Trade Barriers to the Public Good

Trade Barriers to the Public Good: Free Trade and Environmental Protection

Copyright Date: 2008
Pages: 432
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  • Book Info
    Trade Barriers to the Public Good
    Book Description:

    Trade Barriers to the Public Good provides a detailed examination of NAFTA and AIT cases involving MMT - a chemical additive brought into Canada by the US company Ethyl Corporation Inc. When the Canadian federal government banned the importation of MMT under the Fuel Additives Act, Ethyl Corp. filed a claim under NAFTA Chapter 11 seeking US $201 million in damages. Alex Michalos uses a case study of MMT to reveal exactly how and why quasi-judicial international dispute processes provide significantly less protection for the public interest than the routine procedures for passing an ordinary Act of Parliament.

    eISBN: 978-0-7735-7485-4
    Subjects: Business

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-viii)
  3. Acknowledgments
    (pp. ix-2)
  4. 1 Introduction
    (pp. 3-10)

    Negotiations for the North American Free Trade Agreement (nafta) officially began in February 1991, and on 1 January 1994 the agreement came into force. In Canada, at least, the most important achievement of the agreement according to those responsible for drafting it involved the so-called dispute settlement provisions. We were told that those provisions would help restrain the overwhelming power of the United States and create “a level playing field” for the three North American countries. Recalling those claims, I considered writing a book that would answer the following question: How have the dispute settlement provisions performed? A little research...

  5. 2 Philosophical Foundations and Method
    (pp. 11-29)

    This chapter explains the broad philosophic perspective and the narrower moral perspective from which this treatise is written. It then outlines the critical methods employed in the analyses. Although I was tempted to suggest that readers who are primarily interested in public policy issues might skip this chapter, after reading the 1999 statement of theGovernment of Canada Regulatory Policy, I think that would not be a good idea. Much of the content of this chapter is directly relevant to satisfying the conditions specified in that document.

    This book is written from the point of view of a pragmatist and...

  6. 3 Globalization, Democracy, and Federalism
    (pp. 30-62)

    This chapter outlines some logical relationships among concepts of globalization, democracy, and federalism, and describes some of the empirical consequences of two agents and products of globalization, the nafta and the Canada-u.s. Free Trade Agreement (custa), on Canada, the United States, and Mexico. The nature of Canada’s particular brand of federalism is also sketched, with special emphasis on the way in which legal authority and responsibility for trade and environmental policy and regulation have evolved since confederation.

    Globalization may be described as an interactive mixture of economic, political, and cultural phenomena, with causal arrows proceeding in different directions according to...

  7. 4 Motor Vehicle Technology
    (pp. 63-75)

    Because the mmt cases involve a variety of claims and counter-claims about the normal and abnormal performance of certain components of motor vehicles, some relatively unbiased explanations of their design and function should be provided before entering into controversial matters. Broadly speaking, the alleged risks posed by the use of mmt involve issues related to (1) the variety and levels of chemical emissions following combustion of the product; (2) the product’s negative impact on spark plugs, on-board diagnostic systems, and catalytic converters; and (3) the neurological disorders that are known to be related to high levels of inhalation of manganese...

  8. 5 EPA Regulations, Company Tests, Appeals, and Judgments
    (pp. 76-94)

    This chapter reviews the salient parts of the regulatory history of mmt in the United States, sketching the variety of tests run and the supporting data obtained by various concerned companies and researchers, the epa regulatory rules and administrative procedures, and the contributions of the u.s. Court of Appeals. Several features of this history had a significant impact on the nafta and ait cases, and will continue to have an impact on the commercial prospects of mmt.

    The U.S.Clean Air Act, section 211 (f)(1) prohibits the introduction of new fuels and fuel additives unless they are “substantially similar” to...

  9. 6 Harmonization
    (pp. 95-112)

    This chapter outlines the variety of ways in which diverse ideas, theories, policies, and proposals about harmonization formed an important part of the historical context in which the mmt cases were played out. It proceeds from relatively general and global issues to specific issues related to harmonization agreements among the key players in our story.

