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Confluence of the law of fresh water resources and international trade : do Canada’s international trade… Nash, Brett Jason 2016

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		 CONFLUENCE	OF	THE	LAW	OF	FRESH	WATER	RESOURCES		AND	INTERNATIONAL	TRADE:	Do	Canada’s	International	Trade	Obligations	Apply	to		Canada’s	Fresh	Water	Resources?			 by		BRETT	JASON	NASH		B.A.	(Special.),	The	University	of	Alberta,	1985	LL.B.,	The	University	of	Alberta,	1991				A	THESIS	SUBMITTED	IN	PARTIAL	FULFILLMENT	OF		THE	REQUIREMENTS	FOR	THE	DEGREE	OF		MASTER	OF	LAWS		in		THE	FACULTY	OF	GRADUATE	AND	POSTDOCTORAL	STUDIES		(Law)			THE	UNIVERSITY	OF	BRITISH	COLUMBIA		(Vancouver)			April	2016		©	Brett	Jason	Nash,	2016	 ii	Abstract	This	thesis	explores	whether	international	trade	rules	apply	to	Canada’s	fresh	water	resources.		In	order	to	determine	if	international	trade	rules	apply,	in	particular	the	rules	contained	in	GATT	1947,	GATT	1994,	and	NAFTA,	three	questions	are	posed	by	the	author.		The	first	question	focuses	the	enquiry	on	the	legal	characterization	of	fresh	water	resources	in	the	selected	international	legal	instruments	to	determine	the	obligations	contained	in	the	trade	agreements	apply.		The	second	question	is,	if	the	first	question	cannot	be	answered,	what	other	interpretive	tools	can	be	employed	to	come	to	an	answer.		Finally,	the	third	question	is,	if	international	trade	obligations	apply	the	the	bulk	export	of	fresh	water	resources,	are	there	any	exemptions	which	can	be	employed	to	limit	or	prohibit	the	bulk	export	of	the	resource.	In	order	to	answer	these	questions,	the	author	applies	a	traditional	legal	doctrinal	analysis.		This	provides	a	method	of	analyzing	the	legal	texts	of	the	international	agreements	and	other	legal	materials	in	an	orderly	and	systematic	manner.		Using	this	methodology,	the	author	engages	with	the	primary	materials	to	determine	the	ordinary	meaning	of	the	words	and	phrases	used	in	the	texts.			In	addition	to	the	analysis	of	the	legal	texts,	the	author	reviews	the	history	of	the	development	of	Canada’s	international	trade	and	foreign	policy	through	the	lens	of	the	international	relations	theory	of	exogenous	shock.			By	using	the	theory	of	exogenous	shock	as	an	interpretive	aid,	the	author	is	able	to	provide	justification	in	concluding	that	the	preferred	interpretation	that	Canada’s	international	trade	obligations	found	in	GATT	and	NAFTA	do	not	apply	to	Canada’s	fresh	water	resources.				  	 iii	Preface	This	thesis	is	original,	unpublished,	independent	work	by	the	author,	Brett	Jason	Nash.		The	opinions	reflected	in	this	thesis	are	the	author’s	own	and	do	not	reflect	the	opinions	of	the	Department	of	Justice	Canada	or	the	Government	of	Canada. 		  	 iv	Table	of	Contents	Abstract	..........................................................................................................................................................	ii	Preface	...........................................................................................................................................................	iii	Table	of	Contents	......................................................................................................................................	iv	Acknowledgements	.................................................................................................................................	vii	1		Introduction:		Charting	the	Course	...............................................................................................	1	1.1		What	Questions	Need	to	Be	Answered?	................................................................	10	1.2		How	Will	These	Questions	Be	Answered:		Methodological	Approach	.....	11	2		An	Upstream	View:	A	Retrospective	of	Canada’s	International	Trade	Relations	and	Foreign	Policy	...........................................................................................................................................	19	2.1		An	Historical	View	of	Canada’s	Trade	Relations	and	Trade	Policy	............	21	2.2		International	Relations	Theory	of	Exogenous	Shock	and	Its	Role	in	Changes	in	Canada’s	Foreign	Policy	Shifts	and	Trade	Relations	.........................	37	3		Reading	the	Currents:	A	Review	of	Selected	Boundary	and	Transboundary	Water	Agreements	in	Canada	..........................................................................................................................	47		 v	3.1		Constitutional	Division	of	Powers	of	Legislation	and	Regulation	of	Fresh	Water	(ss.	91	and	92)	and	the	Crown’s	Prerogative	to	Make	Treaties	.............	48	3.2		Implications	of	Section	35	Constitution	Act,	1982,	Aboriginal	Title	and	the	Duty	to	Consult	..........................................................................................................................	54	3.2.1		Section	35	of	the	Constitution	Act,	1982	and	Aboriginal	Rights	and	Title	to	Surface	and	Subsurface	Water	.......................................................................	55	3.2.2		The	Constitutional	Duty	to	Consult	Aboriginal	Groups	Prior	to	Negotiating	and	Implementing	International	Agreements	–	Canada	China	Foreign	Investment	Protection	Act	Challenge	..........................................................	57	3.3		Boundary	Waters	Treaty	...............................................................................................	59	3.4		Columbia	River	Treaty	....................................................................................................	62	3.5		Boundary	Communities	Municipal	Water	Agreements	..................................	64	3.6		Helsinki	Rules,	UNWC,	and	Berlin	Rules	..................................................................	65	3.7		Summary	.............................................................................................................................	70	4		Reading	the	Downstream	Currents:		Do	GATT/WTO	and	NAFTA	Change	the	Status	Quo?	 	................................................................................................................................................	73	4.1		GATT	1947,	GATT	1994,	and	WTO	and	Their	Applicability	to	Fresh	Water	Resources	....................................................................................................................................	74		 vi	4.2		Do	Any	of	the	Provisions	in	NAFTA	Modify	the	Relationship	Developed	in	GATT	as	Among	the	NAFTA	Parties?	...............................................................................	79	4.3		The	Competing	Ideas	of	Public	Good	and	Commercial	Resource	to	Aid	in	Deciding	the	Preferred	Interpretation	............................................................................	82	4.4		What	Are	the	Potential	Effects	of	Exogenous	Shock	on	the	Treatment	of	Fresh	Water	Resources	Under	GATT	and	NAFTA?	....................................................	95	4.5		If	Fresh	Water	Resources	Are	Interpreted	to	Be	Included	in	the	Definition	of	“Good”	or	“Product”,	Can	Article	XX	Be	Used	to	Exempt	Fresh	Water	Resources	From	the	Rules	of	GATT?		...............................................................................	99	4.5.1		Chapter	11	and	Its	Potential	Chilling	Effect	on	Imposing	Environmental	and	Conservation	Measures	.........................................................	106	4.6		Does	the	Discourse	on	Food	Security	and	International	Trade	Assist	in	Answering	the	Question?	....................................................................................................	108	4.7		Answering	the	Question:		Do	International	Trade	Agreements	Apply	to	Fresh	Water	Resources?	......................................................................................................	113	5		Retracing	the	Upstream	Path:	Summary	and	Future	Considerations	.......................	117	References		..............................................................................................................................................	123		 		 vii		Acknowledgements	Researching	and	writing	a	thesis	is	a	relatively	solitary	endeavor.		However,	many	people	have	contributed	in	many	ways	to	the	development	of	my	ideas.		I	have	had	many	discussions	with	many	people	on	a	variety	of	topics	which	seemed	to	have	no	connection	to	this	thesis.		However,	these	discussions	about	ideas	and	themes	in	sociology,	history,	economics,	geography,	cultural	studies,	and	gender	and	race	studies	have	formed	how	I	see	the	law	and	how	international	relations	and	international	law	affect	and	are	affected	by	other	disciplines.		It	may	not	be	readily	apparent	in	this	thesis	of	the	full	extent	of	the	influence	other	academics	have	had,	but	I	do	want	to	acknowledge	their	impact	on	my	academic	development.	I	do	wish	to	specifically	acknowledge	the	contribution	and	support	of	my	thesis	supervisors	Professors	Ljiljana	Biuković	and	Karin	Mickelson.		Their	support	and	input	has	been	invaluable	in	the	finalization	of	my	thesis.		I	would	also	like	to	thank	Professors	Mary	Liston,	Emma	Cunliffe,	Darlene	Johnston,	and	Ben	Richardson	for	their	guidance	and	support	during	the	programme.		As	with	any	organization,	there	are	the	administrators	who	make	sure	things	run	smoothly	and	who	keep	everyone	on	track.		I	would	like	to	thank	Joanne	Chung	for	her	role	in	making	this	thesis	a	reality.						Last	but	not	least,	I	would	like	to	acknowledge	the	support	and	patience	of	family	and	friends,	especially	Gus	and	Coco.		You	have	borne	the	brunt	of	my	distraction,	my	indecision,	and	my	absence	at	times	and	I	thank	you	for	understanding.			 1		1 Introduction:		Charting	the	Course	Amid	the	discussions	on	climate	change	in	recent	years,	there	have	been	numerous	reports	of	droughts,	decreasing	levels	in	the	ground	water	and	reservoirs,	and	stresses	on	regional	water	resources	due	to	increasing	urban,	industrial,	and	agricultural	uses.		Much	of	the	attention	has	been	on	the	Southwestern	region	of	the	United	States	of	America	and	parts	of	Australia.		In	Canada,	which	is	generally	regarded	as	“water	rich”,	there	have	even	been	concerns	about	drought	and	decreasing	volumes	of	water	available	to	support	the	current	needs	in	regions,	particularly	the	Prairies.		Water	restrictions	were	imposed	in	the	Metro	Vancouver	area	in	the	summer	of	2015	due	to	decreasing	levels	in	reservoirs,	unthinkable	to	many	due	to	the	region	being	located	in	a	temperate	rainforest.	However,	this	appears	to	be	a	new	reality	for	many	regions	of	the	world.		The	water	available	for	industrial,	agricultural,	and	human	uses	is	being	stressed	due	to	a	myriad	of	factors.		Not	only	are	there	concerns	about	local	water	reserves	but	also	plans	are	being	developed	to	augment	local	reserves	with	water	diverted	from	water	courses	or	piped	into	regions	to	minimize	the	water	deficit.		This	is	not	a	recent	development,	but	has	reached	a	critical	juncture.	The	object	of	this	thesis	is	to	determine	whether	the	exploitation	and	conservation	of	Canada’s	fresh	water	resources	is	subject	to	Canada’s	international	trade	obligations.			The	means	to	determine	this	is	by	analysing	the	texts	of		 2	international	trade	agreements	to	which	Canada	is	a	party	that	may	apply	to	the	fresh	water	resources.		In	addition	to	the	texts	of	these	agreements,	other	interpretive	tools	will	be	employed	to	attempt	to	provide	guidance	of	how	these	instruments	can	be	interpreted	in	order	to	provide	a	basis	to	answer	the	question.		In	this	thesis,	the	focus	is	on	fresh	water	as	opposed	to	salt	water.		The	term	“fresh	water	resources”	used	throughout	the	thesis	refers	to	fresh	water	from	sources	such	as	aquifers,	rivers,	lakes,	and	ice	caps	and	to	describe	an	exploitable	quantity	of	water.1					Canada	is	one	of	the	world’s	nations	that	has	been	endowed	with	large	fresh	water	reserves.		Some	estimates	by	Environment	Canada	put	Canada’s	fresh	water	reserves	at	20	per	cent	of	the	world’s	total	fresh	water.2		This	fresh	water	is	located	in	large	lakes	throughout	the	country	and	in	its	rivers,	smaller	lakes,	streams,	aquifers,	and	mountain	snow	and	ice	pack.		However,	Environment	Canada	estimates	that	Canada	only	has	7%	of	the	world’s	renewable	fresh	water	resources.3		Some	hydrologist	and	environmental	scientists	classify	water	as	a	resource	that	is	renewable	through	the	water	cycle,	but	is	at	risk	of	becoming	a	exhaustible	resource	due	to	increased	industrial	uses,	which	do	not	return	the	used	water	to	the	natural	system.		Industrial	uses	of	water	include	manufacturing	processes,	resource	extraction,	and	agricultural	irrigation.		Other	major	uses	include	domestic	and	residential	uses	and,	most	importantly,	as	drinking	water.		With	increased	global																																																									1 The terms “water” and “fresh water” are used interchangeably by various authors and when using quotes from those authors, the terms they use will be kept in the quotations. 2 Environment Canada website http://www.ec.gc.ca/eau-water/default.asp?lang=En&n=1C100657-1 Date Modified: 2012-02-16. 3 ibid. 	 3	demand	for	agricultural	and	industrial	uses,	locating	new	sources	of	fresh	water	to	meet	that	demand	by	regions	with	small	reserves	becomes	increasingly	more	urgent.	There	was	a	planned	project	to	ship	fresh	water	resources	from	a	region	of	British	Columbia	that	is	abundant	in	water	to	a	place	that	has	a	water	deficit.	This	plan	developed	by	the	Goleta	Water	District	in	California	involved	the	transboundary	transportation	of	fresh	water	resources.		Plans	like	this	bring	into	play	principles	of	international	law	and	may	invoke	provisions	of	international	trade	agreements.		The	extent	to	which	international	trade	agreements	are	applicable	to	such	situations	is	uncertain.		The	importance	of	an	answer	to	this	question	can	be	shown	by	the	following	case	examples.			In	1990,	two	companies	entered	into	a	joint	venture	in	British	Columbia.		Snowcap	Waters	Ltd.	and	Sun	Belt	Water	Inc.	planned	on	developing	a	business	to	ship	fresh	water	resources	from	Tzela	Creek,	which	empties	into	Toba	Inlet	on	the	coast	of	British	Columbia	north	of	Powell	River.		The	British	Columbia	government	granted	a	license	to	Snowcap	in	1989	allowing	it	to	withdraw	200	acre-feet4	of	fresh	water	resources	from	the	creek	for	the	purposes	of	marine	bulk	export.		The	joint	venture	planned	on	shipping	the	fresh	water	resources	to	California	and	other	destinations	by	tanker.		Snowcap	and	Sun	Belt	actively	pursued	customers	relying	on	the	license	and	the	Crown	policy	to	support	the	export	of	fresh	water	resources																																																									4 an acre-foot of water is defined by the volume of one acre of surface area to a depth of one foot and  is 43,560 cubic feet. There are two definitions of the acre foot (differing by about 0.0006%) depend on whether the international or U.S. survey foot is used. 	 4	to	the	United	States.		Sun	Belt	was	invited	to	enter	into	a	contract	by	the	Goleta	Water	District	in	California	for	the	supply	of	fresh	water	resources	in	bulk	by	marine	transport	in	December	1990.	5			Around	the	same	time,	officials	from	the	British	Columbia	Ministry	of	Environment	wrote	to	Snowcap	to	advise	them	that	they	could	apply	to	increase	the	annual	withdraw	from	the	creek	and	stated:	…	to	obtain	rights	for	greater	quantities	of	water,	an	application	should	be	made	to	the	Comptroller	of	Water	Rights.		Such	an	application	will	be	judged	on	its	individual	merits	provided	that	the	water	to	be	licensed	for	export	is	surplus	to	local	and	provincial	requirements	and	that	the	export	operation	does	not	impact	significantly	upon	other	resource	values	including	environmental	and	land-use	concerns.6		In	addition	to	the	above	information,	the	Deputy	Minister	wrote	to	Snowcap	informing	them	“the	Government	of	British	Columbia’s	policy	is	to	approve	applications	for	export	of	water	from	coastal	streams	provided	that	the	water	is	surplus	to	the	needs	of	British	Columbia	and	is	environmentally	acceptable.”7			 In	December	of	1990,	officials	of	the	Ministry	of	Environment	“advised	[Snowcap	and	Sun	Belt]	that	if	Snowcap	met	the	usual	requirements	of	the	Water	Act	(B.C.)8,	it	would	receive	permission	to	expand	the	Tzela	Creek	license”9	so	that	the	Goleta	Water	District’s	requirements	for	fresh	water	could	be	met.		Based	on																																																									5 Snowcap Waters Ltd. v.  British Columbia, 1997 CanLII 810 (BC SC), 34 BCLR (3d) 139, para. 12 (Snowcap). 6	ibid,	para.	7.	7	ibid,	para.	8.	8 Water Act (B.C.), R.S.B.C. 1979 chap 429. 9	Snowcap,	para.	12.		 5	this,	the	Goleta	Water	District	chose	Sun	Belt	to	enter	into	the	contract	to	supply	fresh	water	resources	in	bulk.	At	the	same	time	as	Snowcap	and	Sun	Belt	were	involved	in	establishing	a	bulk	exporting	operation,	Rain	Coast	Water	Corp.	(which	was	previously	named	Coast	Mountain	Aquasource	Ltd.	and	Aquasource	Ltd.)	was	developing	its	fresh	water	resources	exporting	operation.		Rain	Coast	proposed	in	1983	to	withdraw	water	from	Freil	Lake,	British	Columbia,	also	close	to	Powell	River.		The	water	was	to	be	exported	internationally	and	Rain	Coast	was	focusing	on	the	California	market.		Rain	Coast	secured	a	foreshore	license	from	the	Government	of	British	Columbia	in	1985	permitting	it	to	ship	water	in	bulk	from	the	lake	to	Hotham	Sound	where	it	would	be	loaded	into	marine	transport	vessels.10				The	Government	of	British	Columbia	issued	a	water	license	to	Rain	Coast	in	1986	allowing	Rain	Coast	to	take	1,125	acre-feet	of	water	per	year	from	Freil	Lake.11		 On	March	18,	1991,	Order	in	Council	#331	pursuant	to	section	22	of	the	Water	Act	(B.C.)12	was	issued	imposing	a	moratorium	on	the	issuance	of	licenses	for	the	exportation	of	bulk	fresh	water	resources	by	tanker.		