Proceedings of the Standing Senate Committee on
Foreign Affairs
Issue 19 - Evidence
OTTAWA, Wednesday, November 28, 2001
The Standing Senate Committee on Foreign Affairs, to which was referred Bill C-6, to amend the International Boundary Waters Treaty Act, met this day at 5:35 p.m. to give consideration to the bill.
Senator Peter A. Stollery (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, I would like to call the meeting to order.
We will hear from Dr. Howard Mann and Mr. Appleton.
Mr. Barry Appleton, Trade Lawyer, Appleton and Associates: Honourable senators, thank you for this opportunity to talk about the technical aspects of Bill C-6. I know this has been a rather heated debate.
Before coming here today, I took the liberty of reviewing some of the statements made in the chamber by honourable senators, to give me some understanding of the live issues that this committee is studying. As I understand it, this bill is to be part of a three-pronged strategy by the Government of Canada to deal with bulk water removals from Canada.
Earlier this year, I appeared before a water summit at the Wahta Reserve. Some senators and members of Parliament participated in that summit. Some of my comments today arise from that occasion. At that time, I expressed some concerns as to whether Bill C-6 would be an effective tool as part of the three-pronged strategy. I still have some concerns about that. I also have some technical concerns.
My legal practice is restricted to issues of international trade and investment, NAFTA being perhaps the most prominent, but also WTO and other issues. There are some relevant issues as we look at the International Boundary Waters Treaty and this proposed legislation, the purpose of which is to better implement that treaty.
First, I shall briefly review those aspects of NAFTA that touch upon fresh water issues. Following that, I shall review some specific aspects of Bill C-6, so that you can better appreciate my sense of areas where this committee might be in a position to better consider the bill itself.
Let us turn to the NAFTA, because there has been a great deal of debate about the implications of NAFTA and fresh water, some of that debate taking place in the Senate. The theory fundamentally has been that fresh water is not a subject of international trade regulation unless or until it is an element of commerce. I know that is the official position of the Government of Canada, and I know that many members of this committee on both sides have taken the position that they support that view. In my opinion, unfortunately, this is not a correct appreciation of the law, and I think it is relevant for you to know my view on this as we go ahead with this because it is relevant to how we consider the whole issue.
Fresh water is a good. NAFTA defines goods as being domestic items as understood by the GATT, now the WTO. The GATT Harmonized Commodity Description and Coding System clearly indicates what is a good. As some members of this committee have already pointed out, item 22.01 of the GATT Harmonized Commodity Description and Coding System reads "water, including natural or artificial waters," and it goes on to give more description, including "ice and snow." These things are covered under item 22.1 of the tariff schedule. It does not matter how much we argue about it, water is a good. The issue is not whether water is a good, but what do we make of that.
There has been a tremendous debate in the House of Commons, in this chamber and in other legislative bodies about this issue. It does not help us to say that we hope water is not a good. The fact is, in my opinion, it is. Now we have to decide what that means.
Because water is a good, two parts of the NAFTA can apply: chapter 3, which deals with trade in goods, and chapter 11, which deals with investments.
Article 301 of NAFTA requires governments not to impose bans on the imports of commodities. Articles 309 and 315 of NAFTA deal with export restrictions, bans and other types of restrictions. I will summarize a complicated area of law and make it simple. On the assumption that water is a non-renewable natural resource, that it is possible for this government to be able to impose export restrictions - whether you call it removal of restriction or an export ban, it does not make a difference from the point of view of international trade; it does help us as we deal with the exception to use, but it really does not make a difference. Under the terms of NAFTA, article 315, three conditions must be met to be able to impose any type of restriction on the removal of water. I shall outline those three conditions.
The first is that there must be no reduction in the ratio of total exports compared to the total supply of the product. That ratio is calculated on a 36-month basis. The second condition is that the sale price of the export product must not be different from the domestic price of that commodity. The third condition is that the normal channels of supply are not to be disrupted. Each of those three criteria must be met, once you have a situation that it is a good and the item happens to be in commerce. That is where the commerce part is important. It does not make a difference whether it is a good or not. That is not a correct analysis of the law.
What is relevant is that once it goes into commerce you create channels of supply, or you have to start looking at the ratio of exports to supply. Obviously, if it is not in commerce, then you do not have a problem meeting this test. Once it is in commerce, you have much more of a difficulty before you, in meeting the test under NAFTA article 315. This is sometimes called the conservation exemption, just to give us a short name for it.
Fresh water comes into commerce even under the licensing regime suggested by Bill C-6. That is important because there has been some debate as to whether or not fresh water could come into commerce. If you look at the terms of the proposed act, you will find that fresh water may be permitted to become part of commerce as long as it stays in the same water basin.
The reason we have this treaty in the first place is that in 1907 the Chicago River was diverted and took water from Lake Michigan into the Mississippi. That water basin has been extended from the Great Lakes going all the way down to the Mississippi. The fact of the matter is that you can have water going from one part of the Great Lakes into the Mississippi, and it is still part of the existing water basin. Under the terms of act as you have it right now, you can clearly have - and that is just one example of many - diversions staying in the same water basin that will cross an international line.
That is important because some members of this committee have said that they are concerned that the minister could license water and that it would therefore go into commerce and create a problem. Those concerns have been focussed on whether water had become a good. I do not think that is the key element. What is important is that it goes into commerce and creates the basis for a problem under article 315. That makes it not impossible for Parliament or the government to deal with the issue, but much more difficult.
What I will impress upon you in relation to the area of goods is that it is complicated area. There is an opportunity to deal with it right now, but the minute you follow the regime established by Bill C-6, it becomes significantly more difficult, significantly more complicated, because you will put water into commerce. It is not prohibited. It is in fact permitted as long as it fits into the existing water basin, and that existing water basin is fairly broad.
I should like to talk about chapter 11 of NAFTA, the investor state provisions, which have caused much concern about fresh water in general. Water rights are a valuable commodity, and there are clearly ownership interests in water rights. They are dealt with under provincial schemes generally across the country. In different places, there are different types of issues. I spend most of my time in Vancouver. Coming from the West, we are always more focused on water rights than in the East, so water rights are more and more an issue and more and more an element of personal property.
Some of the investment rights in water are very long-standing. NAFTA provides that an American or Mexican investor or citizen who owns water rights in Canada has certain rights under NAFTA to be compensated if those water rights are affected or vanquished by governmental action. That deals in particular with NAFTA article 1110, which deals with compensation on expropriation.
Two years ago, an American company brought the beginnings of a NAFTA claim, although it did not continue, seeking somewhere around $500 million in compensation. I do not believe that was a strong claim; however, just because a claim is not strong does not mean that the principle that NAFTA can be applied is not strong. Clearly, the NAFTA investment chapter does apply to investment rights, and there are investment rights in water.