    In theRepublic(c. 360 bce), Plato enquired into the nature of the good life for an individual and for a society. He noticed, first, that a society in which individuals were constantly in conflict with each other would be relatively less attractive to inhabit...

  10. 7 MVMA and AIAMC Report to the House Standing Committee on Environment and Sustainable Development
    (pp. 113-125)

    On 19 May 1995 the Minister of the Environment, Sheila Copps, introduced Bill C-94 (later Bill C-29), theMMT Act, to the House of Commons for first reading. The most important provisions of the Act are in the following sections:

    No person shall engage in interprovincial trade in or import for a commercial purpose a controlled substance except under an authorization referred to in section 5.

    The Minister may authorize any person to engage in interprovincial trade in or to import for a commercial purpose a controlled substance if the Minister is satisfied

    that the controlled substance is not unleaded...

  11. 8 Interim Report and Minority Opinion of the Senate Standing Committee on Energy, the Environment, and Natural Resources
    (pp. 126-167)

    This chapter reviews and critically assesses the arguments presented for and against theMMT Actin the reports of the Senate Standing Committee. On 4 February 1997 the Senate of Canada passed a motion asking the Senate Standing Committee on Energy, the Environment and Natural Resources to prepare “an interim report before submitting its final report on Bill C-29 [formerly C-94]” that would answer the following three questions: (1) Is mmt-based petroleum the cause of obd malfunctioning? (2) Does mmt in gas cause a health hazard to Canadians? (3) Does mmt in gas cause direct damage to the environment? (ssceenr...

  12. 9 Commercial Arbitration
    (pp. 168-198)

    In this chapter I review some of the philosophical and broader socioeconomic roots and issues surrounding commercial arbitration. The dispute settlement procedures of the nafta and ait are discussed in more detail in chapter 10. While the ait is a domestic agreement, its main dispute resolution provisions were adapted and adopted from models of international commercial arbitration. Moreover, as already indicated, the resolution of the domestic ait mmt dispute effectively destroyed the Canadian government’s case in the international nafta mmt dispute. Thus, a deeper and broader analysis of international commercial arbitration seems to be appropriate.

    Graham (1987, 96) explained that...

  13. 10 Dispute Settlement in the NAFTA and AIT
    (pp. 199-221)

    This chapter provides a general overview of the most salient features of the dispute settlement provisions in the nafta and ait, and of critical assessments of those features. Four chapters of the nafta have dispute settlement provisions. Generally speaking, Chapter 11 provisions apply to investment, Chapter 14 to financial services, Chapter 19 to anti-dumping and countervailing duty, and Chapter 20 to interpretations and applications of the nafta. Chapter 11 is divided into three sections. Section A describes the general scope of the chapter, including relatively standard international trade treaty rules for such things as national treatment, most-favored nation, minimum standards...

  14. 11 Ethyl Corporation’s Claims against the Government of Canada under the NAFTA
    (pp. 222-236)

    In this chapter and the next I review and evaluate the claims and counterclaims of the disputants in the nafta mmt case, and of the tribunal.

    Ethyl Corporation filed itsNotice of Intent to Submit a Claim to Arbitration under Section B of Chapter 11 of NAFTAon 10 September 1996, and itsNotice of Arbitration under the Arbitration Rules of UNCITRAL and NAFTAon 14 April 1997.

    In accordance with uncitral Article 3, Ethyl Corporation demanded arbitration, named itself as claimant and the Government of Canada as respondent, described the nature of the claim, and asked for the arbitration...

  15. 12 Government of Canada’s Response to Ethyl’s Claims under the NAFTA and the Tribunal’s Award on Jurisdiction
    (pp. 237-254)

    The Government of Canada filed itsStatement of Defence in the Matter of an Arbitration under Chapter 11 of the North American Free Trade Agreement Between Ethyl Corporation (Claimant/Investor) v. Government of Canada (Respondent/ Party)on 27 November 1997 (Hughes, Evernden, and Tyhurst 1997). Strictly speaking, theDefencereplied to both theNotice of Arbitrationand theStatement of Claim. Briefly, Canada’s position was that the nafta tribunal was “without jurisdiction to entertain Ethyl’s claim,” theMMT Actwas “legitimate regulation,” no national treatment obligation had been breached, no performance requirement was imposed, no investment was expropriated, no measure was...