On	June	21,	1991,	the	Legislature	of	British	Columbia	enacted	the	Water	Protection	Act13	that	“had	the	effect	of	prohibiting	the	export	of	water	British	Columbia	in	containers	of	sufficient	size	or	capacity	to	economically	serve	[Snowcap	and	Sun	Belt’s]	intended	business																																																									10 Rain Coast Water Corp.  v. British Columbia, 2008 BCSC 1182, para 3. 11 ibid. 12 Water Act (B.C.), R.S.B.C. 1979 chap 429. 13 Water Protection Act, RSBC 1996, c. 484. 	 6	markets.”14		Both	Snowcap	and	Sun	Belt	commenced	an	action	in	the	Supreme	Court	of	British	Columbia	for	damages	resulting	from	the	prohibition	to	export	bulk	fresh	water	resources	and	the	resulting	inability	of	Sun	Belt	to	satisfy	its	contract	with	the	Goleta	Water	District.	In	addition	to	the	action	commenced	in	the	British	Columbia	Supreme	Court,	Sun	Belt	Water,	Inc.	delivered	a	notice	to	the	Government	of	Canada	in	November	1998	under	the	North	American	Free	Trade	Agreement	(NAFTA)15.		In	its	Notice	of	Intent	to	Submit	a	Claim	to	Arbitration16	under	Chapter	11	of	NAFTA,	Sun	Belt	Water,	Inc.	alleged	that	the	British	Columbia	Government	violated	investment	protection	provisions	in	Articles	1102,	1103,	1104,	and	1105	of	Chapter	11	NAFTA,	as	well	as	provisions	of	the	Canada-	U.S.	Free	Trade	Agreement17	and	Article	XI	of		the	General	Agreement	on	Tariffs	and	Trade	1994	(GATT	1994)18.19		In	the	Notice	dated	November	27,	1998,	Sun	Belt	Water,	Inc.	alleges	that	the	British	Columbia	Government	favoured	a	B.C.	company	by	entering	into	a	secret	agreement	giving	the	company	special	terms	of	access	to	fresh	water	resources	for	export.		In	addition,	the	March	18,	1991	moratorium	imposed	a	prohibition	of	granting	new	water																																																									14	Snowcap,	para.	15.	15 North American Free Trade Agreement between the Government of Canada, the Government of Mexico, and the Government of the United Stats, 17 December 1992, Can T.S. 1994 No. 2. [NAFTA] 16 Sun Belt Water, Inc. v. Government of Canada, Chapter 11 NAFTA Notice of Intent to Submit a Claim to Arbitration, November 27, 1998, Sun Belt Water, Inc. Disputing Investor.  Retrieved from Government of Canada, Foreign Affairs, Trade and Development Canada website archive. www.international.gc.ca/trade-agreements-accords-commerciaux 2013-05-09. 17 Canada – U.S. Free Trade Agreement, Can T.S. 1989 No.3. 18 General Agreement on Tariffs and Trade, 1994, 1867 U.N.T.S. 187, 33 I.L.M. 1153 (1994) [GATT 1994]. 19 Sun Belt Water, Inc. v. Government of Canada, p. 3. 	 7	licences	is	alleged	to	have	been	in	violation	of	NAFTA	and	GATT	1994	that	caused	Sun	Belt	Water,	Inc.	to	suffer	a	loss	on	their	investment	in	a	water	export	enterprise.		In	a	1993	article	entitled	“NAFTA	drinks	Canada	Dry”20,	the	question	was	raised	with	respect	to	the	applicability	of	NAFTA	to	exports	of	fresh	water	resources.		In	this	article,	the	author	Don	Sullivan	points	out	that	in	1992	there	were	differing	opinions	regarding	the	applicability	of	trade	treaties	to	large	scale	exports	of	fresh	water	resources:		the	Canadian	Government,	with	Brian	Mulroney	as	Prime	Minister	at	the	time,	asserting	that	exports	were	not	considered	or	negotiated	during	the	NAFTA	negotiations	and	therefore	not	subject	to	NAFTA;	and	the	Rawson	Aquatic	Institutes’	assertion	that,	pursuant	to	their	analysis,	exports	of	fresh	water	resources	are	not	exempted	or	excluded	due	to	the	operation	of	the	national	treatment	and	general	investment	provisions.21	Sullivan,	a	self-identified	environmentalist	activist,	focuses	on	the	environmental	impact	of	large-scale	water	exports	and	raises	concerns	about	water	exports	and	the	implications	if	fresh	water	resources	are	a	“good”	as	defined	in	NAFTA	and	access	rights	are	given	to	the	United	States.22			In	1999,	the	then	Minister	of	Foreign	Affairs	the	Honourable	Lloyd	Axworthy,	and	the	then	federal	Minister	of	Environment	Honourable	Christine	Stewart																																																									20 Sullivan, Don, ”NAFTA Drinks Canada Dry” in Canadian Dimension Mar/Apr 93, Vol. 27, Issue 2, p 16. 21 ibid.   22 ibid, p. 17. 	 8	announced	a	strategy	to	prohibit	bulk	removals	of	fresh	water	resources	and	exports	from	Canadian	water	basins.23			The	New	York	Times	published	an	article	in	its	March	8,	1999	edition	entitled	Free	Trade	in	Fresh	Water?		Canada	says	No	and	Halts	Exports24	in	which	the	author,	Anthony	DePalma,	recounts	the	long	history	of	US/Canada	relations	when	it	comes	to	fresh	water	and	the	plight	of	Sun	Belt	Water,	Inc.		DePalma	paints	a	rosy	picture	of	Canada’s	abundance	and	excess	of	water	and	chides	Canada	for	opposing	this	view	and,	as	DePalma	says,	Canada’s	belief	that		“it	has	little	or	none	to	spare”25.		He	quotes	Lloyd	Axworthy	as	saying	“it	[fresh	water	resources]	is	not	just	a	commodity”26	when	he	announced	the	moratorium	on	the	bulk	export	of	fresh	water.		DePalma	does	go	to	the	heart	of	the	matter	when	he	writes	“[b]ottled	water	is	already	covered	under	Nafta	(sic),	but	some	Canadians	worry	that	any	export	permit	…	for	bulk	water	would	make	it	a	tradable	good	throughout	North	America.		Similarly,	any	attempt	simply	to	ban	water	exports	would	actually	acknowledge	that	fresh	water	…	is	a	commodity	and	bring	it	under	trade-agreement	regulations.”27	In	2007,	Professor	Thomas	Gunton	of	the	School	of	Resource	and	Environmental	Management	at	Simon	Fraser	University,	along	with	Joshua	MacNab	and	Murray	Rutherford,	revisited	the	issue	by	addressing	the	Canadian																																																									23 Canada, Department of Foreign Affairs and International Trade, “Strategy Launched to Prohibit the Bulk Removal of Canadian Water, including Water for Export,” Press Release, 10 February 1999. 24 DePalma, Anthony, “Free Trade in Fresh Water? Canada Says No and Halts Exports”, March 8, 1999, online edition www.nytimes.com/1999/03/08/world/free-trade-in-fresh-water-canada-says-no-and-halts-exports.html  25 ibid. 26 ibid. 27 ibid. 	 9	Government’s	Accord	for	the	Prohibition	of	Bulk	Water	Removal	from	Drainage	Basins	that	was	proposed	in	1999.28				The	authors	look	at	the	variations	among	the	provinces	in	their	policies	and	regulation	of	water	to	determine	if	there	is	a	truly	Canadian	approach.		They	then	assess	if	these	policies	and	regulations	violate	the	terms	of	NAFTA	and	the	WTO29	agreements	–	GATT	194730	and	GATT	199431.		They	point	out	that	in	addition	to	considering	provincial	and	federal	regulation,	it	is	important	to	consider	Canada’s	other	international	obligations	respecting	water,	in	particular	the	Boundary	Waters	Treaty32	and	river	specific	bilateral	agreements.		The	authors’	analysis	fails	to	come	to	an	answer	to	their	question.			The	fundamental	question	that	arises	from	these	cases	is	how	international	trade	law	and	trade	agreements	apply	to	bulk	exports	of	fresh	water	resources.		At	present,	it	is	uncertain	how	these	international	obligations	apply	to	bulk	exports	and	if	they	do,	how	will	the	provisions	be	interpreted.																																																									28 MacNab, J., Murray B. Rutherford, and Thomas I. Gunton. “Evaluating Canada’s Accord for the Prohibition of Bulk-Water Removal from Drainage Basins: Will it Hold Water?” Environments. 34:3: 57-76. 29 Marrakesh Agreement Establishing the World Trade Organization, Apr 15, 1994, The Legal Texts:  The Results of the Uruguay Round of Multilateral Trade Negotiations 4 (1999), 1867 UNTS 154, 33 ILM 1144 (1994) [WTO] 30 General Agreement on Tariffs and Trade, 30 October 1947, 58 UNTS 187, Can TS 1947 No 27 [GATT 1947] 31 General Agreement on Tariffs and Trade 1994, Apr 15 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1A, The Legal Texts:  The Results of the Uruguay Round of Multilateral Trade Negotiations 17 (1999), 1867 UNTS 187, 33 ILM 1153 (1994) [GATT 1994] 32 Treaty Between the United Kingdom and the United States of America Concerning Boundary Waters and Questions Arising Along the Boundary Between Canada and the USA, United States and United Kingdom, 11 January 1909, 36 US Stat 2448, UKTS 1910 No 23 (Boundary Waters Treaty). 	 10	1.1. What	Questions	Need	to	be	Answered?	As	stated	previously,	the	fundamental	question	which	is	raised	in	these	circumstances	is	whether	the	provisions	of	international	trade	agreements	apply	to	the	bulk	transfer	of	fresh	water	resources.		The	answer	to	this	question	will	determine	if	the	fresh	water	resource	is	the	subject	of	international	trade	law	due	to	being	included	in	the	definition	of	a	“good”	or	“product”	contained	in	the	legal	texts,	and	if	so,	whether	it	can	be	exempted	from	international	trade	obligations	under	the	natural	resource	or	other	exemptions.		In	order	to	do	this,	an	analysis	of	the	texts	of	the	trade	agreements,	legal	dispute	resolution	cases,	and	domestic	case	law	will	be	undertaken	to	determine	how	the	various	tribunals	have	interpreted	the	rights	and	obligations	parties	have	with	respect	to	fresh	water	resources.		This	analysis	will	aid	in	determining	a	legal	definition	of	fresh	water	resources	and	how	international	obligations	should	be	applied	when	disputes	concerning	fresh	water	resources	arise.	In	order	to	accomplish	this,	the	following	questions	will	be	posed:		1. Does	the	legal	characterization	of	fresh	water	resources	in	international	legal	instruments	to	which	Canada	is	a	party	result	in	the	bulk	export	of	fresh	water	resources	being	subject	to	international	trade	obligations?		2. If	the	legal	characterization	of	fresh	water	resources	is	inconclusive,	what	interpretive	tools	can	be	employed	to	clarify	the	issue?			 11	3. If	the	bulk	export	of	fresh	water	resources	is	subject	to	international	trade	obligations,	can	any	of	the	exemptions	contained	in	the	agreements	be	used	to	limit	or	prohibit	its	bulk	export?	The	answer	to	these	questions	is	of	particular	importance	to	Canada.		The	implications	of	the	legal	characterization	of	fresh	water	resources	in	trade	agreements	could	have	significant	environmental	impacts	if	fresh	water	resources	are	a	“good”	or	“product”	and	no	exemptions	are	applicable.	However,	conservation	of	exhaustible	resources	is	one	such	policy	objective	that	is	expressly	dealt	with	in	the	agreements	and	may	provide	for	an	exemption	to	the	applicability	of	the	trade	rules.		With	respect	to	fresh	water	resources,	it	may	be	the	case	that	development	and	export	restrictions	are	necessary	in	order	to	ensure	a	steady	domestic	supply	as	long	as	possible,	to	protect	the	purity	of	the	reserves,	as	well	as	protection	of	ecosystems	and	the	environment	in	line	with	the	international	legal	principle	of	the	precautionary	approach.	1.2. How	Will	These	Questions	Be	Answered:		Methodological	Approach	In	order	to	answer	these	questions,	the	methodology	of	traditional	legal	doctrinal	analysis	will	be	employed.		Michael	Pendleton	describes	the	process	of	legal	doctrinal	analysis	as	involving	“identifying,	reading	and	digesting	the	area	of		 12	concern”33	by	the	writer	by	gathering	cases,	statutes,	preparatory	materials,	and	subsequent	commentary	in	order	to	undertake	an	adequate	analysis.34		He	states	that	this	exercise	involves	“reflection	on	the	law	and	applying	one’s	own	imagination	to	gain	new	insights”35.			This	approach	allows	the	writer	to	engage	with	the	primary	materials	and	identify	novel	approaches	to	the	subject	matter,	based	on	the	writer’s	legal	philosophical	and	theoretical	assumptions.		Edward	Rubin	also	defines	the	traditional	doctrinal	methodology	of	law,	which	he	calls	standard	legal	scholarship,	as	a	“work	[that]	combines	a	critique	of	an	existing	decision	with	a	prescription	…	for	a	different	approach…	[and]	is	characterized	by	in	normative	quality	and	direct	engagement	of	its	recommendations	with	identifiable	legal	decision-makers.”36		What	legal	scholars	are	doing	is	“not	trying	to	describe	the	causes	of	observed	phenomena,	but	to	evaluate	a	series	of	events,	to	express	values,	and	to	proscribe	alternatives.”37	In	analyzing	the	legal	materials,	the	principles	of	statutory	interpretation	will	be	key.		Ruth	Sullivan’s	works	Statutory	Interpretation38	and	Sullivan	and	Driedger	on	the	Construction	of	Statutes39	set	out	the	key	principles	which	will	guide	the	interpretation	of	the	relevant	statutes	and	legal	instruments	to	answer	the	questions	regarding	the	legislative	interpretation	of	fresh	water	resource.		Sullivan																																																									33	Pendleton,	Michael,	“Non-empirical	Discovery	in	Legal	Scholarship	–	Choosing,	Researching	and	Writing	a	Traditional	Scholarly	Article”	in	Research	Methods	for	Law,	Mike	McConville	and	Wing	Hong	Chui,	eds.	(Edinburgh:	Edinburgh	University	Press,	2007),	page	162.	34	Ibid.	35	ibid,	page	163.	36	Rubin,	Edward	L.	“Law	And	and	the	Methodology	of	Law”	1997	Wis.	L.	Rev.	521,	p.	522.	37	ibid,	p.	527.	38 Sullivan, Ruth, Statutory Interpretation (2d Ed.) (Toronto:  Irwin Law, 2007). 39 Sullivan, Ruth, Sullivan and Driedger on the Construction of Statutes (4th Ed.) (Toronto:  Butterworths, 2002). 	 13	states	that	the	generally	accepted	approach	to	statutory	interpretation	is	the	“modern	principle”	as	first	described	by	Elmer	Driedger.		The	modern	principle	is	that	“the	words	of	an	Act	are	to	be	read	in	their	entire	context,	in	the	grammatical	and	ordinary	sense	harmoniously	with	the	scheme	of	the	Act,	the	object	of	the	Act,	and	the	intention	of	Parliament”40	To	complement	this,	courts	in	Canada	have	adopted	the	ordinary	meaning	rule	with	respect	to	implementing	the	modern	principle.		This	approach	has	been	sanctioned	by	the	Supreme	Court	of	Canada	on	many	occasions,	and	most	recently	in	the	case	of	R.	v.	Tse41.		As	Sullivan	explains,	the	ordinary	meaning	rule	is	“not	[the]	dictionary	meaning,	but	the	meaning	that	would	be	understood	by	a	competent	language	user	upon	reading	the	words	in	the	immediate	context.”42			Although	these	principles	are	specifically	discussed	in	the	context	of	statutory	interpretation,	the	interpretation	of	case	law	is	undertaken	in	a	similar	manner.		Philip	Frickey	writes	in	his	article	Faithful	Interpretation43	about	the	use	of	ordinary	meaning	in	legal	analysis	of	texts44.		He	discusses	the	difference	between	what	linguists	mean	by	the	term	and	what	legal	scholars	mean	by	the	term	and	draws	a	distinction	between	the	two.		He	asserts	that	linguists	are	not	normative	unlike	the	legal	scholar,	who	is	“not	merely	a	literal	reader,	but	faithful	to	the	many	broader	concerns	wrapped	up	in	the	established	practices	of	the	legal	interpretive																																																									40	Driedger,	Elmer	A.,	The	Construction	of	Statutes	(Toronto:		Butterworths,	1974),	p.	67.	41 R. v. Tse, 2012 SCC 16. 42	Sullivan,	Statutory	Interpretation,	p.	50.	43 Frickey, Philip P., “Faithful Interpretation” (1995) 73 Wash. U. L. Q. 1085. 44	ibid,	p.	1090.		 14	community.”45		Alani	Golanski	also	contends	that	what	judges	do	is	not	really	linguistic	science.46		Golanski	further	contends	that	“law	and	linguistics	pursue	different	ends	...	[and]	linguists	construing	statutes	will	miss	legally	decisive	issues”47	and	ultimately,	the	courts	do	not	need	to	turn	to	linguistic	science	and	linguists	to	do	what	courts	have	traditionally	done	(interpreting	laws),	and	as	Sullivan	states,	which	they	are	“ideally	suited	[to	do]	…	having	performed	it	for	centuries	in	the	context	of	the	common	law.”48	Two	principles	which	Professor	Coté	discusses	in	his	work49,	Noscitur	a	sociis	and	Ejusdem	generis,	are	particularly	helpful	in	determining	the	meaning	of	terms	in	legislation	and	international	agreements	and	treaties.50		Noscitur	a	sociis	means	that	the	meaning	of	a	term	is	“revealed	by	association	with	others”	usually	in	a	list.		Coté	uses	the	example	of	the	word	“horn”	which	has	multiple	meanings,	however,	when	it	is	found	in	a	list	including	“trombone,	horn,	and	clarinet”	the	meaning	is	clear.51		Ejusdem	generis	means	a	“generic	or	collective	term	that	completes	an	enumeration”.52		Coté	explains	that	such	a	term	“should	be	restricted	to	the	same	genus	as	those	words	[contained	in	the	list],	even	though	the	generic	or	collective	term	may	ordinarily	have	a	much	broader	meaning.”53																																																											45ibid,	p.	1091.	46	Golanski,	Alani,	“Linguistics	in	Law,	(2002-2003)	66	Alb.	L.	Rev.	61,		p.	61.	47	ibid,	p.	63.	48	Sullivan,	Statutory	Interpretation,	p.	101.	49 Côté, Pierre-André, The Interpretation of Legislation in Canada, (3d Ed.) (Scarborough:  Carswell, 2000). 50	ibid,	p.	311.	51	ibid,	p.	313.	52	ibid,	p.	315.	53	ibid,	p.	315.		 15	With	respect	to	the	international	legal	aspect	in	this	work,	it	will	be	necessary	to	employ	an	international	law	doctrinal	methodology.		Stephen	Hall	describes	how	this	methodology	is	similar	to,	but	does	differ	somewhat	from,	the	traditional	doctrinal	methodology.54		He	points	out	that	in	the	international	law	sphere,	“it	is	not	possible	to	point	to	institutions	endowed	with	readily	identifiable	legislative	and	executive	functions”55	and	“international	judicial	organs	as	exist	are	not	endowed	with	compulsory	jurisdiction.”56		Even	without	an	international	system	of	government	and	legislation,	there	is	a	body	of	international	legal	rules.		These	rules	are	generally	found	in	the	guise	of	customary	international	law	and	“supplemented	by	rules	and	principles	which	are	agreed	upon	in	treaties.”57			This	system	of	law	is	“positive	international	law”	as	they	are	guiding	rules	and	principles	that	have	been	agreed	upon	by	the	states	that	have	mutual	relations.58		The	principles	found	in	customary	international	law	are	often	found	in	domestic	laws	and	positive	international	law	often	“co-exists	with,	and	is	conditioned	by,	numerous	general	principles”	found	in	the	domestic	systems.59		Although	international	law	does	not	ascribe	to	the	doctrine	of	stare	decisis,	“decisions	of	international	and	domestic	courts	and	tribunals	are	often	highly	persuasive”60	in	making	determinations	in	international	legal	disputes.		