The issue here is not whether the government has the authority to govern the exports of water - the federal Parliament has complete constitutional authority to deal with export issues in any event - but what the value of fresh water exports is. If there is a compensation provision, that will be triggered on the value.
From the perspective of NAFTA, chapter 11, the issue is not whether there is a value to the water, because of course there is, but whether there will be steps to make that value higher. In other words, if the government has an obligation at some point potentially in certain circumstances to pay compensation, the idea is, from the government's point of view, to pay as little compensation as possible to be able to preserve the maximum policy flexibility.
As far as we know, currently there are no Canadian facilities exporting bulk water to the United States. The only issues we have are with bottled water, which is a much more limited and identified situation.
If bulk water exports were to begin, the situation would change because a market would be created, as well as a set of damages, to be able to quantify the damages for someone who cannot sell that water.
The issue is very straightforward there is no sale of water. When that changes, including diversions that are permitted under this bill, suddenly you have created a market mechanism. You have created a basis to establish damage. The NAFTA chapter 11 issue, rather than being remote, becomes far less remote, and easier to quantify.
The most important point I can raise on the NAFTA side is that Parliament has a blank canvas. The minute you start licensing water exports, the minute you start licensing water as removable across a boundary, you begin to create liability under NAFTA, either under the trade in goods provisions or under the investment chapter.
Parliament alone cannot address this issue. In the NAFTA implementation legislation, Parliament stated some views about the nature of water, but because it is an international agreement it is tripartite. Each of the three NAFTA countries must put forth their views, and it must form part of the treaty, by way of amendment, which means that you must go to the U.S. Congress.
The U.S. and Canadian governments have issued a joint statement, but under international law it has no weight. For it to have weight, it must involve the three NAFTA governments; it would have to constitute an amendment to NAFTA for it to have that type of weight. That is not impossible. It is just very difficult, and at this point it may be very difficult for us to see that as being a realistic option. It is fair for you to know that because not all things can be solved by way of legislation from Parliament. That is our problem. It is an international agreement.
I wish to leave you with a couple of things. First, there can be policies that limit the removal of fresh water before bulk water removal licensing occurs. That makes it much easier, but after that time it becomes significantly more complicated. Second, whatever policy mechanism you deal with should be as broad as possible. Third, you should cover as much of the country as you can. One of the problems of course with what you have here is that you are creating a circumstance where only part of the country is covered.
I should like to go through a couple of technical points that I think might be helpful, specifically, as we address this bill, but in light of international situation.
First, the bill appears to violate a basic international law norm. The bill operates in an extraterritorial fashion. That is clearly an error of drafting in integrating this bill with the old act.
I have had an opportunity to address this with the chairman of the House of Commons committee, and he has suggested that I bring the matter to this committee. In particular, if you compare the wording of Bill C-6 with that of the original act, you will see that there is a wording problem because of the definition of "boundary waters."
Boundary waters, which are taken from the treaty and are also in the original act, deal primarily with waters from main shore to main shore of the lakes and rivers and connecting waterways. We are looking at the area along which the international boundary runs. They do not deal only with Canadian waters.
In the original legislation, every time we referred to Canadian waters, we actually refer to Canadian waters. If you look, for example, at article 7 of the treaty, it refers to each side of the boundary. If you look at section 4 of the original act, it refers to waters in Canada. However, Bill C-6 does not do that.
With this bill, what you have done - and you are entitled to do so under the Interpretation Act - is legislate for Americans taking water from the American side of the lake on American territory. You have that power; however, it is a fundamental change of Canadian foreign policy, a policy that the government has been strongly opposed to for years.
For example, under the Helms-Burton legislation, when the Americans told us that we could not invest in Cuba, Canada told the Americans that our subsidiaries could do what they want. With this bill, we have done the opposite.
If you want to re-legislate American law, start with softwood lumber; I will give you a list, and you can go from there.
As this bill reads, you are creating criminal offences for Americans on the U.S. side of the border. I am sure that this is a drafting oversight. I hope this committee will be able to look into this matter as you go along.
There are several issues of the bill that are somewhat imprecise. These are areas that you may wish to look at. I have had the benefit of seeing some of the draft regulations. Hence, I now know there is a definition that deals with bulk water removal. We know that is 50,000 litres. There is no definition of use, obstruction, diversion or work, which I think are important terms to have defined specifically.
The term I find the most problematic, because of the extraterritorial aspect, is in clause 11(2). It is the phrase "ordinary use of waters for domestic use." If we are talking about waters that apply to the United States, if someone takes water from the Great Lakes and sends it down to Mississippi, that is domestic use. The term "domestic use" is not defined. It needs to be defined. I hope honourable senators will address this gigantic hole in Bill C-6; otherwise, this proposed legislation presents a very serious problem.
It is correctable, but as far as I can see that has not been averted to by way of the regulations. I would suggest that honourable senators consider whether it would be useful to put this into the proposed legislation itself.
I would like to look at the issue of the objectives of the bill. If the objectives of the bill were to deal with fresh water issues as part of an overall strategy, I would say that Bill C-6 is flawed. Rather than create the opportunity to develop some environmentally sustainable comprehensive water policy - which I think is the objective here - this bill has created the mechanism to actually license, in certain circumstances, water going from Canada to the United States. I am sure that is not the intention. However, under the wording of this bill, it is clearly the effect.
I am not concerned about using the "export" word. I know that many members of this committee have been told not to use that word because it makes water part of international trade. Again, my opinion is that water is already part of international trade; therefore, you can use the "export" word.
However, if you want to have a strategy to deal with water policy, it would be best to deal with this comprehensively. Because of the complexities of NAFTA chapters 3 and 11 - and there are two aspects here to deal with - it is much easier to deal with this before water goes into commerce. Hence, it is my suggestion that a comprehensive water policy should be set before the tap is turned on rather than once the water starts flowing because it will be difficult to deal with turning off the tap.
Some groups have said that it would be impossible to turn off the top; however, that is not true. It would be difficult and costly, though, and no one wants to subject the people of Canada to paying compensation needlessly. That could be the effect if we did not deal with that situation.
There is a simple way to remedy part of this problem, namely, the definition of "boundary waters," which is currently in the bill. My recommendation would be to amend the definition of "boundary waters," which sets out proposed section 10. Presently, the definition of boundary waters is boundary waters "as defined in the treaty."
As I have already set out, that is limited but it has been expanded because of the very reason for this treaty, namely, that the Americans connected the Mississippi to the Great Lakes. I recommend that this committee connect the boundary waters to the boundary; in other words, that boundary waters not be those defined by the treaty but all those waters defined by the treaty and all waters that cross a boundary.