  16. 13 Alberta’s Claims against the Government of Canada under the AIT
    (pp. 255-264)

    In this and the two following two chapters I review and evaluate the claims and counter-claims of the disputants in the ait mmt case.

    On 28 April 1997 the Government of Alberta (complainant) requested consultations with the Government of Canada (respondent) in accordance with the ait Annex 1510.1. This action was undertaken in response to a request from the oil refiners of Alberta, acting through the cppi. Neither Ethyl Canada nor Ethyl Corporation are members of the cppi (pd9/22, 1995c, 4), although cppi members are certainly Ethyl’s biggest customers and all three share many common interests. The federal government’s strategy...

  17. 14 Claims of the Governments of Québec and Saskatchewan against the Government of Canada under the AIT
    (pp. 265-283)

    In accordance with Article 1704.9, the Governments of Québec and Saskatchewan entered into the dispute. That article says that “Any Party that has a substantial interest in the matter in dispute, within the meaning of paragraph 10, is entitled to join the panel proceedings on delivery of written notice to the other Parties and the Secretariat within 15 days after the date of delivery of the request for establishment of a panel” (ait 2002).

    Article 1704.10 says that “A Party shall be deemed to have a substantial interest in the matter in dispute where: ... (b) in the case of...

  18. 15 Government of Canada’s Response to Provincial Claims under the AIT
    (pp. 284-318)

    The Government of Canada filed its writtenSubmission of the Responding Partyon 26 January 1998. Following a brief introduction, theSubmissionbegins with an explanation of the respondent’s view of the onus of proof, the standard of review, and the manner of weighing evidence that the panel ought to apply. In the third section the facts of the case are described as the respondent saw them. Next comes a section containing a point-by-point response to each of the Government of Alberta’s claims, followed by a section challenging certain additional alleged factual claims. A short conclusion includes Canada’s “request to...

  19. 16 AIT Report of the Article 1704 Panel
    (pp. 319-345)

    On 12 June 1998 the ait panel filed itsReport of the Article 1704 Panel Concerning a Dispute between Alberta and Canada regarding the Manganese-Based Fuel Additives Act. TheReportsummarized its authority, the complaint process followed, relevant provisions of the ait, operating principles, background of the complaint, its views on the complainant’s and respondent’s specific issues, its final determinations, and a dissenting opinion. Its appendices listed all participants and official documents, and summarized written submissions.

    When the panel met with advocates for both sides on Wednesday, 15 April 1998, one of the first issues the chair introduced involved the...

  20. 17 Conclusion
    (pp. 346-356)

    I began with the question: In the nafta dispute settlement involving mmt, were the broader community interests of most people in Canada served better or worse than the relatively narrower commercial trade interests of investors? My attempt to answer that question was complicated by the initiation of the ait dispute settlement. However, the answer to the basic question is that broader community interests, as assessed and defended by the Government of Canada, were crushed in favour of the narrower trade interests of the Ethyl Corporation and the petroleum industry, defended in one arena by the Ethyl Corporation and in the...

  21. APPENDIX ONE Relevant Parts of NAFTA
    (pp. 357-358)
  22. APPENDIX TWO Chronology of the MMT Case
    (pp. 359-368)
  23. APPENDIX THREE Relevant Parts of AIT
    (pp. 369-373)
  24. APPENDIX FOUR Participants in the AIT Panel Hearings
    (pp. 374-375)
  25. APPENDIX FIVE Copy of Letter from U.S. Corporations to U.S. Trade Representative
    (pp. 376-378)
  26. References
    (pp. 379-402)
  27. Index
    (pp. 403-419)