FAIT Committee Meeting

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, May 15, 2001

• 0905

[English]

The Chair (Mr. Bill Graham (Toronto Centre—Rosedale, Lib.)): I call the meeting to order, colleagues.

We're missing a couple of witnesses, but Ms. Dawson is here, so we'll ask her if she'd start for us.

Ms. Dawson, if you don't mind, we have a Power Point presentation here. If you could adapt your speech to it, we'd appreciate it—just whatever comes up.

Ms. Laura Ritchie Dawson (Research Association, Centre for Trade Policy and Law): I'd be happy to do that.

The Chair: It seems to have been organized in a way that has nothing to do with us, but if something comes on the screen, talk about it, will you, so it looks as if we know what we're doing?

Ms. Laura Ritchie Dawson: I'd be happy to.

The Chair: Thank you very much. We appreciate your coming, and please start.

Ms. Laura Ritchie Dawson: Good morning, and thank you for the invitation. My name is Laura Ritchie Dawson, and I'm a research associate at the Centre for Trade Policy and Law at Carleton University. We're a joint research organization of Carleton University and Ottawa University.

For the past couple of years I've been working on water policy issues. I'm not a trade lawyer. I'm more interested in trade policy issues, and I've been quite interested and a little dismayed by the role trade policy has come to play in Canada's water policy dialogue.

Of particular concern to me is the way Canada's international trade commitments in the WTO and in NAFTA have been framed by some as a problem we have to address in order to solve Canada's water problem. To me this seems to be a very narrow-minded approach to what has to be done in a policy sense.

It seems to me that the Canadian government has a tremendous opportunity right now and also a tremendous challenge to deal with a whole interlocked set of water issues in terms of trade and stewardship, environmental areas, and supply and demand. I don't think there's any way we can address the enormous problems facing us by looking at a microcosm of trade issues.

In my brief presentation today I want to dismantle some of the trade policy myths surrounding water exports and water removal. I see we have a lawyer on the panel who will do a much better job than I will on the specifics of the legal issues, but I wanted to address these things in a broader policy sense.

The first myth I wanted to discuss is that the only way to protect Canadian water is through a prohibition on bulk water exports. I was very gratified to see the strategy the government has adopted in framing the problem in terms of bulk water removals and not in narrowing the focus to bulk water exports. When this is done, we put the emphasis on the integrity of the ecosystem rather than make it a trade issue that may be dealt with outside our borders, one that will be dealt with in WTO and NAFTA dispute settlement panels.

I'm an advocate of trade, and the freer the trade the better. I am also an advocate for sovereignty over Canadian water decisions and for not leaving it to the vagaries of trade dispute settlement bodies. Had the government taken the route of trade law regulation, I think it would have for the first time imposed trade law regulations on water in its natural state. I'm sure you've already discussed this as a very dangerous route. Then water in all its forms—standing water, ground water—and questions of Canadian sovereignty over bodies of water within its territory could become the subject of trade law challenges.

The second myth I wanted to discuss briefly is that Canada must sacrifice its water for the sake of trade agreements. We hear a lot of this in the media. It seems to be that the anti-traders are using fresh water exports as ammunition in their campaign against globalization. This isn't just mischievous; I think it's dangerous. It disguises and trivializes the real issues of water stewardship, hiding them behind the technical minutiae of trade agreements.

Our trade agreements do great things for the Canadian economy, but no responsible government would ever sacrifice Canada's fresh water integrity in order to gain market access in telecoms, in autos, or in agriculture. I find the suggestion that the Canadian public and the Canadian government would allow this to happen to be offensive.

As you know, within trade agreements we accept a certain package of constraints in order to gain a certain package of benefits in the area of domestic commercial policy. The reason we stay within these agreements is that the benefits outweigh the costs. However, if at some point the costs begin to outweigh the benefits, there's nothing in the world that stops us from walking away from our trade agreements, reopening our trade agreements, or doing whatever is necessary to protect national values.

• 0910

The third myth is that water stewardship problems are primarily trade policy problems. I think I've discussed this in a couple of different directions. Some lawyers have made some really good cases that Canadian water may not be adequately protected under NAFTA. Indeed, if NAFTA were the only thing we had in terms of fresh water policy, we would be in very sad shape. However, this would be a strict interpretation of the letter of the law, and strict interpretation of a lot of things can distort the original intention of the agreement.

We can best defend and conserve our water and promote stewardship of fresh water by having a strong national policy, a framework on which we build our other policy commitments. Our trade policy should build from our broader national framework, not the other way around.

There are all sorts of examples we can look to where Canada has established particular values in trade. We protect Canadian culture, and you can't go into an American bookstore in Canada. We value our dairy farmers, so we pay a lot more for milk than do our southern neighbours. These are exceptions we have carved out of our trade commitments, and we can continue to carve exceptions out of our trade commitments as long as we have established a sound consensus and have had adequate dialogue with the people, one that says, yes, we value our fresh water resources and are willing to do what it takes to conserve them.

Trade agreements are not ironclad prisons. They're dynamic, evolving expressions of shared interests among countries, and they should be treated as such.

The fourth myth I wanted to dispel is that we must sell our fresh water, that we're somehow locked into these agreements, and that hordes will be at the borders ready to suck Canada dry. Our trading partners can't force Canada to extract minerals from the ground, they can't force us to cut down timber in the forests, and they can't force us to pump the water out of the lakes.

Those who oppose trade claim that if any provincial government allows extraction and transformation of some water as a traded good, all provinces are then obligated to do the same. This is not the case. Under existing trade law, any province may prohibit water export. The only constraint is that it must not prohibit the right to export on the basis of the nationality of the applicant.

Under the GATT-WTO system, export restrictions are usually prohibited except where they are necessary for the protection of human, plant, or animal life or for the conservation of a non-renewable natural resource. The GATT provisions can be called upon for water protection, and we can likely do so quite successfully. The only requirement is that these permissible restrictions not be used arbitrarily or as disguised trade restrictions.

I have heard from a number of sources that the WTO dispute settlement system is biased against environmental protection. This is another of the myths. Dispute settlement panels examining the GATT exceptions have affirmed that trade interests may have to give way to legitimate environmental concerns. It's also true that the same panels are particularly concerned with whether measures nominally taken for environmental reasons have underlying protectionist elements.

The WTO Committee on Trade and the Environment is engaged in a comprehensive review to ensure the compatibility between global trade rules and multilateral environmental agreements. Among its strongest positions to date is that multilateral environmental agreements will always take precedence over trade commitments. Therefore, one of the tools we might consider in our national water stewardship policy is to cooperate with a number of other countries with similar interests to develop multilateral accords on fresh water stewardship.

On the national level, the best way to avoid the charge that environmental measures are disguised or arbitrary protection is to situate them within a broader, coherent, transparent policy framework for water stewardship.

• 0915

There are a number of policy options on the horizon that are available to you as policy-makers. If I can leave one message, it's that trade policy is a small part of the puzzle in water stewardship for Canada.

The problem we have is that because of the nature of water, a crisis takes a great deal of time to develop, 20 years or possibly more. It also takes a great deal of time to respond to. The policy horizons we're used to dealing with are a few months or a few years. The sorts of solutions we might need for fresh water stewardship may be 20 or 50 years in the making. This is an incredible challenge for you.

One thing I'm quite convinced of is that market pricing for water is an important first step. This causes a lot of controversy. People don't want to hear that Canadian water, this priceless resource, has been reduced to the commodity level. It's a priceless natural endowment. Its disconnection from monetary value has encouraged Canadians to waste water and not to treat it with the kind of respect it deserves.

When I say that market pricing for water is important, I don't mean that the average consumer should be paying more for the water they get out of their taps. I'm simply saying that while water is highly subsidized in Canada, let's subsidize it for the highest value uses, which are human health, safety, and hygiene, and for lower value uses, including commercial and non-reclaimable uses, and that we impose a higher price for those kinds of water use.

I'm not alone in my advocacy of water pricing. I'm sure you've heard this before. The World Bank is currently taking this approach in dealing with the global crisis of inadequate fresh water access. They estimate that within 20 years 75% of the world's population won't have an adequate fresh water supply. As the guardian and steward of 20% of the world's fresh water supply, we need to be prepared to deal with the crises in the coming years. We need to give some serious consideration to the policy package we're going to put together.

Just to finish up, some of my recommendations would be to work on eliminating the multiple and overlapping levels of regulation and to make policy coherence in water a stronger priority. Because it's regulated at so many levels and there are supply issues, demand issues, municipal issues, and so on, this is a huge undertaking.

We need to work to restore the capacity of governments at all levels to monitor and protect fresh water. We've lost a great deal of our technical capacity within the government. This doesn't mean we shouldn't perhaps consider some level of privatization, but we need the technical ability to provide the necessary oversight if we're going to engage in the privatization of water services at any level.

We have to recognize the intrinsic link among the surface water we're talking about in the Great Lakes, standing bodies of water, and ground water. We really aren't discussing ground water in a meaningful sense, and it's all linked.

I'll just finish off with a reminder that the fresh water shortage is a global crisis and that as Canadians we should work with our international partners to secure and enhance the access of all people to safe and adequate supplies of drinking water.

Thank you.

The Chair: Thank you very much, Ms. Dawson. That was very helpful.

We'll go next to Mr. Dunn, and then we'll go to Mr. Johnson. Thanks for coming. Sorry we got going without you, but we're only here until 11 o'clock, so we had to kind of get the train going.

Mr. Jamie Dunn (Water Campaigner, Council of Canadians): My apologies for being a little late.