If you were to do that, you would actually have in this legislation an opportunity to comprehensively deal with cross-border water issues without being inconsistent with the treaty and being within the full purview of the Parliament of Canada. The technical words I would add are as follows: "all boundary waters as defined in the treaty and all fresh water that reaches the territorial limits of Canada."
Hence, all fresh water that touched a boundary would be covered, which would be consistent with the purposes of the proposed act. It would go beyond the treaty, but that is not a limitation upon this chamber of Parliament. Such an amendment would solve many of the problems within this bill by ensuring that commercial removals of fresh water could not occur without the permission of the government and environmental supervision. That gives you a much more comprehensive water policy and allows Bill C-6 to play a much better part as part of this tripartite scheme.
Dr. Howard Mann, Legal and Consulting Practice in International Environment and Sustainable Development Law: I agree with a large part of what Mr. Appleton has said. Although we often come from different sides in terms of the origins of our arguments, the results lead me to similar conclusions.
I should like to divert from my own presentation and address a couple of the points raised by Mr. Appleton, in particular, the definition issue at the end, where he indicated that it would be possible to expand the definition. The definition of "boundary waters" is one that is laid out in the treaty itself. It is the one adopted in the act and it expressly excludes waters that cross a boundary. I will come back to that in my own presentation later. I agree, however, that federal legislation should include those waters, which it now does not.
The other point relates to the Mississippi now being part of the Great Lakes water basin. I would have to disagree, and my remarks will be understood as disagreeing with Mr. Appleton on that point. The Great Lakes water basin is the geographical limit. The transfer of waters into the Mississippi basin is an inter-basin transfer. It does not geographically extend the Great Lakes water basin as we know it to be, neither environmentally nor in water management or trade terms.
The specific points I would like to cover are the scope of Bill C-6 and the constitutional scope of the federal government in relation to the issue of water exports. Like Mr. Appleton, I do not think it matters whether you call it an export. Bill C-6 is covered by trade law, as any other federal act will be. Whether you include a trade provision matters not; trade law applies equally.
My third issue concerns whether fresh water is covered by NAFTA and the WTO rules, and then the impact of chapter 11.
In terms of the scope of Bill C-6, it does cover boundary waters as defined in the treaty. Those include the Great Lakes, connecting rivers between the lakes, part of the St. Lawrence and, perhaps, five to seven other additional lakes or rivers in New Brunswick and Quebec and the Lake of the Woods, and essentially excludes everything west of the Manitoba-Ontario border. There may be some minor exceptions, in that there may be minor lakes or rivers that form part of the Canada-U.S. border; however, essentially the waters west of the Manitoba border are not covered by this legislation.
Senator Finestone: North of 60?
The Chairman: Order! We are talking about boundary waters. Dr. Mann is talking about boundary waters. North of 60 and the Northwest Territories, apart from the Yukon, we do not border any foreign country.
Dr. Mann: I have not looked at the Alaska-Yukon border. If part of it is formed by a river, then that river would be covered. I would have to check whether this legislation applies only there.
The Chairman: I do not believe there is. I believe the Yukon River goes across the border but is not part of the border.
Dr. Mann: That may be a specific case one way or the other. On the main Canada-U.S. border, it is only the Great Lakes waters and five to seven other waters that would be covered.
I agree with Mr. Appleton that the act constitutes a licensing scheme for diversion, as long the water remains within the same water basin from those boundary waters. Hence, it is legislation that defines how those waters may be used and in what circumstances. That will be fleshed out in the regulations.
The second aspect of it provides a prohibition, with exceptions by regulation on withdrawals from a given water basin. That prohibition must be understood in the context that it has associated exceptions through the regulatory process. Those exceptions will be equally important in understanding the scope and impact of the legislation. There is nothing in the legislation itself that prohibits exports for commercial purposes. Hence, on the face of the legislation there is nothing that prevents fresh water from coming into commerce under this legislation. That may or may not be done by regulation, but there is nothing in the legislation itself that prevents the water entering into commerce.
In my view, Bill C-6 is not a significant expansion in and of itself of the existing federal law in the International Boundary Waters Treaty Act. It is a modernizing piece of legislation. It provides a licensing framework that goes to how the waters might be used. It establishes a certain regulatory processes, and so on, but it does not significantly expand the prohibitions or the conditions that are already found in the International Boundary Waters Treaty Act. One thing it does do is define removal from a single basin as an automatic trigger for International Joint Commission approval of those withdrawals. That provides a definitional threshold and requirement that, essentially, any extra basin removal from a boundary water must go to the IJC under Canadian law. It does add a proper enforcement mechanism also and that should not be ignored. It is an important feature in terms of modernizing the existing legislation.
In terms of the constitutional scope for the federal government, with all respect to those who may hold a different view, the federal government can use the trade and commerce power in section 91(2) of the Constitution to ban exports of bulk water in any medium or container.
There is no doubt as to the constitutional authority to do that. They can use section 132 of the empire treaty to prevent diversions from rivers crossing the boundary. Those diversions are covered by article 2 of the 1909 treaty. Section 132 of the Constitution Act sets out the empire treaty power and gives the federal government the constitutional jurisdiction to implement measures in relation to the provisions of article 2 of the treaty as it exists now. That would include withdrawals or diversions from those rivers that might have an impact in the United States, across the border.
There are two sources of federal jurisdictions that could be applied here, both of which provide a more expansive scope for federal action than what one sees in the bill as it stands now. The fact that there is concomitant provincial jurisdiction over local rivers and lakes does not limit the scope of federal jurisdiction to address these issues of the transboundary movement of waters or the export of waters.
It is a political issue as to how each level of government should be involved, or the extent to which the jurisdiction should be exercised, but the scope of that jurisdiction is a legal issue, not a political one. Those two need to be distinguished in the context of a full debate on these issues.
Is fresh water covered by NAFTA or the WTO? Essentially, the issue is whether fresh water is a product. I agree with Mr. Appleton that, ultimately, it comes down to the question of whether it is in commerce. As the three-party NAFTA statement in 1993 said, unless water in any form has entered into commerce and has become a good or a product, it is not covered.
It is important to note here that that statement does not say unless it has entered into "international commerce," just into "commerce." The reason for that is that the national treatment obligations kick in under trade law as soon as water enters into commerce, not necessarily as soon as it is traded. Those are two different things and that difference is very important. In that context, I agree with Mr. Appleton.
One element we do not really know for sure here is the meaning of "commerce." For example, are privatized water systems an entry into commerce of bulk water? We do not really know that for sure. Does one entry of bulk water into commerce mean that all fresh water has now entered into commerce? Should that assessment be made on a country-by-country basis, a province-by-province basis or in the context of the whole of NAFTA? If it is entered into commerce in one jurisdiction, is it therefore entered into commerce in all?