Hall	identifies	the	following	of	sources	of	international	law:		treaties;	custom;	judicial																																																									54 Hall, Stephen, “Researching International Law” in Research Methods for Law, supra note 27, p. 182 ff. 55	ibid,	p.	182.	56	ibid.	57	ibid.	58	ibid.	59	ibid.	60	ibid.		 16	decisions;	acts	of	international	organizations;	and	soft	law.		The	challenge	to	the	legal	scholar	is	sourcing	all	the	various	information,	as	it	is	not	found	in	one	compendium	or	reporting	series,	unlike	most	domestic	legal	materials.		When	the	two	legal	systems	intersect	in	an	area	of	law,	how	that	interaction	is	dealt	with	is	important.		Ruth	Sullivan	points	out	that	the	Supreme	Court	of	Canada	has	“emphasized	the	relevance	of	international	law	norms	and	values	in	the	interpretation	of	domestic	law.”61		She	points	to	the	case	of	Baker	v.	Canada	(Minister	of	Citizenship	and	Immigration)62	as	support	for	her	position.		Justice	L’Heureux-Dubé	wrote	in	paragraphs	67	to	71:	International	treaties	and	conventions	are	not	part	of	Canadian	law	unless	they	have	been	implemented	by	statute	…	therefore	have	no	direct	application	within	Canadian	law.	Nevertheless,	the	values	reflected	in	international	human	rights	law	may	help	inform	the	contextual	approach	to	statutory	interpretation	and	judicial	review		In	2007	the	Supreme	Court	of	Canada	held	in	R.	v.	Hape63	that	“[i]t	is	a	well-established	principle	of	statutory	interpretation	that	legislation	will	be	presumed	to	conform	to	international	law	…	based	on	the	rule	of	judicial	policy	that,	as	a	matter	of	law,	courts	will	strive	to	avoid	constructions	of	domestic	law	pursuant	to	which	the	state	would	be	in	violation	of	its	international	obligations”.		Among	the	international	materials	on	which	Canadian	courts	rely	are	text	of	treaties,	international	law	instruments,	preparatory	works,	international	tribunal	decisions																																																									61	Sullivan,	Construction	of	Statutes,	p.	425.	62	Baker v. Canada (Minister of Citizenship and Immigration),	[1999]	1	S.C.R.	817.	63 R. v. Hape 2007 SCC 26, para. 53. 	 17	and	reasons,	case	law	of	other	jurisdictions	interpreting	international	law,	and	administrative	guidelines	issued	by	international	agencies.64			The	way	in	which	international	law	is	incorporated	into	Canadian	domestic	law	is	a	function	of	unwritten	constitutional	principles.65		Gib	van	Ert	describes	the	unique	Canadian	reception	of	international	law	into	domestic	law	as	function	of	the	royal	prerogative	over	foreign	affairs	as	an	executive	function,	not	a	legislative	one.		In	order	for	a	treaty	to	become	domestic	law,	it	must	either	be	implemented	by	statute	or	be	incorporated	into	the	common	law.		If	the	principle	in	issue	is	a	matter	of	customary	international	law,	van	Ert	explains	that	“it	is	said	to	be	directly	incorporated	by	the	common	law,	without	the	need	for	legislative	intervention”66	but	can	be	overridden	by	express	legislative	provisions.		van	Ert	argues	that	treaties	and	customary	international	law	is	a	factor	to	be	used	in	interpreting	domestic	law	and	that	“[i]nternational	law	is	part	of	the	interpretive	exercise.”67	Given	that	the	scope	of	this	work	is	to	ascertain	the	legal	characterization	of	fresh	water	resources	with	a	view	to	the	protection	of	the	resource,	the	methodology	chosen	will	provide	the	proper	tools	to	accomplish	that	goal.		When	considering	the	methodology,	the	possibility	of	employing	a	law	and	sociology,	a	law	and	economics,	and	a	law	and	geography	methodologies	were	considered.		When	considering	these	other	methodologies,	all	of	which	are	empirical	in	nature,	it	was	determined	that	the	questions	can	be	answered	and	the	objective	achieved	with	a																																																									64	Sullivan,	Construction	of	Statutes,	p.	427.	65 van Ert, Gib, “Dubious Dualism:  The Reception of International law in Canada”, (2009-2010) 44 Valparaiso U. L. Rev. 927, p. 927. 66 ibid, p. 930. 67 ibid, p. 932. 	 18	traditional	doctrinal	methodology	and	does	not	require	an	empirical	methodology.		Although	there	is	value	in	the	other	methodologies,	those	methodologies	would	be	better	employed	in	a	work	that	had	as	its	objective	the	analysis	and	critiquing	of	the	prevailing	law	and	neo-liberal	economics	theoretical	underpinnings	of	international	trade	law	which	would	result	in	a	new	normative	approach	to	the	field.	Prior	to	applying	the	methodology	to	the	legal	texts	of	the	international	agreements	to	determine	an	answer	to	the	research	questions,	a	review	of	the	historical	context	of	Canada’s	development	of	international	trade	and	foreign	policy	will	be	undertaken	in	Chapter	2.		In	Chapter	3,	selected	Canadian	boundary	and	transboundary	agreements	are	canvassed	to	elucidate	how	fresh	water	resources	are	characterized	in	these	non-trade	international	agreements.		The	analysis	of	the	legal	texts	of	GATT	1947,	GATT	1994,	and	NAFTA	is	undertaken	in	Chapter	4	by	applying	the	chosen	methodology.		Finally,	a	summary	and	concluding	remarks	about	broader	implications	follows	in	Chapter	5.	 		 19		2 An	Upstream	View:	A	Retrospective	of	Canada’s	International	Trade	Relations	and	Foreign	Policy	Any	discussion	regarding	Canada’s	current	obligations	and	responsibilities	with	respect	to	the	conservation,	protection,	and	exploitation	of	its	fresh	water	resource	in	the	context	of	international	agreements	need	to	be	put	in	a	historic	context.		The	history	and	development	of	Canada’s	trade	and	international	relations	illustrates	the	effect	of	international	events	on	domestic	policy	decisions	surrounding	Canada’s	economic	and	diplomatic	goals.		The	following	review	gives	us	and	understanding	of	how	the	policy	shifts	over	time	and	how	international	agreements	are	implemented	and	interpreted	in	light	of	shifting	international	relations.	Canada’s	colonial	and	national	history	is	one	that	is	dominated	by	trade.		This	trade	has	primarily	been	with	three	imperial	nations:		France,	Great	Britain,	and	the	United	States.68		This	economic	reality	has	been	a	major	factor	in	the	Canadian	style	of	nationalism.69		One	key	element	of	the	drive	to	confederation	was	economic	stability,	which	would	provide	for	national	security.		The	national	policies	that	had	emerged	included	among	its	goals	an	economic	plan	that	promoted	Canadian	manufacturing,	protection	from	American	competition,	and	settlement	of	the																																																									68	Inwood,	Gregory,	Continentalizing	Canada:	The	Politics	and	Legacy	of	the	MacDonald	Royal	Commission,	(Toronto:		University	of	Toronto	Press,	2005)	p.	20.	69	Ibid,	p	19.		 20	West.70			This	allowed	Canada	to	move	away	from	a	colonial	outpost	of	Great	Britain	towards	nationhood.		Canada	entered	into	international	trade	negotiations	after	World	War	II	at	a	time	when	the	nature	of	the	Canadian	economy	was	being	debated	domestically.		The	rise	of	trade	liberalization	post	World	War	II	raised	concerns	about	the	primary	and	secondary	effects	of	free	trade.71		The	primary	effects	included	the	concern	that	structure	of	the	Canadian	industrial	environment	being	mostly	a	“branch-plant”	to	American	corporations	inhibited	the	ability	of	industry	to	take	full	advantage	of	economies	of	scale	and	that	management	decisions	would	be	influenced	and	controlled	by	foreign	owners.72	Although	there	were	concerns	about	entering	into	free	trade,	it	was	clear	from	the	global	environment	that	trade	liberalization	was	a	trend	that	was	gaining	traction	and	was	seen	as	necessary	for	economic	development	in	the	post-World	War	II	era.		As	Professor	J.L.	Granatstein	states	it	is	a	“truism	to	say	that	every	trade	agreement	benefits	some	and	hurts	others”	and	free	trade	“is	very	much	an	emotional	political	issue”.73		“[T]here	are	not	very	many	lessons	in	history	that	stand	out	clearly;	on	that	does,	however,	is	that	free	trade																																																									70	Ibid,	p.	20.	71	Stairs,	Denis	and	Gilbert	R.	Winham		“The	Politics	of	Canada’s	Economic	Relationship	with	the	United	States:		An	Introduction”	in	The	Collected	Research	of	the	Royal	Commission	on	the	Economic	Union	and	Development	Prospects	for	Canada	(The	MacDonald	Commission),	Vol.	29	The	Politics	of	Canada’s	Economic	Relationship	with	the	United	States,		D.	Stairs	and	G.R.	Winham	(C)	at	p.	5.	72	ibid.	73	Granatstein,	J.L.	“Free	Trade	between	Canada	and	the	United	States:		The	Issue	That	Will	Not	Go	Away”	in	The	Collected	Research	of	the	Royal	Commission	on	the	Economic	Union	and	Development	Prospects	for	Canada	(The	MacDonald	Commission),	Vol.	29	The	Politics	of	Canada’s	Economic	Relationship	with	the	United	States,		D.	Stairs	and	G.R.	Winham	(C)	p.	50.		 21	between	Canada	and	the	United	States	has	major	political	implications	in	Canada.		Any	political	leader	who	forgets	that	does	so	at	his	peril.”74	In	1982	a	Royal	Commission	was	established	to	study	the	nations	economic	and	trade	future.		This	Commission	is	formally	named	the	Royal	Commission	on	the	Economic	Union	and	Development	Prospects	for	Canada,	but	is	usually	referred	to	as	the	Macdonald	Commission	for	its	chair	Donald	Macdonald.		The	importance	of	this	Royal	Commission	should	not	be	understated	as	it	was	the	largest	social	science	research	project	ever	undertaken	in	Canada.75		The	Commission	produced	seventy-two	volumes	of	research	findings,	which	included	historical,	policy,	and	economic	reports.		The	Commission’s	final	report,	and	the	supporting	research	reports,	are	a	useful	tool	to	understand	how	historically	international	trade	has	influenced	Canada’s	economic	development	and	how	policy	changes	have	been	influenced	by	reactions	to	internal	and	external	conflicts.76	2.1 An	Historical	View	of	Canada’s	Trade	Relations	and	Trade	Policy	Professor	J.L.	Granatstein,	in	writing	for	the	Macdonald	Commission,	traces	the	development	of	the	idea	of	free	trade	by	looking	at	the	crisis	points	since	the	mid	1800’s:		The	reciprocity	treaty	of	1854;	its	abrogation	in	1866;	the	campaign	for	reciprocity	that	culminated	in	the	1891	election;	the	1911	reciprocity	agreement	and	the	election;	the	impact	of	the	Great	War	(WWI);	the	trade	agreements	of	1935																																																									74	ibid.	75 Inwood, Continentalizing Canada, p. 6. 76 ibid, pp. 7 – 8. 	 22	and	1938;		the	Hyde	Park	agreement	of	1941;	free	trade	discussions	of	1947-1948;	the	Auto	Pact	of	1965.	By	the	mid	1980’s,	80	percent	of	Canada’s	exports	to	the	US	entered	free	of	duty	and	66%	of	American	exports	to	Canada	were	free	of	duty.		This	was	in	a	worldwide	environment	in	which	tariffs	had	fallen	substantially	due	to	international	trade	treaties	and	multinational	trade	negotiations	since	1946.			However,	as	tariffs	fell,	non-tariff	barriers	were	put	up	in	their	wake.		It	was	considered	at	the	time	that	in	order	to	protect	the	survival	of	Canadian	industries,	closer	trade	ties	to	the	US	had	to	be	established	to	protect	the	market	from	the	increasingly	hostile	global	trading	environment.	As	Granatstein	points	out,	“reciprocity	has	always	been	contentious”.77		He	explains	that	throughout	Canadian	history,	there	has	been	a	fear	of	the	United	States	and	more	of	a	desire	to	embrace	Canada’s	British	heritage	and	focus	on	the	Commonwealth.		This	fear	of	the	US	and	connection	to	Britain	was	a	consequence	of	the	concern	that	Canada	would	be	“pulled	into	the	American	Union	as	another	state”.78		It	is	Granatstein’s	contention	that	Canada’s	international	relations	and	trade	policy	has	historically	been	influence	by	these	fears	and	that	Canadian	nationalism	is	a	factor	which	matters	and	colours	policy	development	and	negotiations.																																																									77	ibid,	p.	48.	78	ibid.		 23	Trade	policy	is	often	a	tool	that	is	modified	in	response	to	external	events	in	order	to	implement	foreign	policy	and	achieve	the	desired	foreign	policy	goals.		In	fact,	looking	at	the	dynamics	of	Canada’s	trade	policy	will	show	Canada’s	major	foreign	policy	aims.		As	professors	Gecelovsky	and	Kukucha	state	“[s]ince	the	days	of	the	European	presence	on	the	continent,	trade	concerns	have	been	an	important	component	of	Canada’s	foreign	relations	and,	today,	of	its	foreign	policy”.79			Just	as	Granatstein,	Stairs,	and	Winham	conduct	an	historical	overview	of	Canada’s	trade	relations	for	the	Macdonald	Commission,	John	Whalley,	Colleen	Hamilton,	and	Roderick	Hill	analyze	Canada’s	foreign	and	trade	policies	for	the	Commission.		Whereas	the	historical	analysis	is	a	traditional	historiographical	look	at	the	events	surrounding	the	various	phases	in	Canada’s	trade	relations	with	other	states,	especially	the	colonial	states,	the	policy	analysis	is	based	more	on	the	ideologies	at	play	which	influenced	the	development,	implementation,	and	modification	of	Canada’s	policies	over	time.		Other	writers	have	built	on	this	analysis,	as	well	as	critiquing	it,	resulting	in	a	fluid	discourse	regarding	Canada’s	foreign	trade	policy	evolution.	Whalley,	Hamilton,	and	Hill	rely	on	the	historical	context	of	Canada’s	trade	policies	in	order	to	identify	future	trade	policy	options.		They	proceed	on	the	premise	that	the	Canada’s	national	development	is	rooted	in	its	trade	policy	“since	the	origins	of	the	nation	itself	lie	partly	in	trade	policy	conflicts.”80		They	contend																																																									79	Gecelovsky,	Paul	and	Christopher	J.	Kukucha,	“Foreign	Policy	Reviews	and	Canada’s	Trade	Policy:	1968	–	2009”	in	American	Review	of	Canadian	Studies,	Vol.	41,	Issue	1,	2011,	p.	37	80	Whalley,	Hamilton	and	Hill,	“Canada’s	Trade	Policies	in	Context”	in	Canadian	Trade	Policies	and	the	World	Economy	(Toronto:	University	of	Toronto	Press,	1985),	p.	34.		 24	that	Confederation	itself	was	the	result	in	large	part	of	the	United	States	withdrawal	from	the	1854	reciprocal	free	trade	treaty	in	1866.		Furthermore,	the	development	of	the	National	Policy	in	1879	is	the	result	of	failed	attempts	to	enter	into	trade	agreements	with	Britain	and	the	United	States	immediately	after	Confederation,	as	the	prevailing	thought	was	that	these	types	of	arrangements	were	preferable	to	protectionism.		However,	since	negotiations	failed	with	the	other	nations,	the	Canadian	government	adopted	what	they	saw	as	a	second-best	policy	of	tariffs	to	protect	the	fledgling	nation.	The	National	Policy	looked	inwards	to	developing	the	western	part	of	Canada	by	means	of	subsidies	of	transportation,	among	others.		It	guaranteed	a	market	for	the	producers	in	central	Canada	and	encouraged	higher	wages,	which	curtailed	emigration	from	Canada	southward.	81			Gecelovsky	and	Kukucha	echo	the	same	sentiments	in	respect	to	the	importance	of	trade	in	Canada’s	foreign	policy.		One	of	the	earliest	governmental	departments	was	the	Department	of	Trade	and	Commerce,	established	in	1892.		Shortly	after	the	Department	was	established,	full	time	trade	commissioners	were	appointed	and	began	to	travel	abroad	to	establish	trade	relations	with	other	states.		In	illustrating	how	important	trade	issues	are	to	Canada	they	state:	That	trade	matters	were	central	to	Canada's	foreign	policy	was	a	view	articulated	in	1942	by	the	then	Assistant	Under	Secretary	of	State	for	External	Affairs	Hugh	Keenleyside,	when	in	the	context	of	Canada	he	wrote	that	‘trade	and	other	economic	factors	are	fundamental	to	90%	of	all	international	relations	and	are	thus	worthy	of,	and	in	fact	demand,	consideration	by	the	most	competent	and	responsible	officials	available’.	The	same	sentiments	were	voiced	almost	40	years	later	when	an	official	in	the	Department	of	External																																																									81	ibid.		 25	Affairs	remarked	that	‘Canada's	external	policies	and	its	foreign	activities	must	relate	directly	to	[Canada's]	national	interest	and	that	interest	is	90%	oriented	towards	trade	and	commerce.’		…		In	short,	Canada	is	and	has	always	been	‘a	trading	nation.’82	In	the	years	following	Confederation,	protectionism	was	maintained,	but	was	modified	over	time.		A	“one	size	fits	all”	tariff	regime	was	not	advantageous	to	the	Canada	market,	so	a	system	of	tariffs	developed	in	which	different	tariffs	were	applied	to	different	trading	partners.		Up	until	the	post	WW	II	period,	the	highest	level	was	applied	to	trade	with	states	that	had	not	negotiated	a	special	treaty	with	Canada.		The	United	States	was	among	these	states.		Lower	tariffs	were	imposed	on	states	with	a	special	treaty,	and	lower	yet	were	applied	to	trade	within	the	British	Empire.83		During	this	time,	the	governments	of	the	day	felt	that	a	policy	of	protectionism	was	the	only	political	option	as	the	protectionist	sentiment	had	a	firm	gasp	among	the	populace.		Politicians	during	this	period	would	not	try	to,	nor	did	not	try	to,	explore	policy	alternatives	as	they	were	of	the	feeling	that	it	would	be	fatal	to	retaining	office.84			The	Great	Depression	had	changed	the	playing	field	and	forced	the	governments	of	many	nations	to	assess	their	foreign	relations	and	trade	policies.		One	of	the	main	reactions	to	the	Depression	was	the	increase	in	tariffs.		However,	the	United	States’	President	Roosevelt	and	his	government	were	of	the	opinion	that	the	high	level	of	tariffs	on	international	trade	was	one	of	the	main	factors	that	exacerbated	the	Depression.		