The Chair: I'm sorry you missed the introduction of Ms. Dawson's point, because I think there was pretty strong divergence from what I expect to hear from you.

Mr. Jamie Dunn: Yes, I noticed that, even though I came in late.

I'll start off by saying I'm Jamie Dunn. I'm the water campaigner at the Council of Canadians. I have distributed a booklet on several issues, including a one-page fax sheet in English and French on the points I'll be making. I'll be following up by distributing a four-page brief. We are waiting for the translation. Instead of just distributing the English, I thought I'd wait and distribute them both at the same time.

• 0920

I'd like to say a couple of things about the Council of Canadians. We're a public interest advocacy group in Canada. We have over 100,000 members and 65 chapters from coast to coast. We don't receive or accept government funding and we don't receive or accept corporate funding so that we can be an independent voice on policy issues and matters of public interest.

We have a 12-year history of dealing with water issues, stemming from the first negotiations of the free trade agreement in 1988.

I'll just briefly introduce Steve Staples, who is the campaign's coordinator for the Council of Canadians.

We were quite concerned that the terms of the free trade agreement between Canada and the United States would subjugate Canada's regulatory regimes to the trade agreement and that we would actually lose control of our fresh water. There was a large public outcry on this issue, and the government at that time moved to put in place some water regulations, but those fell by the wayside with the 1980 election.

Since then, with the coming into effect of NAFTA and other trade agreements, we have been at the forefront in advocating that Canada not lose control of its fresh water.

There is a 40-year history—and that's important to know—of attempts to divert and export Canada's water, particularly to the southwestern United States, going back to the Grand Canal scheme, which was going to block off and divert water from James Bay to the United States, and the NAWAPA project, which was going to flood one-tenth of B.C. to get water to the United States.

We've seen this come up over and over again, with five licences being issued in British Columbia in the late eighties and subsequently being rescinded because of public pressure; the Nova Group licence, which is why we're all here today; and subsequent attempts to export water, such as 58 billion litres from Gisborne Lake in Newfoundland, which we thought we'd seen the last of at least for a while, but it seems to be raising its head again. So it's important to be talking about this issue.

There are enormous pressures on Canada. Some people have called us the soon-to-be OPEC of water, and I think in that case it's important to start looking at the realities of the context within which we're operating and also to start looking at what we need to do to make sure that Canada's water is protected for its people and for the environment in which its people live.

Moving on to Bill C-6, when Nova Group in Sault Ste. Marie received a licence from the Province of Ontario to export 600 million litres of Lake Superior water, there was an enormous public outcry. In fact, at one point Madeleine Albright, the Secretary of State in the United States, got involved because of her rights under the International Boundary Waters Treaty Act. The member for Winnipeg—Transcona, Bill Blaikie, brought a motion before the House. The House unanimously adopted a motion urging the federal government to ban bulk water exports. But instead of doing that, the federal government came forward with a three-pronged strategy that they said would prevent bulk water exports in the context of trade agreements, because they didn't want to abrogate or threaten their obligations under the trade agreements.

If trade agreements are affecting the Canadian government's ability to control its water, they should be the first point of focus, not what we can do to get around them and whether or not getting around them is possible by any means.

By its own admission these were the obstacles facing the government: public pressure to do something; provinces worried about their jurisdictional control of water; entrepreneurial interests in exporting water to deal with a growing world water crisis; and clear obligations the government admitted it had under the trade agreements, both NAFTA and the agreements administered by the WTO.

So the government announced that in order to deal with this, it was going to take an environmental approach. As my friend here mentioned, article XX of the GATT purportedly allows you to protect non-renewable natural resources. It's important to say that this approach has never been successful. Even though it has been tested at the WTO several times, it has never been successful. That's an important point.

The Council of Canadians has done extensive research on this issue. We have produced the only publicly available legal opinion on the issue in Canada. It's important to know that. We put our money where our mouth was, and we put on public record why we had the opinions we did. You can get that opinion on our website.

The Chair: I'm sorry, I know you're not done, but is that the opinion that's enclosed in your package?

Mr. Jamie Dunn: The abridged opinion is included in your package. There's a full 29-page opinion on our website. That is a 14-page abridged opinion by Steven Shrybman, who at the time was executive director of the West Coast Environmental Law Association.

• 0925

The Chair: Thank you. Sorry to interrupt.

Mr. Jamie Dunn: That's fine.

While article XX of the GATT is incorporated in NAFTA, it's important to recognize that it has never been successful in protecting the environment when challenged under trade agreements.

It's also important to say that this is the reason the federal government felt an environmental approach would be successful, so I think we have to look at Bill C-6 not only in terms of the other two parts of the government strategy, but also in terms of whether or not it is a truly environmental approach.

Because of that, we have several concerns about Bill C-6 in its stated purpose to prevent bulk water exports. The first of them is that it actually creates a water export licensing system. That's enormously problematic. For something that's supposed to stand in the way of exports to begin by starting a licensing system, with licences issued by the Minister of Foreign Affairs, not the Minister of the Environment, calls into question, first, the efficacy of that measure, and also its ability to defend itself as an environmental measure.

The second issue I'd like to bring up is that Bill C-6 would apply to boundary waters only and would do nothing to protect inland waters and coastal waters. The five licences issued in the late 1980s in B.C. were for coastal diversions of water and would not be affected at all by changes to the Boundary Waters Treaty.

It's also important to realize that right now the Atlantic provinces, as we just read yesterday in the newspapers, are supporting the idea of moving ahead on bulk water products. In Newfoundland there's a proposal to export 58 billion litres of water from Gisborne Lake that the proponent says are being wasted. The Premier of Newfoundland says this water is being wasted as it runs into the ocean.

An environmental approach understands that water in all states plays a role in the environment. There's no such thing as wasted water.

With respect to the coastal and interior water, it's also important to look at what plans have been put in place already. Over the last 40 years, only the Grand Canal scheme would have been affected by this legislation. We think it's also important to recognize—

The Chair: Sorry, but which canal?

Mr. Jamie Dunn: It was the Grand Canal scheme of engineer Eric Kierans, a Newfoundland engineer. It would have blocked off James Bay and gathered the fresh water and diverted it though a series of canals through the Great Lakes and down to the American southwest. That was from 1958, I think.

It's also important when you look at these issues to realize that Bill C-6 seems to infringe on provincial jurisdiction. That's not just a technical issue. It's an extremely important issue from the perspective of government policy and what it intends to do and how it intends to act. If the federal government in Canada is saying it can't act because of provincial jurisdiction, then we have to look at what's happening in Bill C-6, which would take away, purportedly, Ontario's right to issue licences and rescind licences, as it did with Nova Group, because that was an Ontario water-taking permit that was issued.

Right now the federal Minister of Foreign Affairs would issue that licence. What has Ontario got to say about that? Would Ontario be issuing any water-taking licences from the Great Lakes? What is a “water basin”? What would that geographical delineation be?

All of these issues remain to be answered. I think they are incredibly important, not only from our policy perspective but also for the defendability of an environmental perspective at the World Trade Organization, assuming that avenue really works. The evidence, as I said earlier, is that it doesn't.

Bill C-6 relies on the idea of water basins. As I said earlier, there were three approaches the federal government took: one, a reference to the International Joint Commission, which came into being under the Boundary Waters Treaty; second, the Canada-wide accord on water, and I'll talk more about that in a minute; and third, changes to the International Boundary Waters Treaty Act.

The Canada-wide accord on water divides up the country into five drainage basins from which you cannot divert water. The five are the Atlantic Ocean, the Pacific Ocean, the Arctic Ocean, Hudson Bay, and the Gulf of Mexico, the Canadian drainage basins. Yet this bill talks about water basins. Confusion between the two strategies at the federal level will not help in defending it as an environmental approach.

It's also vague as to what those are actually defined as, and there have been other criticisms about this. I think what they're being set out as is an engineering concept: which way does the water fall on the continent? At the same time, that seems to suggest that as an ecosystem there's the same ecosystem in Vancouver as there is in San Diego because both of those would be in the Pacific drainage basin.

• 0930

You would also in theory, and actually explicitly, be allowed to ship water from Vancouver to San Diego or Gaspé to Miami or anywhere else along those continental corridors. That isn't a scheme to prevent bulk water exports, no matter how it was intended, and it's important to start pointing out the problems with this overall strategy.

I will also mention that the Council of Canadians organized twice when the provinces were asked to sign the Canada-wide accord on water, pointing out the problems with it. There was overwhelming support from our members across the country, who called their ministers of the environment and their local MPs to tell them they didn't think that was the right strategy. There's enormous support for our position.

There is one thing I was hoping to do this morning, but I didn't have the person power to do it. I have 11 boxes of petitions with over 100,000 signatures from Canadians across the country. I really would have liked to have had them stacked behind me, as if all those people were standing behind me delivering this message. The demand is clear: ban bulk water exports. That's what Canadians want to happen. I think there's a lot of doubt and reticence about the strategy the federal government has taken.

I'll get back to Bill C-6. It's also important to realize that the Boundary Waters Treaty has been superseded. It was superseded by NAFTA, it was superseded by the GATT, and it will be superseded by the free trade area of the Americas agreement, if that is signed in 2005. The Vienna convention on international treaties says that where there is coverage or dispute in jurisdiction over an issue, the most recent treaty takes precedence.

It's also important to realize that article 103.2 of NAFTA says it is superior to all other international treaties unless stated in NAFTA, unless accepted in NAFTA. The Boundary Waters Treaty is not listed as a treaty exempted from NAFTA. The Boundary Waters Treaty has been superseded by NAFTA, and that is written into NAFTA in article 103.2.