Those questions are rather difficult to assess now. There is some legitimate concern on those issues.
In terms of chapter 11, I see three potential concerns. One is the national treatment issue. That can be an important one, especially in the precedent-setting context that which is often discussed. I will come to that in a moment. National treatment essentially opens the door to foreign companies to claim the same rights as Canadian companies to access water for commercial use purposes.
The minimum international standards of treatment provision, article 1105 of NAFTA, would also impact in the sense of requiring at a minimum a fair degree of regulatory transparency and even-handedness in the adoption and implementation of any regulatory mechanism that goes along with Bill C-6.
Finally, on the expropriation article, Mr. Appleton and I would differ significantly on the scope of what constitutes an expropriation. He has not entered into that debate and nor will I, except to say that once a licence or a legal right exists over water, once water rights have been granted, if those rights are removed, the expropriation article may apply. There may be factors that suggest that it is not applicable in any given instance, but notionally at least it might apply.
The interpretations of expropriation are still subject to some flux, some debate, but certainly the potential is there for that article to apply if water rights are given and then removed.
The precedent-setting issue that is associated with the trade law issues is of some concern. Essentially, the precedent-setting argument is this: Once exported in bulk, it must always be available to be exported by anyone in bulk. That precedent would then be enforceable by states at a state-to-state level or by companies under chapter 11.
This is a serious risk. I agree with Mr. Appleton: Once exports begin, the government, federal or provincial, cannot arbitrarily deny further exports. Any denial of exports would have to be in accordance with trade law, including chapter 11. You are into the game as soon as you start down that road.
That means regulatory structures and environmental impact assessment requirements absolutely must be in place and applied before any exports might be made, before any licences might be issued. That applies under any use that might be licensed under Bill C-6. Once you start, you are in it and you cannot back out because you feel like it.
The risks of a precedent-setting nature can be significantly minimized. I use that word "minimized" because I do not think that, given the state of NAFTA jurisprudence or trade law jurisprudence, one can ever say they can be completely eliminated. Those risks can be significantly minimized with proper regulatory and environmental regimes in place, as long as the standards are clear on the face of those regimes what level of environmental risk Canada is prepared to accept in the context of fresh water withdrawals, whether for export or domestic use. The level of risk would have to be clearly identified in the legislation.
A number of the points made in the International Joint Commission report are quite useful on this point.
As Mr. Appleton said, trade law rules will apply equally to Bill C-6 and its regulations as they would to a piece of legislation that expressly says we shall not export bulk water. Trade law will apply just the same. Do not kid yourself that it will not because it does not say the "export" word, to use Mr. Appleton's phrase. It will apply just the same.
On the provincial side, in particular in terms of chapter 11, it has often been said that once one province allows an export, all others will have to do that. That is simply incorrect. Federally, the law must be applied equally across the country because that is how federal laws work. You would have to come to a sound reason why it does not apply equally across the country. That will be a problem in this piece of legislation given its limited scope. At the provincial level, though, chapter 11 certainly only applies on a province-by-province basis.
If New Brunswick were to allow exports, that does not mean British Columbia legislation banning exports is automatically rendered nugatory.
I have some other comments on whether an express trade ban would necessarily breach trade law. I will end my remarks here and take questions.
The Chairman: Honourable senators, before we go to questions, I suggest we deal with the future business of the committee. This is as good a time as any.
Senator Carney: Why? It is not relevant to our witnesses. Why not leave it until after?
The Chairman: I am giving you this option. We can deal with the future business of the committee now or we can deal with at quarter to five. That would give plenty of time to ask questions. If you would like to ask questions now, Senator Carney, go ahead.
Senator Carney: I would challenge that. I think the future business of the committee can be held. One of our witnesses has come all the way from Vancouver and he will be returning to Vancouver. To arbitrarily decide that we cannot extend the questioning until we are through is extremely dictatorial and unlike you in your manner.
The Chairman: Senator Carney, I did not say that we would end the meeting.
Senator Carney: You said quarter to five. Why involve the witnesses in this matter? I suggest we hear the witnesses.
The Chairman: Senator Carney, it is a common practice in parliamentary procedure to deal with matters when the witnesses are here. If you would like to question the witnesses now, that is just fine. Go right ahead. I am not suggesting that the witnesses have to leave when we deal with the future business of the committee. You are quite free to ask any questions you would like, but we do have to deal with the future business of the committee.
Senator Carney: We should do that after we have dealt with these witnesses, not at some arbitrary time.
The Chairman: Do you wish to proceed, Senator Carney?
Senator Carney: If you give us permission. They have come a long way.
The minister, and either of you can answer this, told us yesterday that by adopting Bill C-6 Parliament will set down in law an unambiguous prohibition on bulk water removal of boundary waters and that this is a forward-looking action that places the highest priority in ensuring the security of Canada's fresh water resources. Do you agree that Bill C-6 will set down in law an unambiguous prohibition on bulk water removal of boundary waters? Could you each answer that?
Dr. Mann: It has an unambiguous prohibition of the removal of boundary waters subject to exceptions defined by regulation. It is certainly not a complete, legal prohibition. The scope of those exceptions is not defined in the legislation but will be in the regulations and hence, in that sense, will be outside the scope of Parliament, at least, to determine the scope of what those exceptions might be.
Senator Carney: Just to follow that, you have said, Dr. Mann, that the bill has created an opportunity to license water going from Canada to the U.S. That may not be the intent, but that is the effect.
Dr. Mann: Those were Mr. Appleton's words, but I agree with him.
Senator Carney: How can you rationalize those two positions? How can you say you agree it is an unambiguous prohibition on bulk water removal of boundary waters and then agree that it has created an opportunity to license water going from Canada to the U.S.?
Dr. Mann: I have said that it is a prohibition that is joined with a number of exceptions, and it is the manner in which those exceptions will be implemented that, in your words, creates the ambiguity or limits the scope of the prohibition, either way you want to put it. It is not a complete prohibition unless the regulations are developed in such a way as to exclude exceptions. If by regulation no exceptions are to be permitted, then there will be full prohibitions on bulk water removals from the defined boundary waters.
Senator Carney: That is not in the law.
Senator Bolduc: More than that, is it true that in proposed section 13(1) it can become a vacant prohibition if, by the regulatory powers of Part IV, you just destroy the first part?
Dr. Mann: Yes.
Senator Bolduc: That is what I thought.
