Company Says Quebec Pesticide Ban Violates NAFTA's Chapter 11

Dow Agrosciences insists Quebec's province-wide ban on the residential use of weed-killing chemicals breaches legal protections owed by Canada to U.S. investors under the NAFTA.

Here is something to consider, how would the recent federal election have turned out if the government had told the voters U.S. chemical giant Dow signaled in late August that it is gearing up to sue Canada. Dow is a United States company and has a major manufacturing and sales operation in Canada. Dow wants to be compensated by the Feds for losses incurred to its star product, 2,4-D, one of the most popular chemical ingredients used in commercial pesticides. This is the latest in a long string of disputes to arise under Chapter 11 of the NAFTA which permits foreign investors to detour around local courts and sue the federal government before an international tribunal. In August, Dow triggered a 90-day waiting period when the waiting period it can bring the federal government to binding arbitration. Kathleen Cooper is a senior researcher with the Canadian Environmental Law Association. Cooper claims the Quebec ban has been warmly endorsed by medical and environmental organizations and enjoys wide support in public opinion surveys. Cooper is worried chemical producers can invoke NAFTA in an effort to "undermine the decisions of democratically-elected governments." The Province of Ontario is considering taking the same steps as Quebec and working on regulations that could come into force next spring. It is likely such regulatory moves will eventually draw wider attention and scrutiny in other jurisdictions, for example. Dow insists Quebec and Ontario are out of step with the international consensus on a product that has been used for decades in dozens of countries. The company refers to a 2007 risk assessment by Canada's own Pest Management Regulatory Agency which said the product could continue to be used safely on lawns. Dow refers to Quebec's decision to ban certain uses of the product is not based on scientific evidence. Dow spokesperson Gary Hamelin says it is a real problem when companies are "making investments of tens of millions of dollars for products that—based on a scientific assessment—[are] acceptable." Quebec and Ontario have taken the view that more stringent standards should be imposed by provincial health regulators—particularly where the product is not necessary, but is used for purely cosmetic purposes. The final decisions may rest in the hands of a panel of three arbitrators to decide whether such provincial regulations run afoul of Canada's NAFTA commitments. This is not the only incidence of companies using Chapter 11, the government is defending against another NAFTA Chapter 11 claim filed by another U.S.-based chemical producer. When Canada's Pest Regulatory Management Agency moved to ban the use of Lindane-based seed treatments, U.S.-based Chemtura Corporation sued for $100 million in damages. Arbitration is currently going on behind closed doors, following a January confidentiality order. Dow signaled its intentions in August; however the Department of Foreign Affairs only disclosed the potential lawsuit yesterday.