[asia-apec 1544] NAFTA ruling raises environmental questions

[BAYAN]

NAFTA RULING RAISES ENVIRONMENTAL QUESTIONS
(Mexico ordered to pay California-based Metalclad $16.7-million after
municipality blocks plans for a hazardous waste dump) 
By HEATHER SCOFFIELD
Parliamentary Bureau
Friday, September 1, 2000
Toronto Globe and Mail 
 
Ottawa - Mexico has lost a major NAFTA investor lawsuit that could have
serious
implications for Canada's ability to pass environmental regulations and may
even affect the way that Toronto disposes of its garbage. 

An independent tribunal under the North American free-trade agreement ruled
this week that Mexico must pay California-based Metalclad Corp. a total of
$16.7-million (U.S.) as compensation for a  Mexican municipality's refusal to
allow the company to run a hazardous waste dump. 

The decision is proof that NAFTA and the environment are at odds, and that
municipalities will have a tough time turning away garbage if foreign
corporations are involved, said Michelle Swenarchuk of the Canadian
Environmental Law Association. 

"NAFTA is saying, you can have your local rules for dumping, but if a foreign
company wants to dump... it can force you to pay," Ms. Swenarchuk said
yesterday. "This case is a terrible example of how necessary environmental
controls can become near impossible for local communities." 

For example, if the Canadian firm that plans to ship Toronto's garbage to
Kirkland Lake, Ont., is bought by a U.S. firm, local authorities will have a
difficult time restricting the foreign company even if they decide that
Toronto's garbage would be unhealthy for the Kirkland Lake community, Ms.
Swenarchuk said. 

The NAFTA ruling is the first time an investor has successfully used the trade
agreement to sue a foreign government for measures that amount to
expropriation. Metalclad had asked the NAFTA tribunal for at least
$113-million
in damages, claiming that municipal authorities in Mexico essentially
sabotaged
their investment in a hazardous waste dump by denying them building permits. 

"We won on every ground that we sued," said Metalclad's chief executive
officer, Grant Kesler. 

He claims the state governor in Mexico encouraged local people to protest
against the American company and blocked the progress of Metalclad in an
attempt to protect the Mexican monopoly on hazardous waste. 

But Mr. Kesler added that he was disappointed that the NAFTA tribunal awarded
him only a sixth of the damages he had asked for. Metalclad had sued for lost
potential business, but the tribunal only awarded the company the value of the
existing property in the state of San Luis Potosi, Mr. Kesler said. 

But the Mexican government officials and witnesses involved in the case tell a
different story. 

They claim that Metalclad was allowed to buy the dump on the condition that it
clean up a massive quantity of hazardous waste that was polluting the area.
And
when Metalclad changed its plans and  said it wanted to expand the dump,
people
living in the area who had long opposed the dumping of hazardous waste there
rebelled. Municipal permits were withdrawn as local people began to complain
about their babies becoming sick. 

"We're not talking about a minor problem here. We're talking about the same
quantity of waste that was in the Love Canal issue," Hugo Perezcano, the
Mexican government's chief lawyer on the case, said in an interview from
Mexico
City yesterday. "It's just sitting there." 

The tribunal had nothing to say about the Mexican government's environmental
concerns or the local opposition to Metalclad, Mr. Perezcano said. "That
should
raise concerns in the three NAFTA parties [Canada, the United States and
Mexico]," he said. 

The Mexican government says it will try to have the award set aside using a
loophole in NAFTA that will let Mexico argue its case again before a neutral
court -- in this case, the British Columbia court system. 

A local environmentalist who was involved in the case, Pedro Medellin, was
dejected about the loss. 

"Nobody seems to care much what people think," he said from San Luis Potosi.
###


----------------------------------------------------------------------------
---
	 B A Y A N
	 Bagong Alyansang Makabayan or New Patriotic Alliance
	 No. 23 Maamo Street, Sikatuna Village
	 Quezon City, PHILIPPINES							      	
	 Telephone: (63-2) 435-9151       Telefax: (63-2) 922-5211
	 Email:   <bayan at iname.com>
	 Webpage: http://www.bigfoot.com/~bayan-phils 	      	

-------------------------------------------------------------------------------