They	developed	a	“Good	Neighbor	Policy”	and	began																																																									82	Gecelovsky,	and	Kukucha,	p.	39.	83	ibid.		It	is	interesting	to	note	that	the	special	treatment	Canada	gave	to	trade	within	the	British	Empire	was	not	necessarily	reciprocated.		This	did	change,	however,	with	the	establishment	of	the1932	Commonwealth	System	of	Preferences.	84	ibid,	p.	42		 26	negotiating	bilateral	reciprocal	trade	agreements	with	it	largest	trading	partners.85		With	this	development,	the	Roosevelt	government	developed	the	notion	of	“most	favored	nation”.		Canada	was	one	of	the	first	of	the	trading	partners	to	attain	this	status,	which	also	reflected	a	significant	change	in	Canada’s	protectionist	trade	policy.		This	development	and	shift	in	trade	policies	of	major	trading	nations	set	the	stage	for	the	multilateral	trade	negotiations	in	the	post	WWII	era.86		What	emerged	out	of	the	Great	Depression	and	World	War	II	was	the	development	of	a	globally	focused	integrated	trade	and	financial	system.		The	goal	was	for	international	trade	relations	to	be	governed	by	principles	of	non-discrimination	and	transparency	in	trade	relations	and	trade	barriers.		In	addition,	eventually	all	non-tariff	barriers	would	be	eliminated	in	favour	of	tariffs,	which	would	subsequently	be	subject	to	negotiation,	reduction,	and	even	elimination	in	some	cases.87	Although	Canada	was	involved	in	the	development	of	the	post	war	economic	order,	the	United	Kingdom	and	the	United	States	were	primarily	responsible	for	establishing	the	general	parameters.88		This	international	economic	order	was	premised	on	“liberal	principles	such	as	reducing	barriers	to	trade	to	allow	for	the	free	flow	of	goods	on	the	basis	of	comparative	advantage,	developing	a	set	of	international	rules	to	regulate	member	states’	trade	policy,	developing	a	mechanism																																																									85	ibid,	p.	42	86	ibid,	p.	43	87	ibid,	p.	43	88	Gecelovsky	and	Kukucha,	p	38.		 27	to	settle	disputes	among	states	amicably,	and	creating	a	set	of	international	institutions	to	promote	and	enforce	the	economic	order.”89		What	emerged	in	1947was	the	General	Agreement	on	Tariffs	and	Trade90,	better	known	as	GATT	1947.	According	to	Whalley,	it	has	been	“increasingly	apparent	to	Canadians	that	during	the	postwar	years,	the	rest	of	the	world	ha[d]	not	maintained	the	same	allegiance	to	the	spirit	of	the	GATT	that	Canada	ha[d]	shown.”91		At	the	time	of	the	establishment	of	the	Macdonald	Commission,	the	existing	trade	policies	were	being	questioned	as	a	result	of	the	proliferation	of	regional	trade	agreements	and	the	increase	in	use	by	states	of	non-tariff	trade	barriers	that	affected	the	ability	to	negotiated	changes	to	GATT	1947.		In	addition	to	this,	the	Canadian	government	became	concerned	about	the	shift	in	attitudes	of	the	United	States	government	toward	trade	with	Canada,	starting	in	the	early	1970s.			Up	to	this	time,	Canada	and	the	United	States	had	recognized	the	special	relationship	and	also	entered	into	the	Auto	Pact	in	196592,	which	allowed	for	duty	free	trade	in	auto	equipment	and	parts	between	the	two.		However,	this	was	being	challenged	as	the	United	States	implement	protective	trade	measures.93		On	August	15,	1971,	President	Nixon	announced	that	the	United	States	was	implementing	“a	range	of	measures	targeted	at	rescuing	the	US	from	its	first	trade	deficit	of	the																																																									89	Gecelovky	and	Kukucha,	p.	39.	90 General Agreement on Tariffs and Trade, 30 October 1947, 58 UNTS 187, Can TS 1947 No 27 (entered into force 1 January 1948) (GATT 1947). 91	Whalley,	p.	46.	92 Agreement	concerning	Automotive	Products	between	the	Government	of	Canada	and	the	Government	of	the	United	States	of	America,	Canada	Treaty	Series	1966/14. 93	ibid,	p.	47.		 28	century,	…	largely	due	to	the	war	in	Vietnam.”94		The	measures	included:	a	10	percent	surcharge	on	goods	entering	the	United	States;	export	subsidies	to	US	corporations;	end	of	the	convertibility	of	the	US	dollar	to	gold;	and	an	end	to	the	pegged	value	of	gold.	This	was	called	the	Nixon	Shock	and	most	of	the	measures	were	aimed	at	Canada	as	it	had	an	$800	million	trade	surplus	with	the	United	States	in	1970.95		After	the	scare	of	the	Nixon	Shock,	the	Trudeau	government	reassessed	the	Canada	-	US	trade	relationship	and,	in	October	1972,	the	Secretary	of	State	Mitchell	Sharp	outlined	Canada's	‘options	for	the	future’.		Sharp	outline	three	options:	(1)	maintenance	of	the	status	quo;	(2)	closer	integration	with	the	US;	and	(3)	to	develop	and	strengthen	the	Canadian	economy	in	other	aspects	of	its	national	life	and	in	the	process	reduce	the	present	Canadian	vulnerability.96	In	light	of	this,	the	Canadian	government	adopted	the	“third	option”	which	focused	on	increasing	trade	with	Europe	to	counterbalance	the	reliance	on	trade	with	the	United	States.		In	addition,	more	focus	was	placed	on	trade	with	Asian	states	and	Latin	America.			In	conjunction	with	the	realignment	of	the	trade	aspect,	the	“third	option”	included	an	element	of	controlling	foreign	direct	investment	in	Canadian	enterprises	by	means	of	the	Foreign	Investment	Review	Agency	(FIRA)97.		This	agency	was	given	the	mandate	to	review	proposed	direct	investment	in	Canadian	industries.		The	main	focus	of	the	review	was	to	ensure	that	such	foreign																																																									94	Gecekovsky	and	Kukucha,	p.	41.	95	ibid.	96	ibid.	97 The Foreign Investment Review Agency was established by the Foreign Investment Review Act, S.C. 1973-74, c. 46. 	 29	investment,	and	the	resulting	control	of	Canadian	industry,	would	be	of	significant	benefit	to	Canada.98	Another	stressor	to	Canada’s	international	trade	was	the	competition	that	was	developing	from	newly	industrialized	states	whose	goods	had	comparative	advantages	over	Canadian	good	due	to	lower	labour	and	other	input	costs.		Up	until	this	time,	Canada’s	relationship	with	these	nations	was	generally	that	of	a	compassionate	nation	providing	development	aid	and	other	forms	of	aid.		As	the	competition	in	the	realm	of	trade	increased	in	the	1970s,	Canada’s	relationship	with	these	nations	changed	from	the	provision	of	untied	aid	to	tied	aid	and	increasingly	restrictive	trade	policies.99			As	Whalley	points	out,	Canada’s	trade	policies	are	influenced	by	a	multitude	of	factors.		Canada	is,	and	always	has	been,	a	small	trading	nation.		Trade	policies	have	a	significant	impact	on	the	domestic	life	of	Canadians.		With	this	in	mind,	trade	policies	have	an	effect	on	industrial	development,	Canada’s	involvement	in	international	aid	and	development,	foreign	ownership	of	Canadian	industries.100		Canadian	governments	and	population	have	tended	towards	protectionism	as	a	mechanism	to	protect	self-determination,	but	that	has	become	harder	to	hold	on	to	in	an	evolving	global	economy.		As	a	result,	Canada	has	had	to	readjust	its	foreign	and	trade	policies	to	take	on	new	challenges.																																																									98 Whalley, p. 48 – 50. 99	Whalley,	p.	47.		Untied	aid	is	international	aid	that	is	provided	without	conditions.		Tied	aid	is	generally	when	aid	is	given,	but	with	conditions	that	the	aid	is	used	to	buy	technology	or	goods	from	the	state	which	provides	the	aid,	thus	restricting	the	use	of	the	aid	provided.	100	ibid,	p.133		 30	Professor	Michael	Hart	takes	a	similar	view	to	the	historical	policies	Canada	adopted	with	respect	to	reciprocity	and	international	trade.		He	concludes	that	the	decision	of	Canada	to	enter	into	trade	negotiations	with	the	United	States	in	the	1980’s	was	based	on	economic	considerations.		The	survival	of	Canadian	industries	and	businesses	seemed	to	be	at	stake	“in	the	face	of	the	overwhelming	economic	superiority	enjoyed	by	the	United	States”	especially	in	light	of	the	United	States	persistent	protectionism.101		What	was	intended	was	a	negotiated,	rules	based	relationship	would	ease	tensions	in	what	had	been	adversarial	and	the	rules	would	be	binding	on	both	of	the	governments.		This	was	seen	as	a	means	to	reduce	conflict	between	the	nations	and	provide	a	measure	of	stability	and	an	environment	that	would	promote	greater	economic	prosperity	and	efficiency.102	Hart	argues	that	the	seeds	of	the	trade	negotiations	in	1980’s	were	sown	in	1935	when	President	Franklin	Roosevelt	and	Prime	Minister	Mackenzie	King	“carved	out	a	special	relationship	(sic)	between	the	two	countries”	which	was	used	to	exempt	Canada	from	measures	aimed	at	other	trading	partners.103		With	the	signing	of	the	GATT	in	1947,	Canada	and	the	US	had	in	effect	entered	into	an	agreement	that	would	regulate	bilateral	trade	with	rules	and	processes	to	resolve	disputes.		Although	the	Canadian	government	entered	into	GATT	in	1947	and	supported	gradual	trade	liberalization,	Hart	argues	many	economic	actors	in	Canada	in	the	post	war	period	were	in	favour	of	maintaining	protectionist	measures.		This																																																									101	Hart,	Michael,	“Of	Friends,	Interests,	Crowbars,	and	Marriage	Vows	in	Canada-United	States	Trade	Relations”	in	D’Haenens,	Leen,	ed.	Images	of	Canadianess:		Visions	on	Canada’s	Politics,	Culture,	and	Economics.	(Ottawa:	University	of	Ottawa	Press,	1998)	at	p.	209.	102	ibid,	p.	214.	103	ibid.	p.	208.		 31	opposition	would	continue	on	and	become	a	vocal	opposition	to	trade	negotiations	in	the	1980’s.			When	the	Canadian	government	announced	it	was	entering	into	trade	negotiations	with	the	United	States	in	the	1980’s,	it	came	as	a	surprise	to	many	Canadians.		Through	Canada’s	history,	free	trade	was	one	of	the	most	politically	divisive	issues.		Prime	Minister	Brian	Mulroney	was	elected	in	1984	on	a	platform	that	did	not	include	international	trade	as	a	component.		Previous	prime	ministers	did	not	have	negotiating	trade	agreements	as	part	of	their	agendas,	either.		This	impetus	to	enter	into	negotiations	with	the	United	States	after	the	1984	election	was	as	largely	a	result	of	lobbyists	from	outside	of	the	government	advocating	that	better	relations	with	the	US	would	be	one	of	the	results	of	free	trade.104		The	lobbyist,	which	have	been	described	as	employing	professional	rather	than	partisan	rationales,	were	also	able	to	tap	into	aspects	of	the	Conservative	government’s	goals	in	order	to	justify	entering	into	negotiations.		Along	with	the	goal	of	ratcheting	down	the	adversarial	tone	of	Canadian-American	relations,	the	Conservative	goal	of	reduction	of	government	intervention	in	the	marketplace	and	allow	more	flexibility	of	market	players	to	influence	the	Canadian	economy.105	Despite	the	Mulroney	Government’s	willingness	to	enter	into	trade	negotiations	with	the	US,	there	were	many	groups	who	still	feared	reciprocity	and	integration	of	economic	systems.		These	“populist”	groups	raised	concerns	about	the	threat	to	Canadian	culture,	environmental	protection,	equality,	and	Canadian	social																																																									104	ibid,	p.	213.	105	ibid.		 32	programmes	(such	as	health	care,	education,	social	assistance,	among	others).		As	Hart	states,	“[t]he	debate	pitted	a	corporate	internationalist	vision	against	a	populist	nationalist	one”.106		In	sum,	Hart	argues	that	the	rationale	for	Canada	to	enter	into	a	trade	agreement	with	the	United	States	was	based	on	economic	stability	and	growth,	although	protection	of	Canada’s	national	identity	was	a	by-product	of	the	economic	benefits.	In	his	review	of	the	impact	of	the	Macdonald	Commission,	Professor	Gregory	Inwood	reviews	Canada’s	economic	history	and	policy	development,	particularly	from	the	1980s	onward.		While	his	main	focus	was	on	the	work	of	the	Commission	and	its	impact,	he	conducts	a	review	of	the	economic	and	political	environment	and	the	changes	it	experienced.		His	main	observation	is	that	there	was	a	disconnect	in	the	early	1980s	of	the	nationalistic	sentiment	and	social	democratic	style	of	government	arising	out	of	the	social	movements	of	the	1960s,	which	were	reinforced	by	the	Trudeau	government’s	“third	option”,	and	the	economic	crisis	of	1981	and	the	rise	of	liberal	economic	policies,	exemplified	by	the	neo-conservative	“Reaganomics”	and	“Thatcherism”.		According	to	Inwood,	this	resurrected	trend	of	neo-conservatism107	and	continentalism	exposed	Canada	to	be	subject	to	the	hegemonic	power	of	the	United	States,	and	threatened	the	social	programmes	and																																																									106	ibid,	p.	215.	107	Liberalism	in	North	America	is	generally	used	in	relation	to	social	issues.		Neo-conservatism	generally	used	in	relation	to	open	markets	and	minimal	state	intervention.		In	other	regions	of	the	world,	the	term	liberalism	is	used	in	it	classic	sense	in	both	social	and	economic	matters,	following	the	terminology	used	by	Smith,	Locke,	Ricardo,	and	Mill,	among	others.		In	describing	economic	liberalism	post-1980,	I	will	use	the	term	“neo-conservative”	to	be	consistent	with	the	usage	in	the	North	American	academy.		 33	nationalistic	policies,	which	had	taken	hold	and	gained	support	from	the	majority	of	Canadians.	108		With	the	election	of	Ronald	Reagan	in	1980	and	the	depression	of	1981,	the	United	States	administration	began	implementing	policies	aimed	at	dismantling	socialist	programmes	and	restrictions	on	businesses.		According	to	Inwood,	the	Reagan	administration’s	right-wing	advisors	“were	intuitively	unsympathetic	to	the	state-centred	economic	development	strategies	often	employed	by	Canadian	governments	[and	that	the]	Canadian	government	represented	a	dangerous	socialist	menace	to	the	accumulation	of	capital”.109		As	he	states,	“the	Reagan	administration	preached	liberalization	abroad	and	protectionism	at	home,	and	it	targeted	the	Canadian	government	with	a	vengeance.”110	At	the	same	time	as	the	Reagan	administration	was	forging	new	economic	and	foreign	policies,	Canadian	businesses	were	forced	into	becoming	more	multinational	in	nature.		The	“third	option”	looked	to	new	markets	and	Canadian	businesses	were	experiencing	new	competition,	which	resulted	in	the	shift	from	domestic	market	focus	to	external	markets.		The	lowering	of	tariffs	as	a	result	of	GATT,	Canadian	enterprises	were	able	to	make	the	shift	to	exporting	to	foreign	markets.		In	addition,	Canadian	foreign	direct	investment	increased	and	Canada	became	a	net	exporter	of	capital,	mostly	to	the	United	States.111		With	this	trend	already	well	established	by	the	1981	depression,	Canadian	businesses	began	to	put																																																									108	Inwood,	Gregory	Continentalizing	Canada:		The	Politics	and	Legacy	of	the	Macdonald	Royal	Commission	(Toronto:		University	of	Toronto	Press,	2004),	p.	33.	109	ibid	110	ibid	111	ibid		 34	pressure	on	the	Canadian	government	to	look	toward	integrationist	policies	with	the	United	States	in	order	for	them	to	protect	their	foreign	investments.112		What	arose	was	a	schism	in	Canadian	society	and	among	the	regions.	As	Inwood	describes,	an	ideological	polarization	developed	in	Canada	between	the	neo-conservative,	free	market	supporters	who	wanted	less	government	involvement	in	all	aspects	of	life,	especially	economic,	and	the	supporters	of	democratic-socialism	who	supported	welfare	and	social	programmes	and	who	generally	supported	a	higher	level	of	government	intervention	in	the	economy.		Alberta	was	the	poster	child	for	the	neo-conservative	side	due	to	its	well-publicized	disagreements	with	Ottawa,	especially	over	the	National	Energy	Programme.		Alberta	lead	the	campaign,	along	with	businesses	with	significant	direct	investment	in	the	United	States,	for	closer	ties	with	the	United	States	and	greater	economic	integration.		On	the	other	side	of	the	debate,	the	labour	movement	was	the	standard	bearer	supporting	the	social	programmes	and	protectionist	policies,	which	developed	from	the	“third	option”.113			This	schism,	plus	the	lingering	effects	of	the	1981	depression,	forced	the	Canadian	government	to	reassess	its	policies.		The	means	by	which	a	comprehensive	review	of	the	policy	options	would	be	carried	out	was	with	a	royal	commission.		Thus,	the	Macdonald	Commission	was	formed	in	1982.	In	the	1980s,	the	policy	focus	began	to	shift	from	one	of	reliance	on	GATT	and	sectoral	protectionism	to	a	more	open,	liberalized	trade	with	a	greater	number	of																																																									112	ibid,	p.	34.	113	ibid.		 35	states.		During	this	period,	Canada	began	to	see	a	rise	in	the	importance	and	reliance	on	exports	as	a	significant	portion	of	its	gross	domestic	product	(GDP).		The	majority	of	exports	have	been	to	the	United	States.		As	a	result	of	this,	Canada’s	economic	health	is	dependent	on	international	trade.		This	has	a	significant	influence	on	many	policy	objectives	of	the	Canadian	government	and	options	it	has	at	its	disposal	to	optimize	Canada’s	future	economic	health.		Added	to	this	is	the	increase	in	the	Canadian	provinces	looking	at	international	markets	for	their	products,	rather	than	relying	on	inter-provincial	trade.114	This	has	added	another	dimension	in	the	development	of	national	foreign	and	trade	policy.		As	Gecelovsky	and	Kukucha	point	out,	“anyone	attempting	to	craft	a	trade	policy	for	Canada,	…,	needs	to	be	mindful	of	differences	of	both	the	provincial	and	sectorial	levels.	Trade	policy	is	not	singular	but	rather	plural	in	character,	as	each	province	and	central	group		…	wants	something	different	from	Canada	and	for	the	government	to	be	responsive	to	its	particular	concerns.”115	Canada’s	trade	policy	exhibited	continuity	during	the	period	of	1968	to	2009.		