Senator Carney: If this, as you say, creates an opportunity to license water going from Canada to the U.S., you have both agreed that that can trigger chapter 11 and the NAFTA provisions of trade law. You both made the point that this bill is as subject to trade law as any other bill. That is important because according to the government this is merely an amendment to a 90-odd-year-old piece of legislation and trade law does not apply in any form. Do you agree with the suggestion that trade law does not affect this bill in any form?
Mr. Appleton: I will try to answer this question and your last one at the same time. I believe that this clearly does trigger trade law implications. There is absolutely no way to avoid that. In relation to the point made by Mr. Mann, I believe absolutely, without a shadow of a doubt, that once one part of the country puts water into commerce it is into commerce. The issue is not if another province is obligated to sell it - that is a national-treatment issue and is based on the provincial level of jurisdiction - the issue is whether it is in commerce, which establishes a market, and the question of damages is in fact established, because it is clearly a licensing regime. I believe that there is no prohibition in this. It is a licensing regime. Licensing is the opposite of prohibition. If this were to be a prohibitive regime, it would say something differently.
To answer Senator Bolduc's question, this minister or a future minister could - I am not saying they intend to, but they could - change the complete effect and intent of this legislation because of the regulatory structure, which is somewhat unusual.
Senator Carney: That is our point, and I am glad you emphasized it.
My last question is the prohibition set out in proposed section 13, which says, "...no person shall use or divert boundary waters by removing water from the boundary waters..." We made the point yesterday that bulk water is not mentioned anywhere in this bill. It just talks about teacups of water.
An exception to the prohibition to divert water in the regulations is identified as a manufactured product, to make a manufactured product in the water basin from which the boundary waters are removed. That is one of the regulations. You are looking puzzled.
Dr. Mann: I have not seen them.
Senator Carney: They were just given to us yesterday. It is too bad the clerk did not send that material to you.
Mr. Appleton: I have it myself.
The Chairman: Just for the clerk's benefit, what material?
Senator Carney: The regulations. Under the heading"Prohibition," clause 13(1) says as follows:
Despite section 11, no person shall use or divert boundary waters by removing water from the boundary waters and taking it outside the water basin in which the boundary waters are located.
One of the exceptions in the regulations is that you can divert boundary waters to make a manufactured product in the water basin from which the boundary waters are removed. This is regulation number 5(3)(a). The minister, in his speech in the House, said that an exception to the prohibition of the removal of boundary waters would be for food and beverages. He has identified an exception to the prohibition as water used in food and beverages, and the regulations list a manufactured product. Does this exception from the prohibition bother you or have trade law implications?
I realize that it is will be difficult for you to give an instant opinion, when you have not had a chance to assess the information.
Our concern with this bill is the huge range of exceptions, the large amount of ministerial power and the scope of the regulations. One thing that concerns us is that the minister identifies food and beverages. The prohibition does not apply in respect of exceptions, and one of the exceptions is to make a manufactured product. Are there consequences that flow from that?
Mr. Appleton: I had the opportunity to look at the regulations at the beginning of this session. Senator Murray was good enough to give me his copy. I believe this increases the commerce factor in the international commerce issues involved in this bill.
Nevertheless, the other problem you have is imprecision of this gigantic exception in proposed section 11(2), dealing with domestic or sanitary purposes, because domestic could also mean household purposes. If you are going to sell water for people to use in their homes, that could constitute a domestic purpose, not a purpose being used in Canada, but for a household purpose. As a result, it may very well be that shipping water to Las Vegas so people can water their lawns or fill their pools would be a domestic purpose and therefore completely exempted by proposed section 11(2).
There is nothing there. I understand your point. I think you are right about this manufactured product, but it pales in comparison to this gigantic hole for what "domestic" may mean, which is why I think it might be good for that to be defined in some way within the proposed act. What it means to us may be different from what it may mean to someone else or to a court down the road.
Senator Carney: Or to a NAFTA panel. We have already read into the record the IJC section on international trade law in its report, which points out that there are possible obligations under the GATT, FTA and NAFTA.
Senator Murray: Mr. Mann, if I understand your presentation correctly, you are of the view that if we do it right and if we time it right an export ban would be more effective than this bill?
Dr. Mann: If we want to ban the exports, let us ban the exports. Let us not play word games.
Senator Murray: I have your presentation here. Interestingly, you are suggesting that if we do an export ban correctly, if we enact it prior to the entry into trade, if we prevent bulk water from becoming a product rather than after, the risk of state-to-state trade law challenge is very low and the risk of a chapter 11 challenge is non-existent, if licences are unavailable.
Your point is that if we want to ban exports we should ban them with an explicit export ban.
Dr. Mann: In my view, that would be preferable and more direct. Trade law panels will understand that this creates an export ban and will look at it that way. They will look at either type of instrument, whether direct ban or this type of ban on removables, in the context of the environmental risk being addressed and the context in which that is being addressed.
Senator Murray: Environmental risk is deemed.
Dr. Mann: No, a definition is deemed here in the context of the treaty. The nature of the associated environmental risk is not fully defined. They use language that comes from the International Boundary Waters Treaty. That triggers the requirement of the International Joint Commission to approve a proposal. It does not prevent the export in and of itself. It creates an additional requirement for the approval of the IJC. There is an additional barrier before an export might take place because of that deeming provision.
Senator Murray: An explicit export ban would not involve the IJC.
Dr. Mann: In Canadian waters, it would negate the need for the IJC to consider those withdrawals from Canadian waters because they could not take place under Canadian law then.
Senator Murray: Do you agree with that, Mr. Appleton?
Mr. Appleton: Yes.
Senator Murray: You say that in regard to Bill C-6 trade rules would apply equally to Bill C-6 and its regulations. You both made that point. You also note that Bill C-6 is not insulated from challenge because it is not framed in trade terms.
Explain the challenge that would arise from the enactment of Bill C-6?
Dr. Mann: The risk as it stands is fairly low because it is unlikely that there would be a state-to-state challenge, at least not in the foreseeable future.However, it does not accomplish the full scope of an export ban. Whether it should is a political decision.
Senator Murray: From those two boxes in your presentation, I got the impression that we would be less vulnerable if we enacted an export ban rather than go with Bill C-6, as it now stands?
Dr. Mann: I am not sure we would be more or less vulnerable. The vulnerability is fairly equal. In the event of a challenge, whether under chapter 11 or a state-to-state challenger under GATT, or NAFTA, the same issue will arise. What is the environmental risk being addressed, and how comprehensively is that being addressed? What role does the legislation being challenged play in the totality of how that risk is being addressed?
Mr. Appleton: I have a different view on that Senator Murray. The types of possible trade actions would be under NAFTA chapters 20, state-to-state, and 11, investor state, and there could be an action under the WTO. I do not believe that there would be no risk if we pass this law.
