressed happiness with the federal payout.
“We are pleased that the matter has been concluded and we appreciate the work of the federal government in resolving the issue,” according to a statement issued to CBC News by Williams’s office.
“The Government of Canada has agreed to make a payment of $130 million to AbitibiBowater upon the company’s restructuring. This payment represents the fair market value of the company’s expropriated assets,” said a statement from Foreign Affairs and International Trade Canada.
“AbitibiBowater has agreed to irrevocably and permanently withdraw its claim against Canada.”
The company said the federal payment forestalled an expensive legal case under NAFTA.
“We believe this is an acceptable settlement for our company, stakeholders and creditors, given the set of circumstances faced by the company at this particular time, as well as the inherent uncertainty of any judicial process,” stated CEO David Paterson.
“We are now able to move forward and focus on finalizing our restructuring process and plans to emerge from creditor protection in the fall 2010. AbitibiBowater would like to thank the Government of Canada for its efforts to reach this settlement and avoid a protracted and expensive NAFTA case.”
The settlement has not generated a solely positive response however, and has in fact set off warning bells in the offices of those charged with the task of safeguarding the public rights of Canadians.
The Council of Canadians released the following press release on August 25 in response:
The $130 million NAFTA settlement handed to pulp and paper company AbitibiBowater yesterday by the federal government could have constitutional repercussions affecting provincial jurisdiction and water governance according to the Council of Canadians. The organization is demanding that the terms of the deal be made public. “Water is a public resource to be managed by governments in the public interest,” says Maude Barlow, national chairperson of the Council of Canadians.
“If AbitibiBowater has in any way been compensated for the loss of water and timber rights, as the company is suggesting, the Harper government’s hundred million dollar buyout would turn water into private property. Imagine the consequences of handing oil and gas companies operating in the tar sands this same right to draw water or else be compensated,” says Barlow.
Unlike the United States and other countries, Canada rejected private property as an inalienable right when it signed a new Constitution into law in 1982. This NAFTA settlement with AbitibiBowater proves again how investment guarantees in free trade agreements have forced private property rights into Canadian law – with high costs for Canadians and few if any possible benefits to the management of Canada’s economy, natural resources in particular. If the company is telling the truth that not only its assets but its water and timber rights have been compensated for, the threat to water management in Canada will be high.
The Council of Canadians is also astonished that AbitibiBowater was let off the hook recently by a Quebec court from having to foot the bill of the needed environmental cleanup of its now inoperative plant in Newfoundland.
“This NAFTA settlement tells multinational companies around the world that Canada will pay them to eliminate jobs and to pollute the environment,” says Barlow. “NAFTA made these kinds of settlements inevitable by letting investors challenge even public health and environmental policy directly as indirect expropriations of their profits. The anti-democratic Chapter 11 dispute process should be gutted from NAFTA and a more balanced international investment regime put in place.”
Tags: AbitibiBowater, Council of Canadians, NAFTA, Newfoundland, Settlement
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