Despite	each	successive	government	vowing	to	reduce	Canada’s	dependence	on	trade	with	the	United	States	and	diversifying	external	markets,	at	the	end	of	each	of	their	mandates	Canada’s	dependence	on	the	United	States	as	a	market	for	Canadian	goods	was	greater	than	at	the	beginning	of	their	mandate.116After	Prime	Minister	Trudeau	established	the	Macdonald	Commission,	his	Liberal	Party	lost	the	national	election	to	the	Progressive	Conservatives	lead	by	Brian	Mulroney.			In	addressing																																																									114	Gecelovsky	and	Kukucha,	p.	40.	115	ibid.	116	ibid.		 36	the	issue	of	opening	up	trade	with	the	United	States	and	negotiating	a	free	trade	agreement	during	the	lead	up	to	the	election,	Mulroney	was	steadfastly	against	the	idea	and	is	quoted	as	saying	“the	country	could	not	survive	with	a	policy	of	unfettered	free	trade”	and	went	on	to	say	that	since	Canada	is	in	many	ways	a	branch	plant	economy	that	companies	would	“crank[]	up	their	plants	throughout	the	United	States	in	bad	times	and	shutting	their	entire	branch	plants	in	Canada.”117		On	another	occasion,	Mulroney	is	quoted	as	saying	“[d]on’t	talk	to	me	about	free	trade,	that	issue	was	decided	in	1911.		Free	trade	is	a	danger	to	Canadian	sovereignty”.118		However,	after	being	elected	prime	minister	and	having	the	benefit	of	the	Macdonald	Commission	report,	Mulroney	changed	his	mind.		He	stated	that	there	were	three	reasons	why	he	changed	his	mind:		first,	the	rise	of	protectionism	in	the	United	States	which	was	devastating	to	Canadian	industries;	second,	the	move	in	Europe	to	establish	a	stronger	trading	bloc;	and	third,	the	Commission	report	and	its	examination	of	Canada’s	economic	prospects.119			As	Inwood	states,	of	all	of	the	economic	policies	which	Canadian	governments	considered	in	the	post-WWII	era,	free	trade	with	the	United	States	was	generally	considered	the	most	unlikely	policy	to	adopt.		Even	Prime	Minister	Mulroney	was	opposed	to	the	idea	when	he	took	office.		Inwood	states	that	the	origins	of	the	change	in	policy	considerations	in	this	period	can	be	traced	to	the	“climate	of	crisis”	in	the	early	1980s	in	foreign	relations	between	the	United	States																																																									117	ibid,	p.	36.	118	ibid.	119	ibid,	p.	36		 37	and	Canada.120		American	business	lobbied	the	Reagan	administration	to	address	the	restrictions	Canada	had	placed	on	foreign	corporations	and	their	“freedom”	to	do	business	in	Canada	at	the	same	time	as	the	Americans	increasingly	protectionist	policies	regarding	the	domestic	markets	were	seen	as	a	threat	to	the	Canadian	business	community,	and	the	Canadian	economy	as	a	whole.		This	“climate	of	crisis”	forced	all	policy	options	to	be	considered,	even	free	trade	with	the	United	States.		In	addition,	the	Canadian	bureaucracy	within	the	Department	of	External	Affairs	and	the	Department	of	Industry,	Trade	and	Commerce	was	restructured	to	allow	for	the	implementation	of	the	new	policy	alternatives.121		2.2 International	Relations	Theory	of	Exogenous	Shock	and	Its	Role	in	Changes	in	Canada’s	Foreign	Policy	Shifts	and	Subsequently	Canada’s	Trade	Relations	As	is	shown	by	the	preceding	discussion,	policy	considerations	are	subject	to	pressures	from	unexpected	external	forces,	which	sometimes	result	in	adoption	of	previously	rejected	options.		To	understand	how	and	why	these	external	forces	cause	such	a	change	in	policy	positions,	it	is	instructive	to	look	to	the	study	of	international	relations	and	foreign	policy	development.	Professors	Jonathan	Paquin	and	Phillippe	Beauregard	have	conducted	an	analysis	of	Canada’s	foreign	policy	alignment.		Their	analysis	attempts	to	determine																																																									120	ibid,	p.	37	121	ibid,	p.	38		 38	if	the	policy	choices	are	dependent	on	outside	forces	in	an	attempt	to	co-ordinate	Canada’s	policies	with	those	of	its	allies,	or	are	they	primarily	conceived	and	developed	unilaterally.		They	“attempt[]	to	shed	light	on	the	issue	of	alignment	by	moving	beyond	the	simple	assertions	and	anecdotal	analysis	that	have	sometimes	exaggerated	and	distorted	Canada's	behavior	on	the	International	scene.”122		They	point	out	an	important	distinction	between	“alignment”	and	“concordance”	in	policies	with	other	states.		They	define	alignment	as	“the	government	publicly	adopt[ing]	the	position	of	another	government	after	the	fact,	or,	to	state	it	differently,	when	a	state	modifies	or	updates	its	position	in	order	to	‘bring	it	in	line	with	that	of	another’.”123		They	define	concordance	as	follows:	when	two	or	more	governments	adopt	the	same	position	at	the	same	time.	This	could	be	explained	by	convergence	between	allies,	that	is,	when	two	or	more	governments	share	similar	interests	and	reach	the	same	position	without	consulting	one	another.	It	could	also	result	from	coordination,	that	is,	when	governments	discuss	and	coordinate	positions	prior	to	announcing.124	This	distinction	is	important	in	the	analysis	as	it	shows	the	level	of	independence	or	unilateralness	is	inherent	in	the	policy	development	and	implementation.			In	their	analysis,	Paquin	and	Beauregard	look	at	the	history	of	continentalism	in	Canada.		They	refer	to	Professor	Granatstein	and	Michael	Hart	and	their	argument	that	“suggests	that	since	the	United	States	is	Canada's	main	economic	partner	and																																																									122	Jonathan	Paquin	and	Philippe	Beauregard	(2013).	“Shedding	Light	on	Canada's	Foreign	Policy	Alignment”,		Canadian	Journal	of	Political	Science,	September	2013,	Vol	46,	Issue	3,	p.	618	123	ibid	124	ibid,	p	619		 39	security	provider	through	NORAD	and	NATO,	Canada	has	no	real	choice	but	to	align	its	policies	and	positions	with	those	of	the	United	States,	regardless	of	the	preferences	and	behavior	of	other	states	and	allies	…	Canada's	strong	ties	with	the	United	States	are	the	‘indispensable	foundation	of	Canadian	foreign-policy	in	all	its	dimensions’.”125		As	such,	this	view	of	contentaltism	presumes	that	Canada’s	interests	cannot	be	dissociated	from	those	of	the	United	States	resulting	in	an	alignment	of	Canada’s	foreign	policy	with	that	of	the	United	States.			Missing	in	the	continentalist	argument	are	the	close	ties	Canada	has	with	Britain	and	Europe.		“Transatlantism”	traditionally	described	North	America’s	ties	with	Europe	generally.		However,	a	second	definition	of	“transatlantism”	developed	in	Canada	to	describe	the	relationship	between	Canada	and	Europe,	sometimes	called	“Europeanism”.		This	relationship	survives	as	a	result	of	key	values	which	Canada	and	Europe	generally	share,	including	social	welfare,	international	law,	and	human	rights.126	This	relationship	is	sometimes	underplayed,	but	Paquin	and	Beauregard	argue	that	it	is	an	important	element	of	the	analysis	as	“the	European	Union	is	currently	Canada's	second-largest	trading	partner	after	the	United	States	and	that	Canada	is	currently	embracing	the	strategy	of	increasing	trade	relations	with	the	EU	in	order	to	stimulate	growth	and	reduces	economic	dependency	on	the	United	States.	”127		They	point	out	that	this	echoes	Prime	Minister	Trudeau’s	third	option	in	that	it	strives	for	diversification	of	Canada’s	foreign	relations	to	reduce	the	vulnerability	of	being	aligned	tightly	with	the	United	States.																																																									125	ibid,	p	619	–	620.	126	ibid,	p.	621.	127	ibid.		 40	They	also	focus	on	the	the	links	uniting	the	Anglo-Saxon	world	and	the	“shared	special	relationship	and	a	collective	identity	in	international	relations,	which	initially	were	racially	defined	by	the	British	Empire	and	later	evolved	around	the	US	hegemonic	power.”128		They	show	that	despite	some	disagreements,	the	affinity	between	the	states	of	the	Anglo-Saxon	world	have	been	consistent.		As	a	result,	they	contend	that	this	“Anglosphere”	perspective	would	predict	that	the	Canadian	government	would	stand	with	its	Anglo	allies	in	times	of	crisis.129	“Unilateralism”	is	the	last	theory	that	the	authors	consider	in	their	analysis.		The	conventional	wisdom	in	the	study	of	foreign	relations	is	that	small	nations,	such	as	Canada,	rarely	act	unilaterally	as	the	risks	of	acting	out	of	step	with	their	larger	allies	could	result	in	alienation	or	retaliation.		The	analysis	of	the	policy	statements	from	the	Harper	government	do	indicate,	however,	that	Canada	is	increasingly	unilateral	in	its	policy	decisions	and	does	not	always	support	decisions	of	it	traditional	allies.		They	contend	that	this	new	trend	of	making	unilateral	decisions	is	to	“emphasize	[Canada’s]	values	and	protect	its	interests	in	the	world”	which	“emphasizes	the	fact	that	we	live	in	a	dangerous	world	where	there	is	no	natural	harmony	of	interests	among	states.”130		They	illustrate	this	with	a	remark	made	by	Prime	Minister	Harper	in	a	2011	speech:		“we	take	strong,	principled	positions	in	our	dealings	with	other	nations	–	whether	popular	or	not	–	and	that	is	what	the	world	can	count	on	from	Canada.”																																																											128	ibid,	p	622.	129	ibid,	p.	623	130	ibid		 41	The	conclusions	of	their	analysis	show	that	Canada	follows	a	“transatlantism”	policy	alignment,	aligning	its	policy	choices	with	those	of	the	United	States	and	its	main	European	partners,	with	the	United	States	carry	much	more	weight	in	this	group	than	other	states	resulting	in	Canada	and	European	states	aligning	their	policies	with	those	of	Washington.		Of	all	the	nations	that	were	the	focus	of	this	analysis,	Canada	was	the	state	that	most	often	aligned	its	policy	choices	with	its	partners.		Thus,	despite	the	public	statement	by	Prime	Minister	Harper,	Canada	does	not	act	unilaterally	in	the	foreign	policy	sphere.		In	fact	the	analysis	shows	that	Canada	“appear[s]	dependent	on	the	transatlantic	community	and	[is]	reluctant	to	take	the	lead	in	managing	foreign	crises.”131	Following	on	this	conclusion	with	respect	to	Canada	being	a	“follower”	in	developing	its	foreign	policy	positions,	Professor	Stephanie	Golob	analyzes	Canada’s	foreign	policy	and	trade	policy	development	in	the	light	of	the	international	relations	theory	of	“exogenous	shock”.		She	looks	at	what	are	the	drivers	of	change	in	Canada’s	foreign	policy	and	how	Canada	reacts	to	shocks	to	the	international	order.	Professor	Stephanie	Golob	differs	in	the	characterization	of	Canada’s	decision	to	enter	into	a	free	trade	agreement	with	the	United	States.		She	argues	that	trade	policy	was	not	the	driver,	rather	it	was	a	result	of	security	policy.132		She	analyses	the	events	which	lead	up	to	the	1985	Canada-US	Free	Trade	Agreement	and	the																																																									131	ibid,	p.	638	132	Golob,	Stephanie	R.	“Beyond	the	Policy	Frontier:		Canada,	Mexico,	and	the	Ideological	Origins	of	NAFTA”,	World	Politics,	Vol.	55,	No.	3	(April	2003)	at	p.	362.		 42	subsequent	NAFTA	through	the	lens	of	international	relations	theory	and	what	she	calls	the	concept	of	a	“policy	frontier”.		She	asks	the	question	“under	what	conditions	and	through	which	mechanisms	can	previously	forbidden	policy	options	become	recoded,	enabling	the	policy	frontier	to	be	transcended”?133		In	other	words,	what	events	cause	such	concern	amongst	the	policy	analysts	that	they	will	discard	previously	strongly	held	positions	(“policy	frontiers”)	and	turn	180	degrees	to	enter	into	negotiations	with	the	goal	of	bilateral	free	trade?	Golob	argues	that	a	policy	frontier	is	the	manifestation	of	a	national	interest	that	has	the	sanction	of	state	legitimacy.		These	frontiers	often	develop	over	time	and	can	become	embedded	in	the	national	discourse	as	necessary	for	the	protection	of	the	national	identity.		Golob	defines	them	as	“barriers	erected	by	historically	held	and	sacred	ideas	of	sovereignty,	security,	and	national	identity	that	make	certain	choices	unavailable	as	‘normal’	policy	options.		To	go	‘beyond	the	policy	frontier’,	state	elites	must	risk	their	own	legitimacy,	bound	up	as	it	often	is	in	the	symbolic	language	of	national	pride,	historical	memory,	and	defense	of	the	nation”.134		In	respect	to	the	issue	of	bilateral	trade,	Canadian	policy	had	been	to	resist	strongly	reciprocity	with	the	US	as	both	Granatstein	and	Hart	had	illustrated.		Golob	sets	out	to	understand	why	such	a	long	held	policy,	which	she	labels	as	a	policy	frontier,	was	transcended	in	1985	with	the	Free	Trade	Agreement.			Golob	accepts	that	in	order	to	transcend	the	policy	frontier,	there	must	be	an	exogenous	shock.		An	exogenous	shock	is	a	significant	event	that	can	call	into																																																									133	ibid.	134	ibid.		 43	question	the	existing	policy	and	begin	a	debate	on	possible	shifts	in	policy.		Naomi	Klein	wrote	about	and	popularized	this	theory	in	her	book	The	Shock	Doctrine135	and	illustrated	how	economic	crises,	natural	disasters,	and	wars	can	shock	the	existing	policy	landscape	and	invite	the	consideration	of	new	policy	tools.		Golob	takes	this	further	and	argues	that	there	needs	to	be	more	than	a	shock.		In	what	she	calls	a	critical	juncture,	she	states	that	in	addition	to	the	exogenous	shock,	the	existing	policies	have	to	be	discredited	“due	to	their	implication	in	the	crisis	or	their	inability	to	respond	to	it	successfully”136	and	the	existing	institutional	discourse	is	challenged.		Furthermore,	the	bureaucratic	institutions	that	controlled	the	policy	agenda	become	marginalized	in	favour	or	those	that	espouse	the	emerging	policies.		It	is	this	environment	that	allows	formerly	rejected	policies,	such	as	reciprocity	in	Canada	and	US	trade	relations,	to	become	considered	as	policies	that	can	respond	adequately	to	the	new,	“shocked”	reality.	Golob	argues	that	the	economic	recession	of	1981-1982	represented	such	a	critical	juncture	and	that	it	“discredited	the	nationalist	and	statist	economic	policies	of	the	1970’s	and	opened	up	a	period	of	disillusionment	and	uncertainty	over	[Canada’s]	economic	health	and	international	identity”.137			She	argues	that	up	until	1982,	Canadians	saw	that	the	choice	of	accepting	reciprocity	was	in	effect	deciding	between	“the	state	or	the	States”138	and	the	recession	“called	into	question	the	government’s	ability	to	maintain	policies	such	as	universal	health	care	and	limits	on																																																									135	Klein,	Naomi	The	Shock	Doctrine:		The	Rise	of	Disaster	Capitalism	(Toronto;	Random	House,	2008)	136	Golob,	“Beyond	the	Policy	Frontier”,	p.	378.	137	ibid,	p.	374.	138	ibid,	p.	388.		 44	direct	foreign	investment	that	had	distinguished	Canada	from	the	U.S.	and	thus	fostered	its	separate	identity”.139		The	recession	was	the	result	of	two	exogenous	shocks:		the	fall	in	the	price	of	oil	which	put	in	jeopardy	the	energy	sector’s	importance	in	being	an	economic	engine;	and	the	rapid	increase	in	interest	rates	and	the	ballooning	of	national	debt	and	deficits.			As	a	result	of	this	economic	shock,	Prime	Minister	Trudeau	established	the	Macdonald	Commission	to	review	the	future	of	Canada’s	trade	policy	and	economic	development.		With	such	a	public	policy	debate,	policy	“entrepreneurs”	were	able	to	argue	that	the	existing	trade	policy	with	the	US	was	no	longer	appropriate	and	put	forth	new	policy	options	that	had	been	dismissed	as	beyond	the	former	policy	frontier.		Social	scientists,	economists,	lawyers,	and	business	leaders	were	able	to	provide	input	to	the	Commission	and	provide	alternatives	to	the	discredited	policy	frontier.140		The	result	of	this	review	of	the	policy	landscape	was	the	government	transcending	the	old	policy	frontier	of	anti-reciprocity	and	entering	into	bilateral	trade	negotiations	with	the	formerly	feared	economic	powerhouse.		Golob	argues	that	one	of	the	considerations	in	deciding	on	the	new	policy	was	that	the	rules	based	trade	agreement	would	put	limits	US	unilateralism	and	thereby	establishing	certainty	in	the	relationship.		She	sums	up	the	decision	to	transcend	the	policy	frontier	was	a	trade	off	of	“some”	economic	sovereignty	(being	market	access	to	US	firms)	for	greater	certainty.		“This	trade	off	metaphorically	guaranteed	future																																																									139	ibid.	140	ibid,	p.	380.		 45	prosperity,	which	would	in	turn	provide	the	resources	to	‘protect’	and	‘defend’	national	values”141	Understanding	the	policy	environment	and	events	which	lead	up	to	negotiating	and	ratifying	GATT	1947,	Canada-US	FTA,	and	NAFTA	is	important	in	developing	policies	and	reactions	to	future	shocks.		With	respect	to	the	issue	of	trade	in	fresh	water	resources,	the	analysis	of	the	historical	events	can	assist	in	attempting	to	predict	policy	directions	in	circumstances	when	development	pressures,	natural	disasters,	or	economic	shocks	that	put	pressure	on	fresh	water	resources.		As	will	be	discussed	in	subsequent	chapters,	international	trade	law	is	often	influenced	by	world	events	and	shifts	in	generally	accepted	policies	and	goals.		When	these	policies	and	goals	shift,	so	does	the	interpretation	of	the	analysis	of	the	provisions	in	the	negotiated	agreements.			The	Canadian	strategy	to	prohibit	the	transfer	or	export	fresh	water	resources	in	bulk	is	such	a	policy	that	can	be	subject	to	a	shock	and	a	shift	in	policy	options.		Likewise,	the	1993	joint	statement	of	the	NAFTA	parties,	which	states	that	fresh	water	is	not	subject	to	NAFTA	provisions,	is	a	policy	statement	outside	of	the	text	of	the	agreement	that	can	also	be	subject	to	exogenous	shocks	and	one	or	more	parties	attempting	to	transcend	the	policy	frontier.		As	a	result,	an	analysis	of	the	WTO	and	NAFTA	texts	with	a	view	to	providing	a	level	of	certainty	with	respect	to	the	characterization	of	fresh	water	and	the	treatment	it	is	afforded	under	the	agreements	is	required	to	determine	if	fresh	water	resources	are	a	“good”	or																																																									141	ibid,	p.	390.		 46	“product”	as	defined	in	the	agreements.		