The assumption for the discussion is that the United States would want to have access to water. If the United States were not interested in water, you would have no government-to-government issues.
If the United States needed access to water, and we decided not to give them access, there would be basis for a nullification impairment action under the WTO. Treaty rights would be impaired. We would be imposing an export ban, and we would use an environmental defence.
There is some risk. The issue is that if there is an export ban before water comes into trade you reduce that significantly. However, I disagree with Mr. Mann when he says that there would be no risk of a chapter 11 case, an investor state.
A tremendous amount of water rights are privately owned already. It is not accurate to ignore the thousands of privately owned water rights that exist. They are there. That risk happens in any event. If you do not have the water in commerce, you reduce the amount of liability by way of damages significantly. I would agree that it is better to have a comprehensive policy up front.
Senator Murray: An export ban?
Mr. Appleton: Yes, that would be a better strategy for the government to take from a trade perspective. That does not mean that there is no risk, that a holder of existing water rights might not have a problem.
There are other provisions of NAFTA. For example, NAFTA article 1109 deals with transfers specifically; it gives you a right to transfer goods in kind from one country to another. That would certainly apply to water.
Dr. Mann: The difference on this point between Mr. Appleton and myself is not that great if we add one other factor. It depends on the scope that existing water rights contain. What kind of right can be exercised? If that water right, for example, is limited to agriculture use for irrigation purposes in the land next to where the water flows, that does not create an international right. If it is limited to extraction for a local facility, an export right is not created.
If there is an open-ended right, it might be impacted by trade ban or any other instrument. If the right is of the type that normally applies in Canada today, which is not open-ended but has limitations on the use of that right, there would not be an immediate risk raised.
If there is a licence for export and that licence a impacted by legislation, then you are creating at least the risk of chapter 11 action.
Senator Carney: My supplementary deals with the fact that trade law is a moving target. Despite the suggestions of the minister and the department that trade law does not apply to this bill, you are making it clear that there are trade law implications, as did the International Joint Commission.
I understand that at the last meeting of the WTO in Doha, in the dying moments of the meeting, there were successful attempts to define water in terms of goods and services in WTO measures. We do not have those measures before us. One of the witnesses I hope to call to identify what happened in that area at the WTO meeting would be from DFAIT. Do either of you have any information on what took place at that WTO meeting and what implication it is to us that water and a whole range of water services were included within the WTO language?
Mr. Appleton: I would be happy to answer that for you. Remember that water is already covered as a good by the GATT schedule. It is not an issue as to whether water is a good. That is already covered. There has been a strong push by Canada and the United States to include water services under the GATT. There has not been a final decision on that. Since you were a former trade minister, you would know that a round starts the process. The round has begun and this is clearly on the table. One of the largest proponents on that is the Government of Canada. I cannot tell you where the day-to-day negotiations are, but our government has taken the position in those negotiations that services related to water and environmental services related to water, the whole area, should be on the table completely. That could conceivably include the whole issue of water going across the border.
Senator Banks: Can either Mr. Appleton or Dr. Mann tell me what section 302 of the NAFTA implementation legislation says?
Mr. Appleton: Sure.
Senator Banks: That is leading to a question that may be obviated by the answer.
Mr. Appleton: I wrote the book on this in 1994, and I have it in there. Section 302 says, in particular, that the Parliament of Canada said that water in its natural state should not be included by the NAFTA. It is also in section 7 of the North American Free Trade Implementation Act, and states that "for greater certainty nothing in this act or agreement except article 2 of the agreement applies to water." In the section, "water" means natural surface and ground water but does not include water in packages, beverages or tanks. Of course, that is Parliament, not the NAFTA. That is just a parliamentary statement. It does not govern what the NAFTA actually says.
Senator Banks: I was looking to that previously, for some comfort and assurance that the bogeyman does not actually exist. I was relying on that. Can I ask you to comment on the information that was presented by the International Joint Commission? I may be asking questions that have already been asked.
If I could paraphrase their view, they have stated that water is not included in the NAFTA. The report of the commission states that "the provisions of NAFTA and the WTO agreements do not prevent Canada and the United States from taking measures to protect their water resources." Does that not exactly counter what you said?
Mr. Appleton: The International Joint Commission statement is wrong. I do not agree with it. I wrote a book in 1994 outlining this issue in the chapter. My position is clear and has not changed for some time. The fact that the IJC has said they have looked into it and has said that there could be NAFTA issues but that they do not think that is correct - they are entitled to say that, but they have no expertise in international trade law. That is not what they are appointed to deal with.
Senator Banks: They hired people who do, though.
Mr. Appleton: I cannot tell you, other than they took submissions from several groups. I do not know that they actually hired people to do it. They took submissions. In my opinion, that is not a correct statement. It flies directly in the face of the specific terms of NAFTA and of the harmonized tariff schedule. The IJC can say it, but the black letter of NAFTA says something else. Unfortunately, I believe you have to follow the black letter of NAFTA in an international tribunal. The black letter of NAFTA applies, and unfortunately, it says something different from what the IJC says.
Senator Carney: You have taken only one measure from the IJC report. The IJC report makes it clear that there are concerns about NAFTA and exports and the diversion of water. I am pointing out to you that IJC does cover that.
Dr. Mann: Specifically on this point, I disagree with Mr. Appleton that water in mid-flow from a river or a lake is a good covered by the NAFTA or the GATT. However, once you create a regime that allows, through a licensing provision or another regulatory mechanism, access to that water that is in mid-flow, then you create trade law rules, obligations and rights under chapter 11 to have fair and equal application of that regime and fair and equal access to the water that is in mid-flow. It is the access to that water that will become subject to trade rules.
Senator Murray: His argument is that the licensing regime, as you put it, simply confirms a process that has been in place for 90 years. Does that make any difference to you?
Dr. Mann: If the licensing regime is used at the federal level to license commercial exports and there is nothing in the legislation that prevents that from happening, then we are creating the right of access to it for that purpose and the manner in which that regime is implemented is fully subject to trade law. We can argue forever whether water in mid-flow is a good or not a good. Once you create the licensing apparatus around that, it is for certain that that regime is subject to trade law.
Senator Murray: Is it just a semantic difference between you and the minister? Senator Graham put the question to the minister yesterday about why not an export ban. His answer was, "We want to avoid making a commodity out of water, that is, turning it into a tradable good or product." He talked about the three-pronged strategy. All of that was meant to avoid turning it into a good that would be subject to actions under our trade agreements. The Qs and As put out by the department on this bill talk about the same thing. An export ban may be subject to a trade challenge. Therefore, the federal government has an environmental approach. I, and a number of us, have accepted the validity of that argument until a few moments ago.