That calls into question the efficacy of this strategy by the federal government. As I said, we've produced an important legal opinion, the only publicly available one in the country on this issue. It's also important to start looking at the ways in which the federal government has taken an approach to the issue of trade and water. Water is a good under NAFTA. There has been a lot of discussion as to whether that matters, and the federal government has said, “Well, not in its natural state.” Our legal opinion disputes whether it is accurate that all the parties agreed that in its natural state water wasn't a good. There's clearly the likelihood of a dispute, at least from the United States, on that issue.

It's also important to realize that under NAFTA water is also a service and an investment. For a service and an investment, environmental provisions are not exempt under NAFTA. Article XX of GATT applies only to articles 3 through 9 of NAFTA. These exemptions we've heard about apply only to articles 3 through 9 of NAFTA. Services and investment are articles 12 and 11 respectively. As we've seen when one of those water licences I spoke of in the late 1980s in British Columbia was rescinded, Sun Belt Water Inc., which had a relation with one of those licences, is currently suing the federal government under chapter 11 for $10.5 billion U.S.

These are the avenues that are open to even the smallest companies, because I'm not about to suggest that Sun Belt Water of Santa Barbara, California, is an enormous corporation. One person told me it exists over a barbershop somewhere in Santa Barbara.

Likewise, Nova Group, the—

The Chair: They want to move out of the barber shop. That's why they're—

Mr. Jamie Dunn: Maybe. Likewise, Nova Group is a small investment company that spent $50 to get a permit to export 600 million litres of water. It said that was the best $50 of public policy money ever spent in Canada.

Just to address those issues of trade agreements and what's coming generally, I'd like to close by saying that it's important to state that the government's overall strategy on water is flawed. As part of this strategy, Bill C-6 needs to be looked at more carefully.

While it is unlikely that the natural state provision or allowance that the federal government is relying on to protect Canada's water would survive a trade challenge, it is vital to realize that water exists on a lot of levels within various trade agreements, any of which Canada could be challenged on and then forced to allow exploitation of its water. Secondly, as I said, article 2101 does not say the exceptions under GATT article XX apply to services and investment.

I'd like to make this less academic and do a reality check on this issue. Right now the Council of Canadians is an appellant at an Ontario environmental tribunal hearing on a water-taking permit issued for the Tay River, near Perth, Ontario, to take 1.6 billion litres of water a year.

• 0935

The reality of NAFTA's importance there is in the fact that the way the permit was issued, with no significant environmental information on the Tay River and with a wait-and-see approach, will set a standard for water access in Ontario. If that permit goes ahead, any American or Mexican company, and once the FTAA comes into play, any of the countries in the western hemisphere, can say, that's the standard by which we get water in Ontario, without significant environmental information, on a wait-and-see basis, and since the appeal process in Ontario is at the front end, once the permit is issued, in a way that frustrates public participation in how its environment is protected.

My friend here has suggested that just because one province does something, it doesn't mean all provinces are bound, and there is dispute amongst lawyers on that issue. But the Canada-wide accord, by setting a common standard across the country, advances the argument that all provinces will be bound once one of the signatories to that Canada-wide accord start exporting water, because they're part of the standard. The Atlantic provinces signed the accord. Newfoundland signed the accord. Once it starts exporting water, there's a good argument in front of a trade tribunal that all the other provinces involved in the accord are subject to the same standard and the same rights of access by foreign companies.

I wasn't going to address pricing, but my friend brought it up. It's a vital issue. No one is saying any corporation should be able to exploit nature to any extent it wishes, but the fact is that around the world full-cost recovery and flat-out water pricing kills people. Right now in South Africa it's killed about 400 people in a cholera outbreak, because people can't afford the tapped-in water, so they go to the river. Around the world it's caused riots. We were in Cochabamba, Bolivia, in December, where there were riots and uprisings. The people took the city and kicked out Bechtel, which was delivering the water, because of the cost of the water.

I grew up in a little town outside Ottawa, a little rural community. Until 1986, when I moved out, the people across the street from me went to the town tap every morning for their water. What happens to those people in Canada? We're not just a middle-class society. We have all kinds of edges and regions to our society and distinct cultural groups who are not as advantaged as everyone else. Water pricing cannot be seen as a panacea and a magic bullet to solve conservation issues. What will happen to Dofasco and GM, who get their water right out of Lake Ontario and aren't on a metered municipal system, while people within that metered municipal system have to watch every litre they use?

Those are the issues. That's why the Council of Canadians is having an international civil society conference on water in Vancouver this July, with three-language simultaneous translation. I'd invite you all to come—early registration is by June 1, $50 for a three-day conference at UBC. These are the crushing issues on the crisis around the world. The World Bank and other very powerful organizations, and increasingly the UN, are adopting this “Just Price It” motto. That is the biggest threat to human rights we're facing right now.

On that note I'll close. Thank you very much for your time. I'm available for any questions.

The Chair: Thank you very much, Mr. Dunn. It was very helpful.

I take it Mr. Staples is here with you, so we'll go to Mr. Johnson.

Mr. Jon Johnson (Individual Presentation): Can I have a glass of water?

The Chair: Give Mr. Johnson maybe the last glass of free water he's going to get right now, and then we'll hear his testimony.

Mr. Jon Johnson: I don't think I'll drink it; I think I'll take it out and sell it.

The Chair: Take two and store up. But that might become bulk drinking, and you won't be allowed to do it.

Mr. Jon Johnson: Thank you, Mr. Chairman. My name is Jon Johnson. I'm a trade lawyer. I'll give you a bit of my background in trade law.

My first involvement with trade law was with the Trade Negotiation Office in 1987, when I was involved in the drafting and finalization of the Canada-U.S. Free Trade Agreement. I did some work for the office of the trilateral trade negotiations in connection with NAFTA in 1992-93 on rules of origin. The chairman used to get me lecturing on rules of origin at his classes, because he deemed them too boring and incomprehensible to deal with himself, which I think was very wise on his part.

• 0940

Subsequent to that time I've been involved in four WTO cases on behalf of private sector clients, but advising the government. I also have been involved in a number of chapter 11 cases. I've written several books on trade law. I don't purport to have any particular expertise on the subject of water. I've been involved sporadically in the water debate.

In my first involvement I participated in a symposium on water that was put on by the Rawson Academy of Aquatic Sciences in 1988, 11 days before the election, when the Conservatives were 11 points down in the polls. I found I was the only one there who was defending the government position on water, and it was a pretty terrifying experience. There were some papers that came out of that—I wrote several—which were a little on the overwrought side, both for and against. I did actually consolidate my views on this topic in a publication a number of years later, which I'll leave with you. The book has the somewhat scary title Continental Water Marketing. I wrote an article called “Canadian water and free trade”, in which I endeavoured to deal with, basically, how these trade agreements cover the subject of water, or don't cover the subject of water, which is probably more to the point. The article is a little stale-dated. It really doesn't deal with the WTO, because the WTO was not yet in effect. Anyway, I'll leave it with you.

As I said, I don't have any particular expertise on the water issue. I have a background in trade law, and I think what I can usefully do in the time remaining to me is briefly describe what I believe the trade agreements cover and, more significantly, what I don't think they cover.

Laura made this statement, Jamie disputed it, I agree with Laura: the trade agreements don't cover water in a natural state. There is nothing in the trade agreements, in the NAFTA or in the WTO agreements, that requires a member country to permit the exploitation of a resource. If a member country chooses to prohibit the exploitation of a particular resource, they are perfectly free to do that. That really is outside the scope of the WTO agreements and of NAFTA, in my view. The crossover point is when the natural resource becomes a product.

In the case of water, when does it become a product? I think in most cases that's pretty obvious. Bottled water is a product, water in bulk containers for shipment and sale is a product. There may be some grey areas. One that comes to mind is water running through a generator to create hydroelectric power. I would think water in that case is not a product. It's really that the owner of the water, say a province, is permitting the temporary use of the water, the motion of the water, to create energy. But the hydroelectric generator does not own the water, the water simply goes back into the drainage system. I think in that circumstance it would not be considered a product.

When Jamie made reference to the environmental approach not working, he said it in reference to Bill C-6. Given that Bill C-6 almost entirely deals with water in a natural state, the trade agreements, the NAFTA and the WTO, are not relevant. They do become relevant with respect to Bill C-6 to the extent that it contemplates exceptions, licences, and that sort of thing.

• 0945

Let's just talk briefly about what the WTO agreements and NAFTA do cover in respect to water.

Jamie made reference to an export ban. I gather that the Council of Canadians is advocating an export ban. The problem with an export ban, which I think you've probably heard a number of times, and which both Laura and Jamie have mentioned, is simply GATT article XI. It's been there since 1948, and GATT article XI prohibits import restrictions and export restrictions. Therefore, if water was a good and there was a ban on the exportation of water as a good, that would be caught by article XI, unless the prohibition could be fit within a number of exceptions that are set out in the GATT. Those are carried forward in the WTO because they are what is called GATT 1994, which is essentially the old GATT with a few modifications.

Laura mentioned the human, animal, plant life or health exception. That's one. She also mentioned the exception for conservation of exhaustible natural resources. There are a couple of others. Probably the only other relevant one is that there's one for critical shortages. These exceptions could apply to an export ban, but I think one would have difficulty applying them to a general export ban that wasn't related to a particular situation. The critical shortages exception is obviously, by its very nature, a temporary thing to deal with a current problem. It's not the sort of exception that could support a long-term policy.

In the human, animal, plant life, or health exception, first you'd have to have a linkage to an environmental situation, probably a specific one. Also, it is qualified by the word “necessary”, and necessary has been held in the GATT jurisprudence to mean the least trade restrictive. So if there was a less trade-restrictive way of dealing with the particular environmental problem intended to be covered by article XX(b), then the out-and-out ban could be problematic.