If	the	answer	is	“no”,	then	there	is	a	high	level	of	certainty	that	Canada	can	develop	policies	and	legislation	that	may	shield	the	resource	from	a	variety	of	critical	junctures	and	subsequent	pressures	from	other	nations.		If	the	answer	is	“yes”,	then	policies	and	regulation	are	subject	to	a	changing	landscape	and	will	not	provide	as	much	certainty.		However,	certain	exemptions	from	trade	rules	contained	in	the	agreements	may	be	able	to	provide	increased	certainty,	but	the	policy	landscape	may	be	more	susceptible	to	pressures	to	limit	the	application	of	the	exemptions.		 		 47	3 Reading	the	Currents:	A	Review	of	Selected	Boundary	and	Transboundary	Water	Agreements	in	Canada	Prior to considering the legal texts of international agreements, it is useful to review Canada’s constitutional landscape and other instruments which affect Canada’s fresh water resources.  These instruments provide a framework in which one can situate the discussion regarding trade obligations.  In addition, a review of other legal instruments, agreements, and obligations may provide guidance as to how Canada’s trade obligations may be interpreted when it comes to their applicability to fresh water resources.   In this chapter, a review will be undertaken of Canada’s constitutional framework which governs the powers to legislate in respect of the various forms fresh water resources take.  Included in this review are emerging issues of constitutional importance, namely the intersection of Aboriginal rights and resources and potentially conflicting international obligations.  Following this will be a review of two significant bi-lateral treaties concerning Canada’s fresh water resources, the Boundary Waters Treaty142 and the Columbia River Treaty143, and cross boarder municipal water sharing agreements.  These two treaties and agreements may be instructive in the analysis of Canada’s trade obligations.  The review will then consider other international legal instruments which affect fresh water resources and will round out the understanding of how fresh water 																																																								142 Treaty between Great Britain and the United States relating to Boundary Waters and Questions arising along the Boundary between the United States and the Dominion of Canada, United States and United Kingdom, 11 January 1909. 36 US Stat 2448, UKTS 1910 NO 23 (Boundary Waters Treaty). 143 Treaty between Canada and the United States of America Relating to Cooperative Development of the Water Resources of the Columbia River Basin, Washington, January 17, 1961, 15 UST 1555, TIAS No 5638, 542 UNTS 244, (Columbia River Treaty). 	 48	resources are viewed in various legal contexts and will provide a framework of understanding of how fresh water resources are characterized at law. 3.1 Constitutional	Division	of	Powers	of	Legislation	and	Regulation	of	Fresh	Water	(ss.	91	and	92)	and	the	Crown’s	Prerogative	to	Make	Treaties	As a result of the nature of Canadian federalism, each jurisdiction in Canada has enacted legislation and regulations affecting the development of fresh water resources.  Part VI of the Constitution Act 1867144 comprises sections 91 to 95 and is entitled “Distribution of Legislative Powers”.  This part divides the legislative powers among the legislatures, mostly in sections 91 and 92.  Generally speaking, the legislative authority is split based on the nature of the subject matter and whether it is local in nature or interprovincial or cross boundary in nature.    Section 91145 enumerates the subjects of exclusive legislative authority of the Parliament of Canada.  In the text preceding the enumerated list, the Parliament of Canada is granted the residual legislative authority.  The text is as follows: 91.  It shall be lawful for the Queen, by and with the Advice of Consent of the Senate and House of Commons, to make Laws for the Peace, Order and good Government of Canada, in relation to all Matters not coming within the Classes of Subjects by the is Act assigned exclusively to the Legislatures of the Provinces; and for greater Certainty, but not so as to restrict the Generality of the foregoing Terms of this Section, it is hereby declared that (notwithstanding anything in this Act) the exclusive Legislative Authority of the Parliament of Canada extends to all Matters coming within the Classes of Subjects next hereinafter enumerated;  																																																								144 Constitution Act 1867 (UK), 30 & 31 Vict, c 3, reprinted in RSC 1985, App II, No 5 (Constitution Act 1867). 145  Constitution Act 1867, s. 91. 	 49	Within this part of the section, where a subject is not explicitly the subject of provincial legislative authority, the federal parliament has authority.  As Professor Peter Hogg writes, this residual power is a result of the peace, order, and good government (POGG) filling any gaps in the division of powers as well as the “national concern” doctrine.146  The specific enumerated grounds in s.91 which would give the federal Parliament legislative authority to enact provisions and regulations concerning water bodies include:   s.91(2) – the regulation of trade and commerce;   s.91(10) – navigation and shipping;   s.91(12) – sea coast and inland fisheries;   s.91(24) – Indians, and lands reserved for the Indians. Section 92147 sets out the exclusive legislative powers of the provincial legislatures.  This list is exhaustive, but as Professor Hogg points out, there are two provisions which are very broad in scope and can appear on the face of them to conflict with the POGG power and other areas of federal authority148.  These two sections are s.92(13) -- property and civil rights in the province and s.92(16) -- all matters of a merely local or private nature in the province.  Other provisions in s.92 which may involve legislative authority over the regulation, development and conservation of fresh water resources include: 																																																								146	Hogg,	Peter,	Constitutional	Law	of	Canada,	Fifth	Edition	Supplemented,	(Toronto:	Carswell,	2005)	supplemented	to	December	2012	pp.	17-1	ff.		The	interpretation	of	the	POGG	power	and	the	gap,	national	concern,	and	emergency	power	doctrines,	arise	from	the	residuary	nature	of	the	POGG	power.		The	gap	branch	flows	from	necessity	to	have	one	level	of	government	to	have	jurisdiction	over	an	area	which	has	not	been	specifically	allowed	for	in	the	text	of	the	Constitution	documents.		The	national	concern	branch	flows	from	the	identification	that	some	matters	have	a	national	dimension	even	if	the	origin	of	the	issue	is	of	a	local	or	provincial	nature.		The	legislative	authority	would	then	rest	with	the	federal	Parliament	so	that	important	legislative	provisions	would	provide	for	consistency	across	the	country.		Finally	the	emergency	branch	flows	from	the	necessity	of	having	federal	legislation	in	highly	exceptional	or	abnormal	circumstances	such	as	war	or	famine	or	other	disasters.	147 Constitution Act 1867, s. 92. 148	ibid.		 50	s.92(5) – the management and sale of the public lands belonging to the province and of the timber and wood thereon; s.92(10) -- local works and undertakings other than such as are of the following classes:   (a) lines of steam or other ships, railways, canals, telegraphs, and other works and undertakings connecting the province with any other or others of the provinces, or extending beyond the limits of the province; (c) such works as, although wholly situate within the province, are before or after their execution declared by the Parliament of Canada to be for the general advantage of Canada or for the advantage of two or more of the provinces. In addition to the section 91/92 division of legislative authority, section 92A149 may have an impact on legislation and regulation of fresh water resources depending on circumstances particular to certain watersheds, aquifers, or bodies of water.  Section 92A divides legislative authority between provincial legislatures and the Parliament of Canada in relation to non-renewable natural resources, forestry resources, and electrical energy.  Section 92A reads, in part, as follows: (1) In each province, the legislature may exclusively make laws in relation to:    (a) exploration activities in the province,   (b) development, conservation, and management of non-renewable natural resources and forestry resources in the province, including laws in relation to the rate of primary production therefrom; and (c) development, conservation and management of sites and facilities in the province for the generation and production of electrical energy. (2) In each province, the legislature may make laws in relation to the export from the province to another part of Canada of the primary production from non-renewable natural resources and forestry resources in the province and the production from facilities in the province for the 																																																								149 Constitution Act 1867, s. 92A. 	 51	generation of electrical energy, but such laws may not authorize or provide for discrimination in prices or in supplies exported to another part of Canada. (3) Nothing in subsection (2) derogates from the authority of Parliament to enact laws in relation to the matters referred to in that subsection and, where such a law of Parliament and a law of a province conflict, the law of Parliament prevails to the extent of the conflict. The implications of this constitutional arrangement are that the legislative authority to enact legislation and regulations that affect fresh water resources is divided among 14 jurisdictions.    There are at least 104 different pieces of provincial and territorial legislation and regulation that specifically deal with water supply and water resource management.150 In addition to the legislation, policies are made affecting water governance by numerous government departments.  Federally, Environment Canada and the Department of Fisheries and Oceans play a significant role in governance of the water resource, however nine other federal departments affect water governance in a secondary manner.  These include Finance Canada, Industry Canada, National Defence Canada, Public Works and Government Services, among others.151 As a result, there are at least 23 pieces of legislation, regulation and policies covering the water resource. The Library of Parliament Background Paper entitled Bulk Water Removals:  Canadian Legislation152 outlines the legislation from the various jurisdictions which specifically deal with bulk removals of fresh water resources. What is illustrated by the summary of the legislation is that every jurisdiction in Canada has some legislation that prohibits, to various degrees, the taking of water from a water shed or basin by means of 																																																								150	Hill,	Carey	et	al	“A	Survey	of	Water	Governance	Legislation	and	Policies	in	the	Provinces	and	Territories”	in	Karen	Bakker	ed	Eau	Canada:		The	Future	of	Canada’s	Water	(Vancouver:		UBC	Press,	2007)	p.	369	ff.	151	ibid	p.	375.	152	Johansen,	David	Bulk	Water	Removals:		Canadian	Legislation,	Library	of	Parliament	Background	Paper	Publication	No.	02-13-E	(Ottawa:		Library	of	Parliament,	2010)		 52	diversion, removal, or convey for removal from a province or Canada.   The impetus of this background paper was the federal government’s 1999 strategy to prohibit bulk removals from Canada’s water basins.  This included the removal of fresh water resources for export.  The strategy referred specifically to the 1993 joint statement153 of the governments of the three NAFTA countries in relation to the applicability of the trade agreement to fresh water resources.  The federal government’s strategy was based upon the principle that “the protection of water in its natural state as a water management and environmental issues rather than as a trade issue.”154   The strategy set out three elements:  proposed amendments to the International Boundary Waters Treaty Act155; a study of the Great Lakes and the effects of water consumption, diversion, and removal; and a Canada-wide accord on bulk water removals.  The third element of the strategy was an explicit recognition that the Canadian provinces have constitutionally entrenched powers over water management and that any effective strategy would have to include the provinces’ cooperation and participation.  As stated in the background paper, the International Boundary Waters Treaty Act was amended with the amendments to prohibit bulk removals of fresh water resources from the Canadian portion of the boundary waters coming into force in December 2002.  In addition, a study was conducted and a report was issued by the International Joint Commission156 that the boundary waters between Canada and the United States require protection in light of environmental, industrial and urban stressors on the fresh water resources.  It is the third 																																																								153 1993 Statement by the Governments of Canada, Mexico, and the United States. 154	ibid,	p.	1	155	International	Boundary	Waters	Treaty	Act,	R.S.C.	1985,	c.	I-17	as	amended	156	The	International	Joint	Commission	is	established	by	the	International	Boundary	Waters	Treaty	and	its	roles	and	responsibilities	are	outlined	in	the	treaty.		 53	element which has proven more difficult in that an accord has not been entered into by all the provinces with respect to prohibiting bulk removals.157  Despite the fact that no accord has been entered into, as is illustrated above, the provinces have enacted legislation dealing with bulk removals and restrictions on the removal of fresh water resources from the provinces. As shown by the constitutional provisions, there is an element of interpretation in determining whether certain watersheds, aquifers, or bodies of water are non-renewable and whether a work affecting the water is of a national concern, inter-provincial, or cross boundary in nature.   In addition to the legislative authorities, international characteristics of trade in fresh water resources involve the treaty making power in Canada.  Although water authorities may be able to enter into direct contracts with foreign or domestic corporations, treaties and trade agreements will dictate some of the major terms and conditions of such agreements and the domestic regulation of access and exploitation of fresh water resources.  The authority to enter into treaties with other states lies with the federal government.  As Professor Hogg points out, there is no particular grant of treaty making power in the Constitution Act 1867.  British North America, at the time of Confederation, was only self-governing with respect to domestic matters.  As Canada was still part of the British Empire, the common law applied to grant the executive branch in Great Britain the power to enter into treaties on behalf of the Empire, as the Imperial Government in Great Britain was the entity that had international legal personality.158  																																																								157	ibid,	p.	2	158	Hogg,	Peter,	Constitutional	Law	of	Canada,	p.	11-2.		 54	The common law prerogative power of foreign affairs was delegated by King George IV to the Governor General in Canada in the 1947 Letters Patent159 expanding the office of Governor General of Canada.  Professor Hogg argues that this instrument delegates to the federal executive branch of the government of Canada, the power to enter into treaties binding Canada.160  As such, the Canadian Parliament does not have any formal role in making treaties and there is no legal requirement for Parliament to approve or ratify the treaty negotiated by the executive.161  However, an informal process was followed until 2008 by the executive to put a motion before both houses of Parliament for a resolution of approval.  Since 2008, the executive tables the treaty in the House of Commons with an explanatory memorandum and waits 21 sitting days before ratifying the treaty or introducing implementation legislation.162 3.2 Implications	of	Section	35	Constitution	Act,	1982,	Aboriginal	Title	and	the	Duty	to	Consult	on	Treaty	Making	and	the	Development	of	Fresh	Water	Resources	In recent years, there has been an increase in litigation commenced by Canada’s Aboriginal peoples challenging government actions based on claims of Aboriginal title and the duty on the Crown to consult163 if an asserted Aboriginal right may be affected.  In relations to fresh water resources, there have been challenges to decisions which affect 																																																								159 Letters Patent Constituting the Office of Governor General and Commander-in-Chief of Canada, 1947, 1947 C Gaz, Extra, No. 12, Vol. LXXXI, p. 1. 160	ibid.	p.	11-2	161	ibid,	p.	11-4	162ibid,	p.	11-5	163 The content of the duty to consult when asserted Aboriginal rights and title are affected by a decision of the Crown was articulated by the Supreme Court of Canada in Haida Nation v. British Columbia (Minister of Forests), [2004] 3 SCR 511, 2004 SCC 73, and Taku River Tlingit First Nation v. British Columbia (Project Assessment Director), [[2004] 3 SCR 550, 2004 SCC 74. 	 55	the water levels and flow of rivers and claims of title to the subsurface water resource.  In relation to Canada’s negotiation of international agreements, there has been challenges to the Crown prerogative to enter into international agreements without consulting Aboriginal peoples. 