The Chairman: Senator Spivak is not a member of our committee but has an interest in this matter. Senator Carney, I should like to point out that one of our witnesses is from Ottawa, the other from Toronto. Neither is from Vancouver.
Senator Carney: That is not correct. This man has just come from Vancouver.
The Chairman: His address is 1140 Bay Street, Suite 300, Toronto, Ontario.
Mr. Appleton: Senator Stollery, I am a resident of Vancouver. I do have an office in Toronto, but it is true that I am a resident of Vancouver. I did come from Vancouver through Toronto to be here.
The Chairman: You certainly do cover the waterfront.
Senator Spivak: Can we deal with the issue?
Senator Murray: What about my question?
Senator Spivak: Forget the question.
The Chairman: I think Senator Spivak is entitled to -
Senator Carney: Dr. Mann was asked a question. Is he allowed to answer?
The Chairman: Senator Carney, we have a list of questioners. Senator Murray was not on my list. He was interjecting on a question following Senator Banks. The next person on my list was Senator Tunney, but Senator Spivak has been very patient for hours. I think it is only fair to give her the floor.
Senator Carney: So the question will go unanswered.
The Chairman: If in answering the question our witnesses are also able to answer Senator Murray, then that would be just great.
Senator Spivak: I want to make a general comment first. It might be difficult for you to comment on this, but given your statements here today it seems to me that this is a reckless action on the part of the government. It is a reckless action because of the way in which the bill is constructed. I understand that the essential point here is not whether water is a good or a service but whether it gets into commerce. Hence, water can get into commerce through a licensing procedure by the unfettered discretion of a minister or by exceptions that are in the regulations, those regulations not having to come before Parliament before they are changed. It may not be that the regulations need to be changed at all; they may need just to be triggered. I am not sure about that point.
We are dealing with this bill, not with an export ban, unfortunately. Do you feel this is a reckless action, in the sense that it puts us at serious risk of exporting water?
Also, Mr Appleton suggested that the remedy here is an expansion of the definition of boundary waters. Is that the remedy for this bill? There is a distinct possibility that we will not reject this bill, given the political situation, but we might at least be able to draw attention or to amend. Is that remedy sufficient then? It is very difficult to understand all the intricacies of trade law at one sitting.
Mr. Appleton: It is important for all senators to recognize that this bill, with warts or not, is the only piece of legislation that has come from Parliament dealing with this very important issue. It is difficult to get time on the parliamentary agenda. This bill addresses the issue of bulk water and the boundary waters.
I would not use the word "reckless." There are fundamental assumptions in the bedrock of this bill that are faulty. Some terms in the legislation are faulty. There are things that can be corrected. I suggested one amendment but that is not the lone amendment. If you can, deal with some of the domestic exceptions. Deal with the licensing regime so that it is less of a wholesale licensing regime and something more akin to an environmentally sustainable regulatory framework that places a ban rather than anything else.
With those issues and the expansion of coverage through definition, a much better answer would be found. Rather than saying to this committee that you should not pass this flawed bill, I am suggesting a more constructive approach. I believe this is an opportunity. Will this bill be free from trade attack? No.
I disagree with the minister that water is not a commodity. No matter how much we wish it were not a commodity, water is a commodity. Hopefully, Mr. Mann and I will never have to debate before a NAFTA tribunal the meaning of "fresh water." My goal here is suggest where you should start to make the bill better.
Senator Spivak: That is helpful. That is the task at hand. We are here to see if we can improve this legislation and minimize the risk.
Dr. Mann: I agree that there are things that can be done. Clearly, a careful definition of the exceptions in the legislation, as opposed to the regulations, would be preferable. You would then have a better sense of the limitations that are set out as well as a much stronger set of limitations because you need to go back to Parliament to change those exceptions.
We will have to see exactly how the licensing scheme works to completely appreciate the links to trade law. It is certain that those provisions will be covered by trade law. It is important to understand that every piece of legislation passed by Parliament is covered by trade law, period; every regulation is covered by trade law, period. There are a minimum number of very specific exceptions under very specific provisions. Broadly speaking, though, everything Parliament does and all the regulations behind it are covered by trade law. That is it.
Senator Spivak: Sure, but are we not trying to ensure that our preventions against environmental disaster are not trumped by trade law? Is that not what we are doing?
Dr. Mann: As Mr. Appleton said, there are things that can be done to strengthen the consistency with trade law in the event of a challenge. The federal government has other options within its jurisdiction but it has decided not to act on those. There are about a dozen bodies of waters that move across the border, as opposed to forming the water.
Senator Spivak: Someone mentioned privatization of municipal water systems. Apart from anything in this bill, does privatization put water into commerce?
Dr. Mann: I do not have a proper answer to that. I have not done the research on that issue. We do fall into the question of whether it is privatized for the purposes of better facilitating a normal domestic use. Does the commerce issue arise simply by the fact that a private company is making money by providing the service, as opposed to normal end use?
In glancing at this, I see language that says a non-commercial product means a project involving the removal of boundary waters in bulk in which no one is required to pay for the waters. In normal day-to-day practice, all residents pay for the water they consume. What would this provision mean? I do not know.
Senator Tunney: Mr. Appleton, early in your presentation, you mentioned pricing water and that we could not charge more on export than our domestic water. Could we charge less?
Mr. Appleton: I will turn to the provisions of NAFTA, so I can give you a very exact answer. That is a very good question, Senator Tunney. No one has ever asked me that question because, normally, in commodity issues, one wants to charge more rather than less. Let us look at that.
Senator Tunney: We have a similar issue in the dairy industry.
Mr. Appleton: The terms of NAFTA, article 315 only deals with charging a higher price for exports, not a lower price. Yes, you could charge a lower price.
Senator Tunney: We are charging a lower price in dairy products and that is why we are before the trade court.
Would you warn us or advise us to be more cognizant of WTO than NAFTA, or to be equally cognizant of both?
Mr. Appleton: That is another very good question - because there is a difference between the NAFTA and the WTO. The NAFTA actually provides much more environmental sensitivity about conservation issues than the WTO, and it has special provisions that apply when you use the conservation terms that you would otherwise not use. Obviously Mr. Mann has a different view, but that is mine.
My sense about this is that the NAFTA, while it actually seems in some way, that is, by trade and goods, to be somewhat more helpful than the WTO, NAFTA chapter 11, the investor state issue, is a very real issue. That is separate. It is not in the WTO. It is only in NAFTA and some other bilateral agreements, but not in countries that will be involved in the water issue.
Senator Corbin: Is it not a fact that the GATT and NAFTA and treaties of that nature do not abolish longstanding bilateral treaties and the laws that come under them for their implementation?
Mr. Appleton: Senator Corbin, could you be slightly more specific?