The exhaustible natural resources exception is certainly a possibility as well. The exception clearly covers items like water, and I say that because in the reformulated gasoline case the exception was held to cover clean air. So if it covers clean air, I think it would cover clean water or water. But again, one would have to make the linkage of the ban to that particular exception.

Jamie did mention that the environmental approach has never worked under the WTO. Again, first we're presupposing an environmental measure that affects a good, because if the environmental measure affects something that is not a good—that is, a natural unexploited resource—then the trade agreements are irrelevant.

I would take issue with the statement. First, there have been very few what you would call environmental cases or environmental measures tested in the WTO jurisprudence. The shrimp and turtle case involved a U.S. ban of shrimp products where the shrimp were caught in a manner that endangered sea turtles, which were an endangered species. Actually, the appellate body in that case found that the measures certainly fell within the exception for the conservation of exhaustible natural resources. The thing they took issue with was not the measure itself but the manner in which the U.S. was implementing it, because the U.S. was being somewhat arbitrary in deciding whether a particular country's shrimp-catching methods endangered turtles or did not endanger turtles.

The reformulated gasoline case dealt with clean air, and again the appellate body didn't take issue with the exception covering the particular measure in question. What they took issue with was that they found that the application of the measure was on the arbitrary side. So in both cases the situations were fixable.

• 0950

In the asbestos case, which recently was released, I don't know that I would call it an environmental measure, but it was certainly a health measure, and in there the appellate body made no bones about its position and certainly upheld the measure without any difficulty.

As far as NAFTA is concerned, on the good side, it doesn't do a whole lot more than what I've just described. What NAFTA does is incorporate a number of these provisions by reference. It incorporates article XI, which is the prohibition. It incorporates all the exceptions. So basically, if, say, the U.S. or Mexico had a claim against Canada under GATT article XI, or one of the exceptions applied, they could bring the claim under NAFTA through that sort of dispute resolution process and the same defences would apply. The single thing that NAFTA does is it modifies the use of several of the exceptions by imposing a proportionality requirement. The really relevant one is the exhaustible natural resources exception.

So if you were going to restrict exports because you want to conserve exhaustible natural resources—so you're going to prohibit the export of certain products, remembering that NAFTA applies to products and not to the resources themselves—then you have to cut back domestic shipments accordingly. The whole formula talks in terms of shipments. This is probably not highly relevant to water, certainly not at the present time, because of course the whole thing was directed at oil and natural gas in which you do have a concept of shipments and it does make sense. That was the thrust of it, really. They didn't have water on their minds, I'm pretty sure, when they drafted it.

Lastly, before I turn it over for questions, I'd like to make a couple of comments about NAFTA chapter 11.

The way NAFTA chapter 11 was intended to apply, and how I think it applies, although I suppose the jury's not completely out on that score, is.... You have several concepts here, and I'll only talk about two of them, the most important two, which are on national treatment. They involve the notion that you're supposed to treat, let's say, U.S. and Mexican investors and their investments in Canada no less favourably than you treat domestic investments. Essentially what that is supposed to mean is that we can have whatever policy we like as long as it doesn't discriminate on the basis of nationality. So you can have a restrictive policy as regards the exploitation of a resource like water, or a lenient one, and as long as it's even-handedly applied, then you shouldn't have a problem with national treatment.

As far as different rules applying in different parts of the country are concerned, and say one province permitting water exportation and another province not permitting it, that issue really came up in the Pope & Talbot case, where you had some provinces that were subject to export charges and other provinces, specifically the Atlantic provinces and also Manitoba and Saskatchewan, that were not. In that case, the investor argued that its B.C. investment should get the New Brunswick treatment because it was entitled to the best treatment in Canada.

The tribunal denied the claim. Essentially what they said is if there's a difference in treatment that's connected to a reasonable government policy, and there's no discrimination on the basis of nationality, then there's no claim. That may not be the last word on the subject, but again it seems to me that this accords with the way I believe at least the national treatment in chapter 11 was intended to apply.

Again, I think this would apply to a situation where you've decided that you've permitted some water exportation and then you've changed your mind about it because it's a bad idea so you aren't going to provide it any more. As long as your stopping to permit it is not with a view to putting some U.S. applicant out of business who is just about to apply to get his water permit, then you shouldn't have a problem with that under chapter 11.

• 0955

The other and last chapter 11 provision I'll mention is the expropriation provision. The jury is out on just exactly what this means, but I think it's uncontroversial that the U.S. investment or Mexican investment would have to have an interest, and the interest would have to be substantially interfered with or obliterated.

Metalclad is one example where you did have a holding of an expropriation under 1110. What happened in that case is essentially a waste management company was permitted by the federal government of Mexico to establish a waste treatment facility. They spent quite a bit of money on it, and then the municipality got second thoughts about it. The upshot was that after having spent the money, the investor wasn't able to use its investment.

In a water context, I think expropriation could certainly come up in a case where a government promised an enterprise it could extract so much water for ten years, at so much per year, and so on, and then reneged on the contract. But that's not a water issue; it's a contract issue, and that would give rise to a claim under 1110. If the investment were Canadian, it would also give rise to a claim against the government in question just as a matter of contract law, unless the government expressly denied compensation, which governments in Canada have rarely done.

I have one last comment on Sun Belt, and then I think I've spoken enough. On Sun Belt, yes, there's a case; yes, a claim was filed. I think the problem in litigation is that you can't stop somebody from filing a claim, but that doesn't mean the claim has any validity. Again, I think Sun Belt is more about contractual obligations generally than it is about water specifically. Water just happens to be the subject matter of the contract at issue.

I'll conclude my remarks with that and look forward to your questions.

The Chair: Thank you very much, Mr. Johnson. That's very helpful.

We have some very differing opinions on legal construction of trade agreements and others before us, so it's helpful to have this panel at this particular time.

Colleagues, we have just until 11 o'clock, so I'm going to hold everybody to their time. But before we do that, we have a quorum, and I want to seize the occasion to get your approval of the budget, which you have in front of you. It's for $38,000 for witnesses. It's a standard budget. It's not for travel; it's just for witnesses to complete these various studies, particularly this study and the caucus' study.

Mr. Keyes has moved this. Do I have any objections?

(Motion agreed to)

The Chair: Thank you very much, colleagues.

The second thing I have is to announce that Mr. Gennady Seleznev, the chairman of the Russia Duma, will be here the week of May 28. Some of you may know this. He's bringing a substantial delegation of Russian Duma colleagues with him. With your permission, I'd like to arrange for them to come before the committee on Monday, May 28, between 4:30 and 6 p.m. We could discuss our Russia-Canada relations with them, and hopefully there will be some social occasion where we can get together. Mr. Seleznev, as the chairman of the Duma, is probably the third most powerful person in Russia, so it's a very important delegation and he is an important person.

There are no problems with that? Good, thank you very much.

We'll go to questions.

Mr. Casson.

Mr. Rick Casson (Lethbridge, Canadian Alliance): Thanks, Mr. Chairman, and thank you, witnesses. I agree with your comment that we have a diverse group here with some very different opinions.

The thing we're dealing with here is Bill C-6, which is on international boundary water, and we're really getting into the whole water issue. I guess that's phase two of a government plan to address this whole issue.

But it's interesting to get the different opinions on different provinces, that one province can do something that, in some of your opinions, would not affect the other provinces, and the fact that the federal government has an obligation to work to protect our water and control it, but then it's under provincial jurisdiction.

• 1000

I guess I need an opinion from you all, because it will be different, but can indeed one province make a deal to export water that would not affect the national situation?

Laura, would you like to start with that?

Ms. Laura Ritchie Dawson: There are really two questions there. Can one province make a deal, and should one province make a deal?

To my understanding, we're only talking about boundary waters, so there are a great deal of restrictions, not only through Bill C-6 but existing precedents with the International Joint Commission, on what sort of deals can be done on boundary waters.

It's interesting for me to note in my research that while Canadians are vociferous and committed to protecting our water, especially in the Great Lakes basin, nobody is more adamant than the U.S. states around the Great Lakes regions. They are bound and determined that not one drop of Great Lakes water is going to get anywhere near the American southwest. I find that very interesting. So in terms of boundary waters, there are great constraints on one province making a deal.

In terms of water within territories, I don't know, I'll leave that to the legal experts here.

Should they make a deal? It seems to me very soon. I like Bill C-6, but I'm not sure how long the shelf life is going to be. Sooner or later we're going to get defectors. We had Newfoundland in the newspaper yesterday, and that looks like an ongoing issue.

The Chair: Mr. Dunn, would you proceed to comment, and then I'll go back to Mr. Johnson.

Mr. Jamie Dunn: Certainly.

The Chair: Mr. Casson, I don't think your question was necessarily restricted to the ambit of this bill and boundary waters. It more generally came out of Mr. Dunn's statement that if one province starts to do it, then this general accord may then kick in the standards that will apply throughout the country.

So Mr. Dunn, I wouldn't restrict you to just the Boundary Waters Treaty in answering the question.

Mr. Jamie Dunn: Thank you. What I'll say, as I mentioned earlier, is that there is a clear obligation within a province to provide best in-province treatment to a foreign company seeking water. There's also the reality that this Canada-wide accord may have established a common standard amongst the provinces that signed it, which would mean amongst the five provinces.