3.2.1 Section	35	of	the	Constitution	Act,	1982	and	Aboriginal	Rights	and	Title	to	Surface	and	Subsurface	Water	On July 13, 2011, Reasons for Judgment were delivered by the British Columbia Supreme Court in the case of Halalt First Nation v. British Columbia (Minister of Environment).164  The matter concerned a petition brought by the Halalt First Nation alleging that the Provincial Crown did not discharge its constitutional duty to consult them in the course of conducting an environmental assessment.  The First Nation asserts Aboriginal rights and title to an area in which wells were to be constructed to pump groundwater from the Chemainus Aquifer on Vancouver Island.165  The First Nation alleged that the Provincial Crown had knowledge of their assert claim to the groundwater and as such owed the First Nation a duty to consult with respect to any project which would affect its interests.166  As the matter proceeded by way of Petition, the Reasons for Judgment did not adjudicate the asserted title claim, rather it was restricted to the issue of the duty to consult. In coming to its conclusions concerning the breach of the Provincial Crown’s duty to consult the First Nation, the court did undertake what it called a prima facie 																																																								164 Halalt First Nation v. British Columbia (Environment), 2011 BCSC 945. 165 ibid, para. 3 – 4.   166 ibid. 	 56	determination of the claim for Aboriginal title to the groundwater.  The court found that the Halalt First Nation had established such a prima facie claim and then turned its analysis to the content of the duty to consult in light of the prima facie Aboriginal right to the groundwater.167  The court found that the Province of British Columbia “owed a duty of consultation and accommodation to Halalt concerning the actual scope of the Project, which the year-round extraction of groundwater as the sole source of water for Chemainus.”168 The decision of the British Columbia Supreme Court was appealed to the British Columbia Court of Appeal and a decision overturning the original decision was issued on November 22, 2012.169  The Court of Appeal overturned the decision based on the determination that in fact there had been deep consultation with the First Nation, and therefore, the duty to consult was discharged.  The Court of Appeal did not address in depth the prima facie determination of the right, as it felt that in light of the issues on appeal it was not critical to undertake the analysis.  Rather, the Court of Appeal focused on the nature and depth of consultation to determine if the chambers judge had erred in finding that the duty to consult was not discharged.  This leaves the issue open with respect to an Aboriginal right and title to fresh water resources. Given that the court found that there was a prima facie s. 35 Aboriginal right to the fresh water resources, the door is open for any Aboriginal group to assert that their s. 35 right may be such that it takes precedence over governmental actions concerning the 																																																								167 Halalt First Nation v. British Columbia, paras. 489 ff. 168 ibid, para. 750. 169 Halalt First Nation v. British Columbia, 2012 BCCA 472. 	 57	conservation, extraction, and diversion of fresh water resources as well as have priority over international obligations in respect of fresh water resources.   For example, the Akisq’nuk First Nation in the Kootenay Region of British Columbia were granted rights to water flowing through their reserve when Indian Commissioner O’Reilly approved the Minutes of Decision, Upper Kootenay Indians, Reserve No.3 on August 9, 1884.170  The Minutes of Decision include the provision that “[a]ll water flowing through this reservation is assigned to the use of the Indians”.  With this provision, and the fact that the waters flowing through this reserve are part of the Columbia River watershed, there is a strong basis for the Akisq’nuk First Nation (the current name of the Upper Kootenay Indians) to assert Aboriginal rights and title which could affect the provincial and federal governments’ acts concerning these waters and the Columbia River system as a whole.  Furthermore, there may be an unknown number of similar Minutes of Decision in existence which could have an effect on the governments’ management of the fresh water resources. 3.2.2 The	Constitutional	Duty	to	Consult	Aboriginal	groups	by	the	Government	prior	to	negotiating	and	implementing	international	agreements	–	Canada	China	Foreign	Investment	Protection	Act	challenge	In a similar vein to the assertion of Aboriginal right and title to water and the duty to consult, the duty to consult has arisen in a case involving the Government of Canada negotiating an investment treaty with the People’s Republic of China.  In the case of 																																																								170 Minutes of Decision, Upper Kootenay Indians, No. 3, Indian Reserve Commissioner P. O’Reilly, Dated at Kootenay, B.C., August 9, 1884, retrieved from the Union of British Columbia Indian Chiefs website, Federal and Provincial Collections of Minutes of Decision, Correspondence and Sketches (http://jirc.ubcic.bc.ca) locator:  08 09 1884 Columbia Lake/Upper Kootenay, Binder 8, Corr No 3041/84 pg 5-6. 	 58	Hupacasath First Nation v. The Minister of Foreign Affairs Canada and the Attorney General of Canada171 the Hupacasath First Nation brought an application for judicial review of the federal government’s negotiation of the Agreement between the Government of Canada and the Government of the People’s Republic of China for the Promotion and Reciprocal Protection of Investments (CCFIPPA)172.  The First Nation argued that the federal Crown had an obligation to consult with the First Nation prior to ratifying the CCFIPPA or taking steps to bind Canada.173  The First Nation argued that by entering into CCFIPPA, Canada is negatively affecting their exercise of “rights to conserve, manage and protect lands, resources and habitats in accordance with traditional Hupacasath laws, customs and practices”, their ability to entry into treaty, and the ability of disputes to be resolved in a traditional manner instead by international law.174 The court dismissed the judicial review, not based on the substantive arguments of the intersection of the CCFIPPA and the First Nation’s s. 35 rights, rather that the First Nation was not able to show sufficient causal link between the negotiation and ratification of CCFIPPA and the particular rights asserted.175  The matter was appealed to the Federal Court of Appeal by the First Nation.  The Federal Court of Appeal dismissed the appeal on January 9, 2015 on the basis that the negotiating and ratification of the CCFIPPA did not directly concern the First Nation or the resources over which they assert rights and title.176  The Court agreed that the result of the CCFIPPA would likely be increased investment in Canada by Chinese nationals but “more investment in Canada does not necessarily lead to the 																																																								171 Hupacasath First Nation v. Canada (Foreign Affairs), 2013 FC 900. 172 Agreement between Canada and the Government of the People’s Republic of China for the Promotion and Reciprocal Protection of Investments Done at Vladivostok on 9 September 2012; Entry into Force: 1 October 2014, Canada Treaty Series 2014/26. 173 ibid, para 2. 174 ibid, para 18. 175 ibid, para 147 – 150. 176 Hupacasath First Nation v. Canada (Attorney General), 2015 FCA 4, at para 114. 	 59	conclusion that the appellant’s Aboriginal rights will be affected.”177  The Court did make a comment in obiter that if the First Nation’s position were taken to the extreme that there is a duty to consult every time the federal government makes decisions affecting investment and development in Canada, every First Nation in Canada would have to be consulted if there were any possibility that their Aboriginal rights and title could be affected.  This situation would result in the government’s governance to be unworkable.178   Even with this result from the Federal Court of Appeal, there is a possibility for Aboriginal groups to be consulted each time the Crown negotiates a treaty which may have an impact on the rights and title asserted.  The nature of the rights and title and the types of provisions in such international agreements are not known at this time, but it worthwhile being on the alert for the potential of challenges to the Crown’s prerogative power in this regard. 3.3 	Boundary	Waters	Treaty	The Treaty between Great Britain and the United States relating to Boundary Waters and Questions arising along the Boundary between the United States and the Dominion of Canada 179 (Boundary Waters Treaty) is an example of a treaty entered into by the Imperial Crown on behalf of the Dominion of Canada in 1909.  The preamble of the treaty outlines the purpose of the treaty as a “peace and friendship” treaty in that it expresses the desire of the parties “to prevent disputes regarding the use of boundary waters and to settle all questions which are now (sic) pending between the United States 																																																								177 ibid, para 118. 178 ibid, para 120. 179 Treaty between Great Britain and the United States relating to Boundary Waters and Questions arising along the Boundary between the United States and the Dominion of Canada, United States and United Kingdom, 11 January 1909. 36 US Stat 2448, UKTS 1910 NO 23 (Boundary Waters Treaty). 	 60	and the Dominion of Canada involving the rights, obligations, or interests of either in relation to the other or to the inhabitants of the other, along their common frontier, and to make provision for the adjustment and settlement of all such questions as may hereafter arise”. 180  The articles of the treaty set out specifics in order to attain these goals.  The Preliminary Article181 defines what is meant by the “boundary waters”.  It states that “[f]or the purposes of this treaty boundary waters are defined as the waters from main shore to main shore of the lakes and rivers and connecting waterways, or portions thereof, along which the international boundary between the United States and the Dominion of Canada passes”.  This article does, however, exclude “the waters of rivers flowing across the boundary”.  As will be discussed, these transboundary rivers often have treaties devoted to them.   The articles of the Boundary Waters Treaty deal with specific issues in order to achieve the purpose which was set out in the preamble.  Article I182 contains a provision which maintains the free navigation for the purpose of commerce.  Article II183 deals with the right of diversion of waters on each parties own side of the boundary, but also provides for remedies is such a diversion causes “any injury on the other side of the boundary”.  Article III184 deals with the issue of the natural level or flow of boundary waters by means of diversion or obstruction.  This article also refers to the International Joint Commission (IJC) and sets out its jurisdiction as a body that has the authority to 																																																								180 Preamble, Boundary Waters Treaty. 181 Preliminary Article, Boundary Waters Treaty. 182 Article I, Boundary Waters Treaty.  183 Article II, Boundary Waters Treaty. 184 Article III, Boundary Waters Treaty. 	 61	approve such diversions or obstructions.  Article IV185 also provides authority to the IJC to approve the construction of dams that would result in a change to the natural water level and flow in boundary waters and cross boundary waters and also provides for the prohibition against polluting boundary waters or cross boundary waters that would injure the health or property of the other. The establishment, composition, rules and guiding principles of the IJC are set out in Articles VII to XII186.  The IJC is composed of six commissioners, three appointed by each of the parties, and a bureaucracy which enables the commission to carry out its duties.  The IJC is granted the jurisdiction over and render decisions involving the use, obstruction, or diversion of the waters as set out in Articles III and IV that require the approval of the IJC.  The IJC is mandated in Article VIII to adhere to uses of fresh water resources in the following order of precedence:  uses for domestic and sanitary purposes; uses for navigation, including the service of canals for the purposes of navigation; uses for power and for irrigation purposes.187 This treaty is primarily a treaty to establish a dispute resolution mechanism to allow Canada and the United States to mediate disputes of the navigation, diversion, and damming of boundary waters.  According to the IJC’s own accounting of its history, the Boundary Waters Treaty was the result of ongoing disputes concerning diversion of water for irrigation purposes west of Lake Michigan.  These diversions caused Lake Michigan’s water levels to drop significantly, which in turn, affected the navigation of the Great 																																																								185 Article IV, Boundary Waters Treaty. 186 Articles VII, IX, X, XI, and XII, Boundary Waters Treaty. 187 Article VIII, Boundary Waters Treaty. 	 62	Lakes for commercial purposes.188  This treaty has been seen as a success story in bi-lateral relations and resolution of a century’s worth of disputes and compromises.  It has been said that this treaty forged new ground in dealing with ongoing competing uses of fresh water resources by the establishment of a permanent commission with jurisdiction beyond that of simply regulating navigation.189  Despite this praise, the Boundary Waters Treaty and the IJC have been criticized as being dated in their mandates and have not kept up to changes in the priorities of water uses, issues relating to water quantity, and in relation to ground water issues.190  Despite this, there has not been a call to reopen the treaty and negotiate changes as the IJC has been seen as being flexible in its interpretation of the treaty and has exercised its authority in a robust manner.191 3.4 Columbia	River	Treaty	The Treaty Between Canada and the United States of America Relating to Cooperative Development of the Water Resources of the Columbia River Basin192 is example of a non-Empire treaty which Canada entered into with respect to transboundary water courses.  This treaty was the result of a number of issues being referred to the IJC regarding works on watercourses in the Columbia River Basin.  Theses matters were referred to the IJC, even though the Columbia River is a transboundary watercourse and 																																																								188	The	International	Joint	Commission	Website	“The	Origins	of	the	Treaty”	accessed	May	26,	2014.		http://www.ijc.org/en_/Origins_of_the_Treaty		189	Muldoon	and	McClenaghan,	“A	Tangled	Web:		Reworking	Canada’s	Water	Laws”	in	Eau	Canada,	p.	246.	190	Saunders	and	Wenig,	“Whose	Water?		Canadian	Water	Management	and	the	Challenges	of	Jurisdictional	Fragmentation”	in	Eau	Canada,	p.	131.	191	ibid,	p.	132.	192 Treaty between Canada and the United States of America Relating to Cooperative Development of the Water Resources of the Columbia River Basin, Washington, January 17, 1961, 15 UST 1555, TIAS No 5638, 542 UNTS 244, (Columbia River Treaty). 	 63	not a boundary water, due to the working of Article II of the Boundary Waters Treaty.193  As discussed previously, Article II allowed for legal remedies if the use on one side of the boundary injures a party on the other side.  In addition, Article IV of the Boundary Waters Treaty194 required IJC approval for works that affect the water level on either side of the boundary.  These situations arose in many instances along the watercourses in the Columbia River Basin.  Two dams, which were built in the United States, which were the focus of much debate are the Grand Coulee Dam and the Libby Dam.  These dams were the subject of two applications to the IJC and, in particular the Libby Dam application, was a major factor in the commencement of negotiations towards a Columbia River Treaty.195 In December of 1959, The IJC transmitted its report entitled Report on Principles for Determining and Apportioning Benefits from Cooperative Use and Storage Waters and Electrical Interconnection within the Columbia System196 to both the United States and Canadian governments.  This began the negotiating of the Columbia River Treaty in earnest.  The two governments came to an agreement and signed the treaty on January 17, 1961.  However, due to the constitutional division of powers, the treaty was delayed in being ratified by Canada.  The Province of British Columbia has the jurisdiction over development of fresh water resources within the province.  In order for the federal government to ratify the treaty, they had to negotiate with the province, which wanted 																																																								193 Article II, Boundary Waters Treaty. 194 Article IV, Boundary Waters Treaty. 195	Bankes,	N.,	The	Columbia	Basin	and	the	Columbia	River	Treaty:		Canadian	Perspectives	in	the	1990s,	Northwest	Water	Law	&	Policy	Project,	Lewis	&	Clark	University	www.lclark.edu/dept/water	January	31,	2001,	p.	26.	196 Report on Principles for Determining and Apportioning Benefits from Cooperative Use and Storage Waters and Electrical Interconnection within the Columbia System, December 1, 1959, online, International Joint Commission, http://www.ijc.org/files/publications/ID238.pdf . 	 64	certain assurances with respect to their resource.  