Senator Corbin: The Boundary Waters Treaty Act has been in place since May 5, 1910. It was signed May 5, 1910. It is in your book by the way. It was signed in Washington May 5, 1910, unless I have a wrong copy. The point is that we have had this treaty in place. It is a bilateral understanding, an amicable treaty between Canada and the United States that has inspired many other nations in the world. It has been a model for many years. Is it your view that the GATT and the treaty diminish in any way the understandings between our two nations and the obligations that arise under them?
Mr. Appleton: I now have a better understanding of your question. I happened to write part of my Masters thesis on this point, so I am glad you asked. No one else has ever asked me about that.
The first issue is that there is an international convention that deals with the interplay of various conventions called the Vienna Convention on the Law of Treaties. It codified hundreds of years of practice. One of the general rules is that the more recent treaty trumps the older treaty, if they deal with the same subject matter. However, that only deals in the case of inconsistency.
I would suggest to you that the International Joint Commission entity, the treaty we are talking about here, is not in fact inconsistent with the NAFTA or with the WTO because they actually speak to different issues. The NAFTA often speaks to issues of compensation, for example, or different types of access. To the extent of inconsistency, in fact, on the same subject matter, most likely the trade agreement will trump the older agreements. There are a variety of rules that fit in, and that is our difficulty, but I would suggest to you they are not inconsistent but part of a rich tableau that fits together. International tribunals will try to construe the two to work together in some fashion.
Dr. Mann: I will take a somewhat different tract. The trade rules apply to measures that are adopted or maintained after the adoption of the agreement, but they also apply to rules that are maintained after the adoption of the trade agreement, so they go back in time. Challenges to existing measures can be brought after a trade law agreement becomes part of the scene. They also apply to implementation decisions. The trade agreement might not apply directly to the other international agreement, but it does apply to any domestic measure taken to implement that agreement, and there is a legal difference between those two things where the NAFTA and the WTO agreements kick in to address the implementation measures of the other international agreement.
None of those implementation measures, even in the agreements listed in Article 103 of the NAFTA, is fully exempted or partly exempted from the provisions of the NAFTA. One exception to that is chapter 11, where it applies primarily to new measures taken when you look at these regulatory issues as opposed to be being able to reach back and apply to a whole range of existing measures. That is it, by and large. There are some exceptions to that too.
Senator Corbin: What is your appreciation of the workings of the treaty over the years? Do you think it has been a useful instrument, and should it continue in the future?
Mr. Appleton: Senator Corbin, I believe that the International Joint Commission that was created by the treaty is one of the finest institutions ever created. It was one the very first times that countries got together to deal with a common environmental problem, and it has been the model for many different bodies. No one in any way is saying that whether this bill is amended or not amended or passed or not passed is a reflection on the International Joint Commission. The commission has done admirable work. That does not mean I have to agree with everything.
Senator Corbin: My specific point was on the treaty, not so much the commission.
Mr. Appleton: The commission really brings together the treaty -
Senator Corbin: The commission and all of us, the government and parliamentarians, we all have a say at some point.
Mr. Appleton: It has been a very successful process, and the very first of its kind. That does not mean there is not an opportunity to make it better. That just means that it has been very successful to date.
Senator Corbin: Does this bill make it better?
Mr. Appleton: As it currently sits?
Senator Corbin: This bill, this initiative, does it make the whole process better in terms of our obligations to implement the contents of the treaty?
Mr. Appleton: With all due respect, Senator Corbin, I would have to say no because of the flaws in the bill. I would like to agree, but I just cannot. If you remedied some of the flaws, I would say yes, and I would like to say yes.
Senator Corbin: Perceived flaws.
Mr. Appleton: As it stands now, if my client were to ask me whether to sign this document, as a lawyer I would have to say no.
Senator Corbin: Have you reread the summary of the bill and its fundamental purpose?
Mr. Appleton: Yes, I have read that and also the debate in the chamber. I have read the treaty.
Senator Corbin: Your charge has been on the potential trade conflicts and problems, but it seems to me you have forgotten the fundamentals of the bill.
Mr. Appleton: If I can recap my testimony here, I made very specific comments about problems with the bill. I identified very specific sections and problems, not from a trade side, because those are actual flaws, in my opinion, with the bill. Now, I am not saying that the treaty is a failure. I am saying this bill does not do what it should to implement the great things that could happen from this treaty. Dr. Mann suggested that there is more scope, as have I, that could be done with this bill.
Senator Corbin: Let me ask this question: With regard to the matters that concern you, could they not be the object of a distinct legislative initiative rather than trying to have this bill encompass all of the criticism or worries that flow under the Canadian sun?
Mr. Appleton: Senator Corbin, your bill regulates in the territory of the United States, in my opinion. Your bill has specific clauses that are ambiguous at best.
I would like to say yes, but the answer unfortunately is no. However, you can correct it.
Senator Corbin: Would we be better off without Bill C-6 and let matters continue as they have over the last 90 years?
Mr. Appleton: Yes, the minister could deal with things by regulations and you would not have a licensing regime.
Senator Corbin: If the minister continued to rule under regulations, Parliament would technically have the possibility for a second look only. With the legislation, we have a first look.
Mr. Appleton: My sense is that if you pass this bill right now Parliament will have fewer options because water will go into commerce. The difficulty here is to provide more opportunities for Parliament to be able to come up with a comprehensive water policy.
Dr. Mann: First, on the question of the extraterritorial issue, with all due respect to Mr. Appleton, that is addressed in section 3 of the existing legislation, which says "imposed or to exist within Canada." If you take that interpretation across the scope of the legislation, the extraterritoriality issue is addressed. This is still a minor technical point, because I do not think there is any intent to have that extraterritorial reach in any event.
Would Canada be better off with or without this bill? I think, with respect, senator, the issue you raised is that without this Parliament will have no say.
Senator Corbin: That is a side issue in response to some comments.
Dr. Mann: It is an important one, given that the scope of the allowable exceptions is nowhere set out in the bill. Those will be done by regulation, over which Parliament has no say. That is a key issue.
With respect to the environmental perspective, in an international environmental and sustainable development law course I teach at the Faculty of Law of the University Ottawa, I use the International Joint Commission and this treaty as an example of some extremely creative and effective institutional development and regime building as one of the leading global examples. It is an effective piece. That has little to do with the scope of Bill C-6. The bill does not touch those other operations that address only the issue of bulk water removals, and does so in a way that puts virtually the entire burden for defining what that will or will not be into the regulatory process.
Senator Corbin: That is your interpretation.
The Chairman: Thank you very much, Dr. Mann and Mr. Appleton.
I shall now entertain a motion for the committee to proceed in camera.
Hon. Senators: Agreed.
The committee continued in camera.