The easiest way to describe it is that the western provinces and Quebec didn't sign, so all the other provinces could be bound to a common standard, meaning that where one province exports water—and clearly that's allowed within the Canada-wide accord because they can export it anywhere along the eastern seaboard in the case of the Atlantic provinces, and remember, it's a crystal ball here, because none of this has actually been tested by a trade tribunal—that may establish an obligation on the other signatories to the accord to treat the companies in the same manner. So that's what I would say about that.

On the issue of whether one province turns on the taps, it's more likely if it was signatory to the Canada-wide accord. There are lawyers out there saying that because this is a federal document and the NAFTA is signed by the federal government, and 105 of the NAFTA obliges the federal government to make sure subnational governments comply with the terms of the NAFTA, provinces, right down to the municipalities—and we found out in the ruling on the Metalclad decision recently that even municipal zoning is subject to NAFTA. The federal government has a responsibility to ensure it's done in a way that complies with the trade agreement.

It's important to say, and I'm going to reiterate this probably several times today, that it's not just a good we're talking about.

Actually, my colleague here made a very good point to me one day. Your cell phone is a good. It's something you sell in the market. But it's useless without the service to operate it, and the service is chapter 12, the right to provide a service without performance requirements, the right to invest. And not just national treatment, because if it were a national treatment issue, then the company that Sun Belt was partnered with received approximately $300,000 in compensation for its water-taking permit being cancelled by the Province of British Columbia and went away happy. Under NAFTA, Sun Belt can sue for all future profits they could have ever made. That's the value of the expropriation under NAFTA. That's not equal treatment.

It's not just about equal treatment, and I will say this, that in future trade agreements—the GATT being negotiated now and the FTAA that's under negotiation—the proposal is to have categories of prohibited legislation regardless of whether they're non-discriminatory. It doesn't matter if you want to treat everyone the same; governments just can't do it. You're going to be hearing more and more about that as the GATT and FTAA negotiations unfold.

• 1005

It's important to put water in context, and it's important to say that water is very important for human health and the environment and that it's part of our national identity and culture; we have to retain the right to manage it.

I'll stop there because I think I've answered your question.

The Chair: Thank you.

Okay. Mr. Johnson, and then we'll have to move on to the next question.

Mr. Jon Johnson: To some extent I actually agree with Mr. Dunn.

A voice: Uh-oh.

Mr. Jon Johnson: I'm sorry.

As far as affecting the national situation in this respect is concerned, Mr. Dunn is right in that article 105 of NAFTA obliges the federal government to ensure that the provinces comply. What that essentially means is that if a provincial measure contravenes chapter 11, then the federal government is on the hook for it.

One delightful instance we're seeing now is the Loewen case in the United States, where the federal Government of the United States will be on the hook for the actions of the Mississippi courts. By the way, they're making a movie of that, but I don't think they're including the chapter 11 part. So to that extent I agree.

As for best-in-province treatment, I agree with that because that's what it says.

As for, say, one province having one set of rules and another province having another set of rules, the whole issue boils down to a phrase in the national treatment provision, “in like circumstances”. You're supposed to treat U.S. investors or their investments no less favourably than domestic ones in like circumstances.

Take, for example, a situation where someone in Newfoundland is permitted to extract water and someone in Ontario isn't. The question is whether those investments are in like circumstances. Jamie is right that we are to a large extent crystal-ball gazing, but the crystal ball.... There was a bit of light shed on it with the Pope case, where, as I said, you had a federal law that imposed export charges on softwood from some provinces but not on softwood from other provinces. The issue was whether the U.S. investment in one of the provinces that was subject to these charges entitled the investor to best treatment, i.e., treatment such as that in New Brunswick or Nova Scotia, where, if he'd been there, he wouldn't have been subject to such charges. The tribunal decided no, and if there's a precedent for differential treatment, that's the one that does exist.

I don't think I've disagreed with you very much there.

I'll just make a statement about the right to provide services. NAFTA does have a services provision. It relates to cross-border provision of services, basically. There are some wrinkles to that, but essentially it's a straight national treatment obligation. If you're going to permit the service to be provided, then you can't say that Canadians are permitted to provide the service but U.S. citizens aren't. However, if you've restricted the service, then everybody is subject to the same restriction. That's fine.

I think I've more than answered your question. I don't know if I've refuted everything I wanted to on what you said, but I had to have refuted something because we can't agree on everything.

[Translation]

The Chair: Go ahead, Ms. Lalonde.

Ms. Francine Lalonde (Mercier, BQ): Good morning. Thank you for your illuminating remarks.

The more I listen, the more it seems to me that Bill C-6 is an indirect way for the federal government to bring in a measure that it cannot apply directly, that is a ban on exports. According to Ms. Dawson, all the government can do is impose indirect trade restrictions.

• 1010

The Boundary Waters Treaty of 1909 is the only true measure of protection against large-scale water exports. The treaty prohibits use which would have adverse effects on either side of the border. It is the only treaty governed by the International Joint Commission.

Therefore, we already have everything we need to protect ourselves. Bill C-6 is an awkward attempt to prevent water exports which might subsequently have an adverse effect on all of Canada's waters.

Bill C-6 is, in my view, a weak initiative, all the more so given that everyone is preoccupied at the moment with the Newfoundland government's plans. All provincial and federal government representatives can do is to try and convince the Premier of Newfoundland.

As I see it, Bill C-6 serves no purpose because it does not strengthen Canada's position, which is already protected by the treaty and the International Joint Commission. Moreover, I'd like someone to explain to me why the IJC believes that when it comes to exports, coordinated, rapid and effective action is required at the State and provincial levels, whereas Bill C-6 has nothing to do with this whatsoever.

I would appreciate your sharing your views on the subject with us, because the whole issue of the impact of trade agreements is a very timely one. Bill C-6 does not appear to provide any kind of effective protection.

[English]

The Chair: Who wants to start?

Ms. Laura Ritchie Dawson: I have to agree with what you said in a number of areas. The 1909 treaty and the IJC process are very effective for what they do. The process, the binational reference panel, is a great way to go.

Where we have the difficulty is that they're like the Supreme Court. They only take reference cases. They don't make proactive policies, and they only respond. They're an extremely conservative organization, and by nature of that conservatism...I think that's been one of the keys to their success. We only get strong international cooperation when we require a very minimal amount of progress.

What is Bill C-6 good for? For me the strongest thing is that it's a focusing point; it's a rallying point for Canadians. It's creating an opportunity to think about the issue and perhaps to create some new structures. Can we create an interterritorial organization that goes some of the way to being as effective as the International Joint Commission has been? As a policy I see it as a band-aid, but as a policy process I think it has some importance and some validity.

The Chair: Does anybody else want to comment?

Mr. Jon Johnson: There's only one aspect of what you said I want to comment on. I don't have any particular views on the treaty itself or on Bill C-6's relationship to it, but the one comment you did make that I don't agree with is that Bill C-6 is simply an indirect way of prohibiting exports. I don't think it's that at all to the extent that it is really directed at the exploitation of the resource in the first place.

• 1015

Now, just as an analogy, the Quebec government permits the cutting of trees and their processing into lumber; it permits the cutting of trees in some places and not in other places. It sets aside various areas because it wants to have parks, it wants to keep these as green spaces, or whatever. The B.C. government and the Ontario government do the same thing. The decision to let the lumber companies cut not track A, track B, or track C but only track D is really analogous to what Bill C-6 does. In other words, Bill C-6 is directed at the exploitation of the resource in the first place. I think you can make the analogy between those two situations.

The Chair: Mr. Dunn.

Mr. Jamie Dunn: I'd like to start off by saying that I certainly agree that it is actually a scheme to, by other means, prevent bulk water exports because that's what was said by the ministers over and over again as they presented it. I think that's probably the whole strategy's greatest weakness. As Mr. Johnson was saying, when you get in front of a trade tribunal, they may say, well, your intentions are fine, but what are you actually up to? It's all about disguised barriers to trade, and as he rightfully pointed out, to ban the export of something is a violation of GATT article XI. I will say, however, that the GATT does allow you to prohibit exports by tariffs and taxes and does not take those capacities away. It's really NAFTA that ties our hands in preventing exports.

I will say that in terms of the jurisdictional issue you bring up, it's a very good point. What we've seen in the international arena is that there is this idea of integrated water resource management, which is supposed to be regional in its application. This is why the Council of Canadians started this thing called the Blue Planet Project, because increasingly the issues of water are driven by international forces. Certainly it makes sense to have the users in the region, in the watershed, make decisions about their water.

But what's happening—and article 105 of NAFTA is an excellent example—is that national governments are signing trade agreements that extend the standards of those trade agreements onto whatever jurisdiction is trying to make decisions about its water.

Our position has always been that if the trade agreement is about water, it's a bad trade agreement. It's not that trade is bad. Water should not just be carved up. South Africa wrestled with this when it had its new constitution and put water in as a human right. How do we do that and recognize the fact it's used commercially? So they divide it up in their constitution. Water is a human right, it's essential to the environment, and oh, it's a commercial thing too, so we'll treat the things completely differently. Yet we have a trade agreement that says, water is this, bang!

I do actually disagree with Mr. Johnson on the issue of whether it's just about access because the Boundary Waters Treaty is about access. It's about how you can access the water, mostly for commercial uses. Look at the region around the Great Lakes. It's an industrial heartland of both countries. So this is really about water as a good. It's really about getting access to the service of water, and it's really about making investments that use water.

I'll just briefly mention the Tay River. Some people say the company put half a billion dollars in the factory, and the last thing they asked for was the water permit. It is likely that if that water permit is denied, it can sue for its investment back even though it had no contractual allowance linked to that investment to permit them to get the water as part of it.

I'll just stop there. I think that it's very weak and that it opens the door to trade problems because it is a disguised measure to stop exports.

