By Tom Fuller

July 1998 will be remembered by many as the month the free trade chickens finally came home to roost. Over the last decade, in debates over the Free Trade Agreement (FTA), the NAFTA, and the Multilateral Agreement on Investment (MAI), critics of "trade liberalization" have argued that such treaties seriously limit the government’s ability to pass legislation designed to protect the the public interest in areas like environmental protection. These arguments were pooh-poohed as leftist paranoia by the wealthy and powerful free trade lobby. "What", they asked, "does Free Trade have to do with the environment?"

Well, last month gave us the answer -- and the MMT/Ethyl Corporation fiasco proves just how right the "paranoids" were.

MMT is an octane booster -- a gasoline additive designed to eliminate engine knocking. It was introduced in 1977 to replace tetraethyl lead, an earlier octane enhancer that had been shown to be a serious environmental toxin. Unfortunately MMT soon proved to have problems of its own. Its critical ingredient -- manganese -- can also have health effects. High levels of airborne manganese are associated with some very serious neurological symptoms up to and including death.

In 1995 the Canadian government banned both the import and the interprovincial trading of MMT. Of course the threat to public health wasn’t enough in itself to bring about this legislation: it took complaints from auto manufacturers to prod the government into action. Car makers reported that that MMT was damaging the catalytic converters in automotive pollution control systems

It seemed logical enough at the time. While the scientific evidence wasn’t absolutely conclusive, there seemed to be sound reason to worry about the effects of MMT on public health and the environment. Rather than risk these effects, the government took the prudent course and banned the substance.

In the age of Free Trade however, prudence, logic and the public interest come a distant second to the rights of business. MMT’s manufacturer, the Ethyl Corporation of Richmond, Virginia announced that it was suing the Government of Canada, claiming $251 million in damages. The suit was filed under a provision of the North American Trade Agreement that allows corporations to sue governments -- before that treaty such a suit would have been impossible.

Ethyl Corp. claimed that the ban on MMT would reduce the value of its manufacturing plant, hurt its future profits, and damage its reputation. The federal government huffed and puffed and vowed to fight the suit until its own lawyers quietly informed it that Ethyl was right -- under NAFTA the right of an American Corporation to hypothetical future profits outweighs probable but unproven environmental damage and danger to public health.

The Government of Canada had to accept defeat and public humiliation. It has been forced to agree that it will withdraw the ban on MMT, compensate Ethyl Corp. to the tune of about $19 million taxpayer dollars, and issue a statement that the additive is neither an environmental nor a health risk (a statement that defies both the evidence and common sense).

Of course the corporate press had to find a way to spin the story so that it didn’t cast Free Trade in a negative light. The Globe and Mail tried to portray it as a power struggle between industries ("Ottawa loses in battle between Big Auto, Big Oil") while the Edmonton Journal played the story as yet another example of government inefficiency ("Ottawa bungled the MMT issue").

Unfortunately for them, no amount of media spin-doctoring can obscure the point of this sorry affair: under the rules of Free Trade the rights of an American corporation to make a profit outweigh the obligations of the government of Canada to take prudent precautions in the public interest. In the first major test of the effects of NAFTA on Canadian sovereignty and environmental protection, corporate power came out a clear winner.

(Note. Albertans who are tempted to agree with the Journal’s account of the affair as "federal bungling" should consider this: it was an Alberta government court challenge to the ban on interprovincial trading of MMT that made the Ethyl Corporation victory certain. Of course it shouldn’t surprise anyone that Alberta ended up on the side favoured by the petroleum industry. When it comes to defending the interests of "Big Oil," the Klein Tories have no shame; when it comes to the environment and public health, they have no policy.)