Published in the Vancouver Observer | March 15, 2012 | Circulation 150,000 unique monthly visitors

“Hogwash.”

That’s how Canada’s international trade department dismissed accusations that its secretive free trade deal with Europe may help privatize municipal water services – or open them up to challenge by multinational corporations, the largest of which are based in the European Union.

Opponents of the Comprehensive Economic and Trade Agreement(CETA) – Canada’s close-to-complete free trade agreement with Europe – have raised concerns that municipal water services, and potentially Canada’s water itself, may be up for grabs when the deal is signed later this year.

Minister of international trade Ed Fast described CETA as “the most ambitious plan of its kind in history.” But claims that Canada’s water is in the deal are absurd, said a spokesperson for the Department of Foreign Affairs and International Trade.

“It is Canada’s longstanding position that water in its natural state is not considered a ‘good’ or ‘product’ and therefore remains outside the scope of Canada’s trade agreements,” said Rudy Husny, press secretary for the department. “Nothing in any of Canada’s trade agreements prevents governments from setting standards to ensure that Canadians have access to safe drinking water, or force countries to privatize or to deregulate their public services.

“Claims to the contrary are hogwash.”

In a rare insight into the state of trade talks, Canada’s High Commissioner to the UK – former B.C. premier Gordon Campbell – laughed off suggestions that water privatization was under the deal.

“It’s not going to lead to privatization of drinking water,” Campbell told CTV news on Sunday. “We’re in the middle of a negotiation, a long-term negotiation – provinces and municipalities have been involved in this throughout.” He insisted that opening up Canada for trade was a “critical part” of the country’s future economic health.

The backroom negotiations – reported to be in their closing stages, having finished their ninth and final round – have been the subject of a series of secret document leaks, none of which specifically target water services.

However, the federal and provincial governments have submitted a list of sectors they want excluded from the final agreement, according to the mostrecent document leak – the lists include everything from marine transport to liquor sales. But conspicuous by its absence are water and water-related services such as sanitation, supply and storage.

The disclosure that water services are not among sectors excluded from CETA has raised alarm from several legal experts, who had already flagged the free trade deal’s dispute process whereby multinational corporations could challenge municipal, provincial and federal regulations deemed to be “discriminatory.”

Paving the way for Bechtel and Veolia?
“Water’s in the deal – there’s no doubt about it,” said Steven Shrybman, a public interest trade lawyer with Sack Goldblatt Mitchell LLP.

“Water is subject to international investment-services agreements. (CETA) leaves public policies on everything from health care to water up to international tribunals and trade dispute panels that are fixated on – and whose only mandated is – serving the interests of capital.”

CETA would open the door to lawsuits from transnational water companies such as Bechtel and Veolia to claim damages if contracts for water treatment, water utilities, engineering or the operation of water services excluded them, according to a report Shrybman authored for the Columbia Institute’s Centre for Civic Governance

“Proposed CETA rules would allow a water conglomerate to get its foot in the door whenever a Canadian municipality or covered water utility tenders for any goods (eg. water treatment technology) or services (eg. for engineering, design, construction, or the operational services) relating to water supply systems,” the report stated.

“That contractual relationship could then provide a platform for the company to expand its interests in the water or waste water systems.”

Those claims are shared in a legal review of CETA conducted by theCanadian Environmental Law Association.

“Some of the most controversial elements proposed for CETA include the liberalization of essential public services, such as water,” the report stated, “and the inclusion of a controversial investor-state dispute settlement clause.

“CETA will open up local regulations and policies of provinces and municipalities to direct competition and challenge from the European government, corporations and investors, thereby restricting the regulatory freedom of local governments.”

That investor-state dispute clause is not, itself, disputed by Canadian negotiators. Under it, a European company could challenge a policy which it believes is “discriminatory” – for example, if the City of Vancouver entered a public-private partnership for a water service, but stipulated that the company must be local or Canadian-owned.

When asked about this procurement component of the agreement, Husny said that indeed Canada must establish a dispute resolution body available to suppliers – in other words, European multinational corporations – but provinces will be free to set up their own. His department insists that municipalities can still regulate quality or cost of bidders for contracts, or offer tax incentives, for example. But a buy-local rule would open up a lawsuit under CETA.

“Under the Government Procurement Chapter of CETA . . . Canada and the European Union would be required to maintain an independent bid challenge (or domestic review) authority to provide a right of recourse to suppliers,” Husny told the Vancouver Observer. “Provinces and territories are free to establish their own domestic review mechanisms or to rely upon the court systems to review supplier complaints on sub-federal procurement within their jurisdiction.”
Prominent among the campaigners against the trade deal is the Council of Canadians, which has long mounted efforts to stymy trade deals they accuse of undermining the country’s ability to enforce human rights, labour and environmental laws. Water has been a key point of contention over CETA, and though water “in its natural state” is not covered, the group believes that once removed from its source corporations will seek to expand their influence in the sector.

“We don’t think these things should come under same market rules as sneakers,” said the group’s trade campaigner, Stuart Trew. “It aims to push us further down the road towards privatization of these services.

“It’s really a way to help create new markets where they don’t exist in these areas.”