[Translation]

The Chair: You have thirty seconds.

Ms. Francine Lalonde: The main weakness is that the federal government's ability is restricted. In order for this to be an environmental initiative, account would have to be taken of the overall water problem, including ground water. This legislation applies only to surface water. I'll come back to this point during the second round of questions.

The Chair: If I understand correctly, you're in favour of broadening the federal government's jurisdiction.

Ms. Francine Lalonde: You are indeed a quick study, Mr. Chairman.

The Chair: That's why we are here.

[English]

We'll go to Mr. Paradis, and then we'll go back around another time. Obviously there will be time. We do have to get out at 11, so I'm going to keep everybody to ten minutes.

• 1020

[Translation]

Mr. Denis Paradis (Brome—Missisquoi, Lib.): Thank you, Mr. Chairman. I'd also like to thank our witnesses for their presentations.

I wish to comment primarily on the presentation made by Mr. Dunn from the Council of Canadians. First of all, let me just say that when it comes to conserving and protecting our water, I think we're all on the same wavelength.

I'd also like to point out that we received a text in French and no English equivalent. I'd like to quote from this summary given to us by the Council of Canadians,

[English]

“Is exporting water the right thing to do? No.”

[Translation]

This summarizes the position that our water must be protected. The following is also noted:

[English]

“Our water is not for sale.”

[Translation]

Furthermore, Maud Barlow has this to say on the subject:

[English]

“Trading water is environmentally, economically, and morally wrong.”

[Translation]

Some general principles have been stated. Let's review now some of the specific provisions in Bill C-6, as perceived by the Council of Canadians.

Returning for a moment to the French summary, we read that Bill C-6 includes a system of water export licences. That's false. In fact, the opposite is true. It does not provide for a licence system. If you read Bill C-6 carefully, you will see that it contains no provisions for a water export licence system.

However, the proposed legislation does provide for a system of licences for water-related projects such as dam construction involving Canada and the United States. The system previously in place will now be governed by a licensing system. Nowhere in Bill C-6 is provision made for granting licences or permits to export water.

I'm responding to the first point raised. I've just been handed a copy of the summary in English.

[English]

“Creates a permit system to allow water export.”

[Translation]

That's false. No provision is made for this in Bill C-6.

The next claim is that Bill C-6 infringes on provincial jurisdiction. That too is a false or inaccurate statement. As mentioned during an earlier discussion, jurisdictions are complementary. There must be agreement between the federal government, which maintains its own jurisdiction, and the provincial governments, which also have their respective jurisdictions to oversee. Bill C-6 makes provision for this complementary relationship.

The Council of Canadians further contends that Bill C-6 applies only to boundary waters. That is true, because that is the scope of the federal government's jurisdiction. Bill C-6 is based on the concept of water basins. It prohibits the removal of massive amounts of water from these basins. There is no mention of exporting water. The bill's provisions prohibit the removal of massive amounts of water from basins.

Since Bill C-6 is national in scope, it neither amends nor affects the Boundary Water Treaty or any other international treaty. This fact may not be relevant to our debate.

Lastly, the Council of Canadians maintains that NAFTA, and soon the FTAA, will have precedence over the Boundary Waters Treaty. Bill C-6 in no way alters Canada's international obligations as far as its waters are concerned. This statement is inaccurate.

Mr. Chairman, it's important to understand that exports are not the issue here. The purpose of the legislation is to defend the principle whereby large amounts of water cannot be removed from Canadian water basins. For the sake of clarity, let's substitute the word “trees” for “water”. Currently, British Columbia exports trees. Does this mean that Newfoundland must also log and export trees? Absolutely not. These are natural resources which belong to the province. That's why this debate must be placed in its proper context. The bill clearly states that water in its natural state is neither a good nor a commodity, but rather an environmental resource. The aim is to stop water from being viewed as a business commodity and to conserve this natural resource for Canadians' benefit.

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My question concerns the legal opinion that was drafted and which can be found in the file of West Coast Environmental Law: A Legal Opinion Concerning Water Export Controls and Canadian Obligations Under NAFTA and the WO.

First of all, this purports to be a summary of the comprehensive legal opinion drafted for the Council of Canadians. Would the Council of Canadians be willing to provide us with the legal opinion it received regarding this matter? Mention is made of a five- or six-page summary of a legal opinion you received.

Secondly, Mr. Dunn, the following is noted in the third paragraph:

[English]

For instance under both US and international law, water in its natural state is considered a commercial good.

[Translation]

Could you explain this further to me?

The next paragraph goes on to state this:

[English]

Furthermore, by focusing attention on water as a tradable commodity, the federal government is ignoring the fact that under NAFTA, water is both an investment and service even if it is not considered to be a “good”.

[Translation]

That's what you said in the second paragraph, whereas in the first, you state that under international and US law, it is considered a commodity. I'd appreciate Mr. Dunn's comments on the subject. First of all, can he give us a legal opinion and secondly, can he comment on these two points?

[English]

The Chair: I understood Mr. Dunn to say in his original testimony that the full opinion is available on your website. Is that correct?

Mr. Jamie Dunn: I'd be happy to provide all the members of the committee with a full opinion.

The Chair: Yes, we'd appreciate that, thank you.

Mr. Jamie Dunn: It's available on our website. For purposes such as these we've been distributing the 14-page version as opposed to the 29-page version.

But that's fine. It's publicly available. It has been for two years. We'd be happy to get if for you. Thank you for asking.

The second question I believe was about it being a commercial good under U.S. law. Absolutely. The Great Lakes governors produced a legal opinion on this issue in the spring of 1999, which is available through the Great Lakes Protection Fund.

James Lockhead, who is the key negotiator for the State of Colorado on interstate water issues, was the American member of the team who made that up. Actually, he was the lead of the team who made that up. He cites several constitutional cases where water is always considered a commercial good, specifically to the restriction of water going across boundaries.

This is important, because when Canada in 1993 came out with its declaration that water in its natural state was not a good, Mickey Kantor, who was the head of the trade representative office at the time, made a statement that, first of all, the Canadian statement did nothing to change NAFTA, and, secondly, as soon as water was a commercial good it would be considered fully under NAFTA.

In terms of diplomatic language, and knowing in hindsight the legal reality of the American situation, it can be reasonably said that Mr. Kantor's intent was that in the American view water is always a commercial good.

So issues as to whether it's in or out of its natural state, from an American standpoint, and it's they who would be bringing complaints against us and who are at the table negotiating with us, it's a moot point, because under their law it is always a commercial good. In NAFTA there is no—and I would say this very strongly—explicit recognition of a difference between natural state and commercial.

The other issue you brought up is that you seem to think there's a contradiction in our legal opinion. As I've said several times, what we're straining to do is identify that there are different obligations under NAFTA. There are obligations for goods, which is water, there are obligations to provide water as a service, and there are obligations to be able to invest in water.

• 1030

I'll give you an example of one of the things you'll read in the full legal opinion—I'm not sure if it's in the abridged. There is a question.... Remember, the lawyer we hired to do this went out of his way to say he was being conservative in his responses because it is untested and everyone is crystal-balling, as my friend admitted earlier, and so we rely on like cases. But what he said is, because the City of Ottawa is providing the people of Ottawa with the service of drinking water, if that were to be privatized, a company could come to Ottawa and expect to access water out of the Ottawa River to provide the service of drinking water to an American city, and therefore get exports through the service provisions of NAFTA.

That's what people who are worried about the provisions of NAFTA, or trying to see what the real obligations are, are straining to understand. So that's why it's not a contradiction; it's an explanation of how the different obligations work separately.

Finally—

[Translation]

Mr. Denis Paradis: If I may digress for a moment, Mr. Dunn, I said that Bill C-6 did not institute, as you claimed, a system of water export licences. From the moment you contend that it does put in place such a system, you apply this argument to your position on NAFTA and so forth. You refer to exports, while Bill C-6 makes no provision for issuing licenses for water exports. Would you care to comment?

[English]

Mr. Jamie Dunn: I believe one of the terms in the clause you spoke of also refers to “diversions”.

A diversion is one of the ways, if you look at the Grand Canal project, which many environmentalists feel is still very much in the works.... A member, Dennis Mills, issued a pamphlet—I think it was in 1991 or 1992—saying we should look at the Grand Canal project as, again, a situation where a licence could be issued under this law.

I would like to follow up on one of the other issues you brought up, and that is the issue of trees. Why can we protect our trees but we can't protect our water? I've heard this many times before, with respect to trees and fish primarily. In the period between 1994, when NAFTA came into effect, and 1996, we had an opportunity to exempt certain areas of the economy. Fish and lumber were exempted from NAFTA. There was no capacity for the American government, or the Mexican government for that sake, to come at us about the way we manage lumber and fish within the terms of the exemption. However, that exemption is being phased out, because there's also an obligation to phase out exemptions. So we don't know what's going to happen to our lumber and fish with the full operation of NAFTA.

I think that has to be made more clear because people rightly are saying, look at our lumber and fish, NAFTA hasn't affected that, but we have to understand it's not under the full operation of NAFTA.

[Translation]

Mr. Denis Paradis: I'd like to clarify something, Mr. Chairman.

[English]

The Chair: You're way over the time, 13 minutes. A little bit of the problem was that the introductory part of the question tended to absorb a lot of the question time. You may get another chance.

Mr. Casson.

Mr. Rick Casson: Thank you, Mr. Chairman.

To follow up on this line of thought, I'd like Mr. Johnson to maybe comment on some of the comments that were just expressed by Mr. Dunn.

