NAFTA dispute settlement over Quebec pesticide ban has both sides claiming victory while the real issue still remains - the need to ban NAFTA's investor state clause.

by Janet M Eaton

The Canadian Press reports that the settlement of a NAFTA dispute that challenged Quebec's pesticide ban has both a U.S.-based chemical giant and environmentalists claiming victory in the case.  Environment advocacy groups say the settlement reinforces the right of municipalities and provinces to ban pesticides — while DowAgroSciences says Quebec has now acknowledged that a popular weed killer can be used properly without health risks.


DowAgroSciences launched its $2-million challenge in 2008, alleging Quebec's pesticide bylaw violated Chapter 11 of the North American Free Trade Agreement, because it outlawed the company's herbicide ingredient 2,4-D. NAFTA's Chapter 11 allows investors of one member country to sue other NAFTA countries for actions or measures deemed to hurt their trade interests. 


Federal International Trade Minister Ed Fast said the agreement "confirms the right of governments to regulate the use of pesticides. "This right will not be compromised by Canada's participation in NAFTA or any other trade agreement."


Brenda Harris, a spokeswoman for Dow, said the company is happy Quebec acknowledged that its weed killer doesn't pose unacceptable risks to people or the environment if it's used properly. "What was most important to Dow AgroSciences is that they (Quebec) clarify their perspective on 2, 4-D,"


Meanwhile the Council of Canadians challenges the legitimacy of NAFTA's notorious Chapter 11 investor state dispute mechanism noting that some countries are choosing to remove the highly contentious clause from their free trade agreements. e.g. The  Australian government under Julia Gillard decided this year not to include investor-state dispute settlement in its bilateral and multilateral free trade agreements. At the same time governments in Ecuador and elsewhere in Latin America are also cancelling bilateral investment treaties with developed countries because of  the way foreign firms, including Canadian resource companies, use them to challenge environmental and development-related policy.


Stuart Trew, trade campaigner with the Council of Canadians stated    "We should take a page from the Australian government by reviewing the investor-state process in NAFTA and other trade deals to see if the costs have outweighed the benefits. At home and abroad, the evidence shows investor-state disputes are a regressive corporate tool with no public value.”


An earlier Supreme Court of Canada challenge - Hudson municipality,

Quebecvs Spraytech industry group resulted in a major landmark

decision in favour of municipalities. According to Jerry DeMarco, managing lawyer with Sierra Legal Defence Fund’s Ontario office there were five major features that established the authority of the decision:


1.   "General welfare" or "omnibus" provisions in municipal legislation can be used to pass by-laws relating to health and the environment

2.   Courts will generally allow simultaneous regulation of a subject matter by municipalities and a province so long as the by-law is within municipal jurisdiction and the two laws do not conflict in such a way so as to result in an "impossibility of dual compliance"

3.   Municipal action can be looked at in the context of the "principle of subsidiarity", i.e. that effective regulatory action can be achieved at the level closest to the citizens affected

4.   Environmental protection is a "fundamental value" in Canadian society, and one that requires action at all levels

5.        Action that prevents harm or addresses risks of harm is consistent with international law´s "precautionary principle"


Sierra Club Canada has long argued against the cosmetic use of lawn pesticides  and has played a significant role in educating municipalities about their  health and environmental impacts while encouraging municipalities to eliminate their use. 


At a Sierra Club Canada Atlantic Chapter sponsored workshop in Wolfville,  Nova ScotiaTeresa McClenaghan from the Canadian Environmental Law Association  (CELA) emphasized the importance of the  precautionary principle: "Where there is a threat of serious or irreversible harm, a lack of full scientific certainty shall not be used as a reason to postpone or avoid measures to reduce or eliminate the risk." and went on to  note that the supreme court decision determined that : "It is not necessary for municipalities to prove or decide that it has been proven the exact health effects of pesticides. That there is cause for concern and that it is considered prudent to reduce pesticide exposure is sufficient to pass a by-law controlling pesticides in the community."


McClenaghan, also noted in regard to the Hudson case, that the Supreme Court of Canada concluded that the federal legislation is primarily a registration system, and the provincial legislation is primarily a means of controlling commercial activity concerning pesticides. Therefore a municipality may pass a pesticides by-law and it will not be in conflict with the provincial or federal laws as they stand. The Hudson Case also concluded that it is not correct to say that federal acceptance for registration carries with it any guarantee of safety for several reasons cited. [p.9]


 After two Supreme Court decisions in favour of municipal and provincial right to ban pesticides it would appear to be a closed case against the chemical companies mounting yet another challenge. However, only  five provinces presently have instated bans - Quebec, Nova Scotia, New Brunswick, PEI, and Ontario with British Colombia and Manitoba considering bans and DOW spokeswoman Brenda Harris has stated that although there was no action being taken against other provinces by Dow at this time she would not speculate on what they might do in the future.


As Sierra Club Canada advocates, a better approach would be to eliminate NAFTA Chapter 11’s investor state clause, as other countries are doing,  and renegotiate all free trade agreements using a fairer trade template.


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