OTTAWA, ONTARIO - Chapter 11 of NAFTA has once again shown itself to be a threat to the capacity of governments to regulate chemical hazards and protect the environment.

Earlier this week, a NAFTA tribunal ruled that Methanex, a Canadian firm seeking $1 billion in damages over California's decision to phase out a gasoline additive it produces, must present more evidence to substantiate its claim that the state's measure was politically, not environmentally, motivated. The Tribunal has given Methanex 90 days to submit further evidence.

"The tribunal should have slammed the door on Methanex," said David Robbins, Trade Campaigner of the Council of Canadians. " There is still the chance that Methanex could win its case, and this would be a major blow on the ability of any government to legislate to protect the environment and the health of its citizens."

After studies showed that the MTBE gasoline additive in question was contaminating ground and surface water, Governor Gray Davis ordered a phase-out of the additive by the end of 2002. Methanex, who produces the methanol needed to manufacture MTBE, argued that the state didn't make that decision on environmental grounds, but to favour Illinois-based Archer Daniels Midland Co. (ADM), who produces ethanol, a competing product.

Methanex amended its original claim by stating that Governor Davis's decision was motivated by political contributions received from ADM. The tribunal's decision stated that Methanex might have a point, but simply didn't have enough evidence to prove it at this time. Incredibly, it granted Methanex more time to make its case.

"These shenanigans only go to support our claim that NAFTA's investor-state provisions open the door for all sorts of abuse and should simply be scrapped," said Robbins.

The Council of Canadians and the Canadian Union of Postal workers launched a lawsuit last year challenging the validity of NAFTA's private enforcement regime as unconstitutional. The groups expect to file evidence in support of their application this fall.

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