Mr. Jon Johnson: Yes, I'll comment a bit. I haven't read the opinion, but I can guess what it says.

It's amusing to hear the words “diplomatic language” used in reference to Mr. Kantor. It's not consistent with my recollection of him.

As far as opinions about water in a natural state being a commercial good are concerned, what U.S. law may or may not say is probably irrelevant. I think the critical word is the word “product”.

NAFTA defines a good as being a domestic product as understood under the GATT, and the GATT doesn't define what a “product” is; it just uses the plain word. Under the established rules of treaty interpretation, you start out with the ordinary meaning of words, and a product is something that is produced.

I don't see how one can seriously jump from there to saying that water in a natural state, or anything in a natural state, is a product. The simple answer is therefore that those provisions of NAFTA relating to goods simply don't apply to things that aren't products.

• 1035

I don't know what was said about water as a service. Water is not a service; water is water. The provision of water by a municipality to its people, say, may be a service, or by a municipality to industry for whatever purpose—that's a service.

It seems to me that if you privatized that service, and its provision was limited to a particular area or type of enterprise, the only relevance of NAFTA's service provisions would be that you couldn't discriminate on the basis of the nationality of the service provider. It wouldn't have any other relevance whatsoever.

That's really an investment question rather than a services question. But it's the same sort of idea, so I don't agree with it.

In an earlier comment, Mr. Dunn referred to the prohibition of export charges under NAFTA as giving up one exception under article XI. That's true, NAFTA does prohibit export charges. But that was never a widely used tool in Canada. Very rarely have we imposed export charges. We've banned the exports of hundreds of products over the years. The Export and Import Permits Act bans the export of a whole host of products.

But we've always used that tool; we've never used the export charge to create an export ban. We've usually used it, though very rarely, to maintain things like the integrity of two-price systems—one instance, of course, being the two-price system we had for oil in the 1970s. Then there were other anomalous cases, like the softwood lumber export charge levied as a result of the settlement of a countervailing duty case in the eighties.

The only other instance, years and years ago, was an old charge on electricity exports, imposed either by the feds or by Ontario, I think. It was ancient, and we gave up something we never used. But that's a digression.

The Chair: Thank you very much. I think that now the period for questions is over, I'm going to keep everybody to a shorter time.

I'll go to Madam Marleau. We might get another chance back then. Then I'll go to Madam Lalonde.

Madam Marleau.

Ms. Diane Marleau (Sudbury, Lib.): I'm very concerned by some of the comments some people here are making. I wonder—and I'm directing this to Mr. Dunn—why we should believe all the things you say, because I think there's sometimes a lot of exaggeration.

An example: on your fact sheet, “Number One Trade”, when you talk about the ban on MMT, your conclusion there is that the Government of Canada decided the gasoline additive MMT was harmful to Canadians.

The ban on MMT was not based on any data saying it was harmful to health. That's not what the MMT ban was based on, so that's false. I'd suggest you start by correcting some of your papers, if you want us to really believe some of the things you're telling us.

What I want to ask the panel is this. We know this piece of legislation deals with trans-boundary waters. So how could we make this particular legislation better? Are there some amendments we should consider? That's my question, whether you have any suggestions. Within the limits imposed, we're trying to make this the best piece of legislation we possibly can.

The Vice-Chair (Ms. Colleen Beaumier (Brampton West—Mississauga, Lib.)): Do you want to start, or do you want to have the final rebuttal this time?

Mr. Jamie Dunn: In the case of MMT, I respectfully disagree. Our evidence, which I think was part of the public record at the time, is that there was concern about low-level manganese and its effect on peoples' health.

Ms. Diane Marleau: Sir, I was the Minister of Health at the time. I was unable to give the trade people the answer they wanted, so I know that was not a factual reason for the ban of MMT.

Mr. Jamie Dunn: Yes, that's actually why we lost it. I would respectfully suggest that was part of the public record on the issue.

Ms. Diane Marleau: That's not the reason it was banned.

• 1040

Mr. Jamie Dunn: In terms of exaggeration, I would simply say that we have attempted to balance our popular material, which all organizations and the government put out, with the only publicly available legal opinion in Canada.

We don't have the resources the Government of Canada has. We don't have the resources of BCNI, or the resources of the many organizations that support the positions of both the government—which we respectfully disagree with—and also the proponents of bulk water exports. Some of those are enormous corporations—one I could name would be Enron Corporation.

We've been the only people to put out a publicly available legal opinion on this issue. Of course, legal opinions are what they are: a debate amongst lawyers. But we have made a legitimate attempt to inform our members, and also to back up what we say with academic, justifiable, and defendable work.

As to what can be saved, I'm in favour of the Boundary Waters Treaty Act having full effect. I'm in favour of the IJC; it has a very good reputation. I had little to do with that group before I got involved with this, but all the people we work with—including the Canadian Environmental Law Association and Great Lakes United—said the IJC has an excellent reputation for being quite courageous in bringing science to political issues. It was not described to me as a conservative organization.

Ms. Diane Marleau: Are you saying this bill is good?

Mr. Jamie Dunn: I'm saying that if we were only dealing with the International Boundary Waters Treaty Act, this would be an excellent way to proceed. But we're not simply dealing with that act; we're dealing with obligations the federal government has entered into—and they affect whether or not this is an effective way to go ahead on the issue. That's what we're trying to say: ban bulk water exports so we don't encourage any more obligations and exposure to the kinds of suits we're seeing.

Thank you.

The Vice-Chair (Ms. Colleen Beaumier): Ms. Dawson, would you like to make a comment?

Ms. Laura Ritchie Dawson: Just very briefly, I know I said it's a band-aid bill, but at the same time I think it's the best you could have done under the circumstances.

I'm sure you had better legal minds than mine advising you on your policy options. But I don't see that you can go any further at this point, legislatively. I see, though, that you do have a great opportunity for institution-building and capacity-building within Canada as a whole.

Some recommendations I could make would include somehow developing a workable inventory of Canadian fresh water resources, both of ground water and in bodies of water, and to look at various uses for water. I'm not sure that fresh water running off a cliff into the ocean and becoming immediately salinated.... Maybe there is a reclamation use for it, or a commercial use. Maybe that water should be treated differently. We hope we can develop the institutional capacity to make those choices and assessments.

I'd like to see a better mechanism for federal-provincial cooperation. I'm extremely heartened by the fact that the Minister of Foreign Affairs and International Trade has centralized authority over this issue. That's not always a good idea on all issues, but in this case I think we're looking at a crisis, and taking the bull by the horns is a very good idea.

Finally, my recommendations would include strong stewardship, pollution prevention policies, and ways for us to integrate our approach to water at all levels: supply, demand, sewage treatment, drinking water. That can only be a good thing. And then maybe there'll be room for more legislation.

The Chair: Can you respond very briefly? We're nearly over.

Mr. Jon Johnson: Yes, I'll just comment briefly.

I advised the federal government on MMT, and my recollection is entirely consistent with yours. Also we didn't lose it; we settled. There is a difference.

The Chair: Madame Lalonde.

[Translation]

Ms. Francine Lalonde: Thank you.

Mr. Johnson, you've presented Bill C-6 as a water management initiative, whereas in reality, all the draft legislation says is that water use requires a licence. It also prohibits removal of water from water basins. It seems rather obvious to me that to address environmental concerns, more comprehensive environmental safeguards are needed.

• 1045

I'd like to focus on two points which were underscored by this morning's witnesses. Ms. Dawson stressed the need to eliminate overlap. Bill C-6 provides no such guarantees. Mr. Dunn raised a question that I will put to you again at this time: What becomes of Ontario's power to issue licences? As I see it, Ontario does not forfeit this right. However, the federal government will need to hire technicians and put in place the infrastructure to issue licences, while Ontario will also issue licences, in keeping with its own management plan. Again, I don't see what benefit the bill will bring in terms of water management. I've used Ontario as an example, Mr. Chairman, but I could just as easily have used Quebec.

Ms. Dawson also stated that it was important to restore the government's ability to intervene, given that it had lost its technical capabilities. I believe the provinces still have this technical capability. What purpose does it serve to acquire this capability at the federal level and what will this entail in terms of cost? Is there some benefit to pursuing this objective instead of trying to work with the provinces which have a vision and general policies in place respecting water, like the one being developed in Quebec?

I have many questions on the subject. If the federal government decides to issue licences, what will this cost in terms of new officials, new skills and funding? We're talking about licences.

[English]

The Chair: First Mr. Johnson, and then Madam Dawson.

Mr. Jon Johnson: I'll just comment on the very first part of your question. I wasn't really commenting on the merits of this as a water management tool. I was addressing your earlier comment that this is not a disguised export restriction. It would not be treated, in my view, as a disguised export restriction by a WTO panel or by a NAFTA panel. There is no WTO case, to my knowledge—I haven't read every single WTO case, but I've read a lot of them—that is even remotely close to dealing with measures such as this.

As far as the second part of your question goes, I'll defer to my colleagues.

Ms. Laura Ritchie Dawson: I'm not sure what would be required for new licensing procedures, what level of bureaucracy. As to the technical capacity, I think there are enough challenges to go around. I think the federal government and the provincial government would both have their plates full in regard to the research and assessment capacity that's required.

My concern comes if we do embark on a major project, for example, the Grand Canal project. I've spoken to people in the ministry who say they simply don't have the technical capacity to do an appropriate environmental impact assessment of that project. If we don't have that at the federal level, can we somehow put that together through a coordinated, coherent effort among provincial officials?

The Chair: Before I go back to Monsieur Paradis, who has another question, let me just ask one.

