Canadian Policy and Legislative Options Concerning Water Exports

Canadian Policy and Legislative Options Concerning Water Exports

1. What are the constraints on Canadian policy and legislative options concerning water exports arising in consequence of Canada's obligations under the WTO and NAFTA?

The basic architecture of both NAFTA and the World Trade Organization is common to both Agreements and can be found in the General Agreement on Tariffs and Trade 1994 (the GATT). There are several provisions of the GATT that impose constraints upon government policy, programs, and legislative options as these may pertain to water. While it is beyond the scope of this opinion to provide an exhaustive catalogue of all such GATT rules, we will highlight the provisions most likely to come into play.

While NAFTA and the WTO share several common elements, there are also important differences between these two regimes. As the following discussion reveals, of the two, the NAFTA is far more constraining of government prerogatives in this context. Accordingly, we would strongly disagree with the view that these differences are insignificant with respect to the issue of water export controls. Moreover an appreciation of the fundamental differences between these trade agreements is critical to identifying a strategy for safeguarding Canadian water from trade agreement based challenges and investor claims.

1.1 Common Elements

1.1.2 GATT Article XI: The Prohibition against Export Controls

The most obvious and likely source of conflict between water export control measures and trade disciplines arises under Article XI of GATT. Article XI.1 provides:

No prohibition or other restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party. [emphasis added]

There is an extensive body of trade jurisprudence that has considered and parsed the meaning of each element of this provision as it applies to a considerable variety of import control measures. It is fair, we believe, to say that these cases have given Article XI a broad reading and have, at the same time, demonstrated a consistent reluctance to limit or in any other way circumscribe the ambit of its application.

However, there are many fewer cases that have considered the application of this provision to export control measures. Coincidentally, the leading cases that have interpreted Article XI constraints from this perspective both concern Canadian export measures for salmon and herring caught off Canada's west coast.