Mr. Dunn, you're the one here who's opposed to the bill, if I can put it that way, although I understand your philosophy is not to oppose the management of the water. The problem is whether this bill is the right technique for the purpose, and that's what we're trying to understand too.

• 1050

Do you fundamentally object to the idea that the federal government should be doing its best to deal with the issue within its jurisdiction—in this case we clearly do have jurisdiction over transboundary waters, dating back to the treaty and for other reasons—and then working on the political level to make sure the provinces do their part?

I have a problem with your statement that this encroaches on provincial jurisdiction. If I understand the philosophy of what you're proposing, it would totally destroy provincial jurisdiction, and we all know they own the water. You say, well, just don't let them do what they want to do with their water. So you go from objecting to this bill for a minor encroachment, which we understand replaces a permit with what used to be a letter of permission—so it's a matter of tinkering with the thing, according to what we were told the other day—to your philosophy of no, it's not their water, and we're not going to let them do what they want with it. You don't have any trouble with that, but you have trouble with a minor empiétement, if I can call it that, on the jurisdiction. I have a little bit of trouble with that contradiction.

The philosophy of what we've been told is that this bill is only a piece of a puzzle, but it's a big puzzle. It involves provincial jurisdiction, international law, and water basin management. You seem to know a lot about that. When I used to teach international law, we used to look a lot at this, such as the Mekong Delta. There are huge issues on the international management of water. This all has to fit in. This is just one small part of it.

Do you really object to the government going at it at least in the areas we can and and then focusing on the other parts later? That's where I have a problem with your position from a philosophical point of view.

Mr. Jamie Dunn: I'll answer it very briefly, because it's a straightforward answer. The reason we have a problem with Bill C-6 and the reason I brought up the jurisdictional issue is the following. The federal government says its hands are tied because of provincial jurisdiction. Then how can it issue licences, such as in the Nova Group situation, for something that was issued and repealed by the Province of Ontario? For me, that's saying that on the one hand we have a problem with provincial jurisdiction that ties our hands and on the other they're encroaching on it.

What I asked when I put this forward was, is it about picking and choosing what provincial jurisdictions you have a problem with? The Council of Canadians' position is that the federal government has jurisdiction over exports and imports. It has jurisdiction over trade. That's what gets signed, a trade agreement.

We're asking for a ban on water exports. That's a trade issue, so we think the federal government has complete jurisdiction to ban water leaving the country. What the provinces do with the water within their jurisdiction is up to the provinces. But we're saying ban bulk water exports. We signed these trade agreements that have clear obligations and potentially huge financial compensation as the worldwide price of water goes up. We don't want to see Canadians faced with any more liability.

We hear from people, including the provinces: We don't care if the federal government is going to be hit with a $10.5 billion U.S. lawsuit. It's not our problem. It is the people of Canada's problem. They may be Ontarians, but they're also Canadians, and they fund both governments.

So it's not a contradiction for us. It's simply saying that if you're going to look at provincial jurisdiction and seemingly abrogate it or change the grey area a little, then why not act definitively within the role you have to play? Yes, it does contradict the trade agreements, but we don't think it should have in the first place. It's your role and act in that capacity.

The Chair: The other point you mentioned was this Canada-wide accord, which has not been focused on very much by the committee. It's largely because, as you know, Bill C-6 restricts itself to transboundary waters. Of course, a lot of the discussion we're having around the bill is really not about the bill. It's about what Newfoundland intends to do with its water, which has nothing to do with transboundary waters. So we're constantly referring to other problems to try to define and understand the nature of this bill. It is a confusing and difficult issue for the committee and perhaps for the public to understand, unless they understand, as I said, that this is a piece of the puzzle and not the whole puzzle.

Just going back to the overall situation, we were told basically that water is a provincial good and it can sell it in some circumstances. The tree analogy is used. As long as it doesn't do it in a way that's discriminatory, it can sell some water and not other water, just as in U.S. constitutional law it's clear that the states that own resources can sell some and not others. Even under the trade-and-commerce clause, states are free to deal with their resources. Every system has that.

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So why do you feel that if the Province of Newfoundland, for example, were to say, we're going to give one permit for one lake, suddenly the whole of Canada would be up for grabs? It seems to be drawing such a long bow that's it's difficult for us to understand,

Mr. Jamie Dunn: We're learning more about how trade agreements are applied as the decisions come down, and we're getting used to this new environment called international trade under these agreements and under this ideology and economic theory that's driving them.

I'll bring you back to the Tay River, which is located just outside of Ottawa. Every Canadian company that wanted to take water out of the Tay River would have to go through the whole environmental assessment process, on which it would be judged, and they could learn from their mistakes in the Tay River process and apply them to the new permit. But a foreign company could walk in and say, that's the standard because that's what has been established as to how water permits are issued in Ontario. Our legal advice tells us that is a winnable position.

The other issue I want—

The Chair: Is that based on the gasoline case that Mr. Johnson referred to, and things like that?

Mr. Jamie Dunn: No, it's based on national treatment. An American company can come into Canada now and say, OMYA AG was given $1.6 billion litres of water without environmental information, and that's exactly how we want our permit issued. That's the treatment. You can't treat OMYA AG one way and us a different way.

The Chair: My understanding of the law would be that if in fact the American corporation applied for a licence and had it, then you could get into your expropriation issue on the basis that it was changed.

But until somebody has actually applied, we can change legislation. Legislation changes all the time, and one could update one's regulations. We do so, and all civilized societies do that. Everybody recognizes that's the nature of what's happening. It's when you try to take away a droit acquis, as they say, that you run into trouble with the law and the international agreements. Isn't that the case?

Mr. Jamie Dunn: I should state up front that I'm not a lawyer, and what I have learned has come from the decisions that have come down and from our lawyers who advise us, in particular Steven Shrybman, but also Barry Appleton has been very successful in actually stretching out or breaking new ground on how chapter 11 applies.

I'd simply put forward that when the Metalclad decision came down late last summer, the Government of Canada was quoted as saying, that's not what we intended chapter 11 to be. In a recent decision by a judge, the three countries said, that's not what we intended. The judge said, that doesn't matter; this is how I'm applying it. This is what the contract says. NAFTA is a contract that stands on its own.

So we have a bit of a runaway train. We thought all these nice civilized rules would apply, but everyone is getting blindsided by how the decisions are actually coming down.

I just throw that out as one of the reasons. We say up front in the opinion that based on the decisions that are made and the way this is going, this is how we read it.

Ms. Diane Marleau: Mr. Chairman, I'd like to hear from Mr. Johnson on that.

The Chair: Maybe we could hear from Mr. Johnson.

We have one minute left. Then we're going to have to get out of the room.

Did you want to make a point, or did you—

[Translation]

An hon. member: It's important, Mr. Chairman.

[English]

The Chair: Mr. Johnson, perhaps you could speak to that issue for about 30 seconds. Then we'll wrap it up because the other committee is waiting.

Mr. Jon Johnson: First, I don't agree that national treatment prohibits changes and that once a standard is set it's always set. In the Pope & Talbot case the federal government changed the rules by imposing these export charges—

The Chair: The Americans are—

Mr. Jon Johnson: —and under national treatment they got nothing.

In one of the offensive aspects of the Metalclad decision, the interpretation of article 1105, the tribunal came out with a mythical principle of transparency, which the B.C. judge quite rightly held didn't exist.

With regard to the references about the judge, I think what Mr. Dunn was referring to was that in the Pope & Talbot case the parties said, we meant this by this, and the tribunal ignored that. It also ignored the wording of the provision itself.

These decisions stand on their own. They don't have precedential value.

Again, the thing I most strongly disagree with is that we can't change the rules. The only time we can't change the rules is if we change them with the express purpose of discriminating against a U.S. investor.

The Chair: Or taking away an asset somebody already had.

Mr. Jon Johnson: Yes.

The Chair: Thank you very much.

• 1100

[Translation]

Mr. Denis Paradis: Mr. Chairman, I'd like to come back to the subject of the licensing system for water exports. That was the first point brought up by Mr. Dunn. I think there is a general consensus on the need to conserve our water. We agree on the broad principles.

Earlier, I put a question to Mr. Dunn concerning the water export licensing system and he gave the example of water diversion. I think if we managed to agree today on the contents of Bill C-6, that would be a major step forward. The following is stated in section 13 respecting prohibition:

13. (1) Despite section 11, no person shall use or divert boundary waters...

Therefore, the general criteria appears to be that no person can use or divert boundary waters from basins, despite section 11 where mention is made of licences. This means that despite the licensing regime, which allows for certain types of construction, the general prohibition applies. Of course, there are certain exceptions, such as water from ships' ballast and humanitarian reasons. I wanted to emphasize the fact that the general prohibition is clear and comprehensive, and that no licence of any kind can be issued which would allow water to be taken outside the water basin. I want us all to be very clear on this point, namely that no licence of any kind can be issued.

[English]

The Chair: Be very quick, because we're running over the time. We're keeping another committee.

Mr. Jamie Dunn: It usually comes down to what a water basin is, and if it has any correlation to the drainage basin in the accord, you could move it to Miami and it would be okay. That's the issue around—

Mr. Denis Paradis: There's no licence provided there. You cannot take away the water by licence.

Mr. Jamie Dunn: It works within the scope of the drainage basin or water basin, whatever that means, which could be all the way to Miami under the accord's definition.

The Chair: Maybe, but we're told the regulations will focus on that. We'll ask that question of the government officials this afternoon. That could be an important point.

Thank you very much. Thanks for coming. It was a very interesting discussion and it's very good to air these views. We appreciate everybody's concern over this very important issue, both for the public and ourselves.

Thank you.

We're adjourned until this afternoon.