The province wanted a binding agreement to sell their downstream power benefits to the United States at an acceptable price, assurances the two federal governments would approve the sale, and the clarification of certain terms of the treaty.197  The negations with the British Columbia resulted in an agreement and Canada and the United States negotiated a Protocol by and Exchange of Notes.  Canada finally ratified the treaty on September 16, 1964.198  Canada and B.C. entered into an agreement to sell B.C.’s downstream power benefits, and through BC Hydro, an agreement was entered into with a coalition of Pacific Northwest utilities to sell the benefits for a thirty year fixed term for each of the three dams covered by the treaty.199 3.5 Boundary	Communities	Municipal	Water	Agreements	Another example of transboundary water agreements is found in the transboundary cooperative projects that provide municipal water to border communities.  Generally, the circumstances surrounding such transboundary water transfers arise in small border communities, which are very close in proximity and often only separated by the line of the international boundary, in order to deal with poor water quality or inadequate supply.200 The solution to the water supply issue for these communities is to enter into inter-local agreements in order to share infrastructure and save on costs, even though the volume of water involved is small.  Patrick Forest, in his work in geography and local water supplies, surveyed 12 such local agreements.  Among his findings is that 																																																								197	ibid,p.	41	198	The	United	States	ratified	the	treaty	on	March	23,	1961.	199	Bankes,	p.	42.	200	Forest,	“A	Century	of	Sharing	Water	Supplies	between	Canadian	and	American	Borderland	Communities”	p.	2.		 65	“these transboundary local water supplies evolved endogenously and independently from each other, building on decades of cooperation in social, institutional, and economic realms.”201  He also states that a common element is that the inter-local agreements were the result of local initiatives, but sometimes involved provincial and federal governments.  These inter-local water agreements are “the sharing of a local public service in response to either compromised water quality or inadequate water quantity.”202   3.6 Helsinki	Rules,	UNWC,	and	Berlin	Rules		The International Law Association adopted The Helsinki Rules on the Uses of the Waters of International Rivers203 in 1966.  The Rules were adopted as the result of ongoing negotiations as a result of increased reliance and development on rivers and lakes after the Second World War.  It became clear that the absence of rules or customary international law principles regarding the non-navigational uses of international waters would result in conflicts between states along trans boundary watercourses.  Beginning in the late 1800s, various theories of states’ rights and obligations in respect of the use of international rivers and lakes began to emerge but were not always compatible.204 One of the first of these principles to be espoused is the Harmon Doctrine.  This Doctrine was set out in an 1895 opinion of Judson Harmon, the Attorney General of the United States at the time, in response to a question of the uses of the waters of the Rio Grande, which is shared by the United States and Mexico.  Harmon’s conclusion was that 																																																								201	ibid.	202	ibid.	p.	26.	203 The Helsinki Rules on the Uses of the Waters of International Rivers, International Law Association, Report of the 52nd Conference 484 (1967) 204	Salman,	Salman	M.A.	“The	Helsinki	Rules,	the	UN	Watercourses	Convention	and	the	Berlin	Rules:		Perspectives	on	International	Water	Law”	Water	Resources	Development	(2007)	Vol	23,	No.	4,	p.	627.		 66	“a state is free to dispose, within its territory, of the waters of an international river in any manner it deems fit, without concern for the harm or adverse impact that such use may cause to the other riparian states.”205  This doctrine of absolute territorial sovereignty has been criticized since its pronouncement as basic international law principles generally prohibit one state from causing harm to another, including when riparian rights are in play.  As such, the Harmon Doctrine has not been recognized as part of customary international water law. Other principles regarding international watercourses developed over time.  These include absolute territorial integrity, limited territorial sovereignty/integrity, and the community of co-riparian states in waters of an international river.  The first principle, absolute territorial integrity, establishes a right of one state to demand the natural flow of a river into its territory from the upper riparian state and imposes a duty not to restrict the flow of the river to downstream riparian states.  This principle favours the downstream riparian states and has also been criticized as being unbalanced, thus, it is not regarded as part of international water law like the Harmon Doctrine.206 The second principle of limited territorial sovereignty or limited territorial integrity asserts that each riparian state has the right to use the waters of an international river and has a duty to ensure that its use does not harm the other riparian states.  This principle views the balance of use and harm prevention as the main goal.  The third principle looks at a cooperative approach to the use of the international watercourse in a community of co-riparian states.  This principle is based on a view of the river and its 																																																								205	ibid,	p.	627.	206	ibid		 67	basin as an economic unit and the rights to the use of the water are held collectively or in manner as agreed upon by the collective.  This principle has not been accepted due to the difficulties in co-riparian states agreeing to give up their rights to a collective with potentially differing domestic goals and policies.207 Given the conflicts among the four principles which had emerged and the increased development, the International Law Commission (ILC), Institute of International Law (IIL), and the International Law Association (ILA), the latter two being non-governmental scholarly legal organizations established in 1873, began work on developing resolutions and rules regarding international watercourses after the Second World War.  The first IIL resolution was the Madrid Resolution of 1911 that prohibited activities that harmed the other riparian states, which was in striking opposition to the Harmon Doctrine.  Later, the IIL modified the Madrid Resolution in 1961 with the adoption of the Salzburg Resolution.  The ILA, on the other hand, took a different approach that focused on the equitable use of international watercourses.  Its first resolution was adopted in 1956, referred to as the Dubrovnik Statement.  Sovereign control of the waters within each states own boundaries was recognized in the Statement, but it required consideration of the effects of that use on other riparian states.  This was modified by the New York Resolution of 1958 and was the precursor to the Helsinki Rules.208 																																																								207	ibid,	see	also	McCaffrey,	Stephen	C.	“The	progressive	development	of	international	water	law”	in	The	UN	Watercourses	Convention	in	Force:		Strengthening	international	law	of	trans	boundary	water	management,	Flavia	Roches	Loures	and	Alistair	Rieu-Clarke,	eds.	(Oxford:		Routledge,	2013)	p.	11.	208	ibid	p.628.		 68	The Helsinki Rules further developed the water basin approach to the rights and duties of development on trans boundary watercourses and moved away from the river and lake focus.  The Helsinki Rules have had a significant impact on the international law of watercourses and are still referred to in negotiations by states, despite the adoption of the United Nations Convention of the Law of Non-Navigable Uses of International Watercourses (UNWC)209.210  The ILA committee that prepared the Rules proposed to the United Nations General Assembly that the ILC study the issue, using the Rules as a model.  After lengthy consideration, the UNCW was adopted in 1997.  As Professor McCaffrey states, the “heart” of the UNWC is contained in Part II:  General Principles and Part III: Planned Measures.  Articles 5 and 6 contain the principle of equitable utilization and the relevant factors to determine if it is equitable.    As McCaffrey states, the principle and factors were not controversial as they followed very closely to the Helsinki Rules.211  What was innovative was the inclusion of the equitable participation provisions in the Convention.  The participation provisions incorporate the concept of co-operative participation in international watercourses. Despite the UNWC being adopted, it is not yet in force.212  After the adoption of the UNWC, the ILA addressed the issue of whether the Helsinki Rules were in need of revision.  The project started in 2000 and the proposed revisions were presented and approved at the ILA conference held in Berlin in 2004.  The title was changed to The 																																																								209 Convention of the Law of Non-Navigable Uses of International Watercourses, 36 ILM 700 (1997); G.A. Res. 51/229, U.N. GAOR, 51st Sess., 99th mtg., UN Doc A/RES/51/229 (1997), (UNWC). 210	McCaffrey,	p.	12.		The	Convention	is	often	referred	to	as	the	UN	Watercourses	Convention	or	UNWC	for	short.	211	ibid,	p.	18.	212	As	at	June	2,	2014	the	United	Nations	Treaty	Database	reports	that	the	UNCW	is	not	in	force.		There	are	16	Signatories	to	the	Convention	and	35	parties.		Neither	Canada	nor	the	United	States	are	Signatories	or	parties	to	the	Convention.		 69	Berlin Rules on Water Resources213.  The new rules, which were more expansive than the previous rules, consist of 73 articles and include all water resources, national and international.  One distinguishing characteristic of the Berlin Rules for the previous principles is that there is an obligation on each basin state to “manage” the water resource in an equitable and reasonable manner. 214 Although the Helsinki Rules, the UNWC, and the Berlin Rules are not binding international law, they have all had their influence on customary international law in relation to international watercourses.  The Permanent Court of International Justice (PCIJ) and its successor the International Court of Justice (ICJ) have referred to these instruments in decisions of three non-navigational uses of international watercourses disputes that were referred to the courts.    These three cases are the Meuse case215, the Gabčíkovo case216, and the Pulp Mills case.217  In these cases, the courts addressed international water law and, according to Professor McCaffrey, made a number of significant statements.  In Gabčíkovo, the court held that Hungary has a basic right to the equitable and reasonable sharing of the resources of an international watercourse which was not derived from the treaty, rather which is found in customary international law.218  McCaffrey and others have identified the ICJ’s statement as evidence of how the equitable and reasonable utilization principle has become a “cornerstone of the law in the 																																																								213 The Berlin Rules on Water Resources, International Law Association, Report of the 71st Conference 3 (2004); 71 ILA 337, 385 (2004), (Berlin Rules). 214	Salman,	p	636.		The	definition	of	“manage”	in	the	Berlin	Rules	is	contained	in	Article	3(14).	215	Diversion	of	Water	from	the	Meuse	(Netherlands	v	Belgium),	PCIJ	Rep	Series	A/B	No	70	216	Case	Concerning	the	Gabčíkovo-Nagymaros	Project	(Hungary	v	Slovakia)	(Judgment)	[1997]	ICJ	Rep	7		217	Case	Concerning	Pulp	Mills	on	the	River	Uruguay	(Argentina	v	Uruguay)	(Judgment)	[2010]	ICJ	Rep	14	218	McCaffrey,	p.	14		 70	field.”219  Furthermore, the ICJ has applied the community of interest principle in the same case in its statement that there is a common legal right which is held equally by each riparian state in the use of the whole course of the river and that the modern development of this principle to non-navigational uses is evidenced by the adoption of the UNWC.220   In the Pulp Mills cases, the ICJ invoked the principle of equitable and reasonable utilization in interpreting the requirements under the 1975 River Uruguay Statute221 despite the fact that the statute itself does not refer to equitable or reasonable utilization.  Furthermore, the court found that the principles found in the UNWC to take into account the interests of the other riparian state and to protect the watercourse were applicable to the matter when the Statute was silent, as these principles contained in the UNWC are part of the customary international law.222 3.7 Summary		These four examples show how treaties and legal instruments contain a number of objectives and principles and illustrate those different approaches and how these principles develop over time.  Although there are many other agreements which could be surveyed, these examples are examples of an Imperial treaty (Boundary Waters Treaty), a treaty in which Canada had to involve a province in its negotiation and implementation (Columbia River Treaty), both of which are bilateral treaties, the multilateral Helsinki Rules and its successors, and inter-municipal cooperation agreements for the provision of 																																																								219	ibid.	220	ibid.	221 Statute of the River Uruguay, 26 February 1975, UNTS vol. 635, p. 91. 222	ibid,	p.	15		 71	public water supplies.  Besides differing in who the parties are as well as the number of parties, they illustrate temporal characteristics.  These temporal characteristics are the result of the prevailing policy considerations, industrialization and economic conditions, as well as general awareness and concern for environmental health and protection. Despite the differences among these legal instruments, there is one striking similarity. They are primarily concerned with development along transboundary watercourses and seek to preserve the access to and a consistent flow and level of the watercourse.  By attempting to achieve this, the agreements establish rights of states along international watercourses regarding the use of fresh water resources and imposing a duty on that state to protect the fresh water resources or flow on behalf of the other riparian states.   In addition, protection from pollution was added in later in time.  What is not addressed in any of these agreements is a notion of fresh water resources as a commodity.  Except for the prohibition from diversion without consent in the Boundary Waters Treaty, the issue of permanently taking water out of the body of water is addressed.  It may well be read into portions of the agreements relating to the obligations to ensure the water flow, but that is generally in relation to damming of the watercourse for the production of hydroelectricity. In light of this, it appears that fresh water resources have not been seen as a commodity of trade until recently.  This shift in characterization of fresh water resources may have an effect on how these agreements are interpreted in the future and how trade agreements may be used to advance the case for the trade of fresh water resources in bulk.  In order to determine if trade agreements, rather than specific trans boundary water agreements, are applicable to fresh water resources and their commoditization, we must 	 72	look to the terms of these trade agreements and their provisions to determine if fresh water resources are in fact a commodity subject to the provisions of trade agreements. 	 		 73	4 Reading	the	Downstream	Currents:		Do	GATT/WTO	and	NAFTA	Change	the	Status	Quo? In	order	to	determine	if	fresh	water	resources	in	bulk	is	a	trade	commodity	under	the	terms	of	the	agreements,	we	must	turn	to	the	legal	texts	of	the	WTO	and	NAFTA	and	consider	the	provisions	contained	in	the	agreements	and	how	they	have	been	interpreted	in	an	attempt	to	discern	if	fresh	water	is	subject	to	the	WTO/NAFTA	regime.		In	discussing	the	applicability	and	implications	with	respect	to	fresh	water	resources,	the	provisions	dealing	with	trade	in	goods	contained	in	GATT	and	WTO	are	key.		In	addition,	corresponding	provisions	in	NAFTA	will	provide	the	rules	which	apply	to	the	North	American	trading	bloc,	to	the	extent	that	they	differ	from	the	GATT/WTO	provisions.		The	WTO	texts	will	be	considered	first,	particularly	GATT	1947	and	GATT	1994.		As	GATT	predated	NAFTA	and	set	the	foundation	of	NAFTA,	it	is	important	to	understand	the	legal	text	as	it	has	been	interpreted	before	addressing	the	provisions	of	NAFTA.		As	well,	NAFTA	is	a	Regional	Trade	Agreement	as	contemplated	in	GATT	Article	XXIV	and	so	the	discussion	concerning	the	text	will	guide	the	analysis	of	the	NAFTA	text.			In	support	of	this	approach,	it	is	instructive	to	look	at	Part	One	of	NAFTA	which	contains	a	specific	reference	to	GATT	Article	XXIV.		NAFTA	is	established		 74	pursuant	to	that	provision	and	NAFTA	Article	103	affirms	the	Parties223	existing	rights	and	obligations	under	GATT	and	other	agreements	to	which	the	Parties	are	signatories.		Article	103	also	provides	that	“[i]n	the	event	of	any	inconsistency	between	this	Agreement	[NAFTA]	and	such	other	agreements,	this	Agreement	shall	prevail	to	the	extent	of	the	inconsistency,	except	as	otherwise	provided	in	this	Agreement.”	224		This	provision	is	consistent	with	Annex	1A	of	the	WTO	Agreement,	which	states	that	“[i]n	the	event	of	conflict	between	a	provision	of	the	General	Agreement	on	Tariffs	and	Trade	1994	and	a	provision	of	another	agreement	in	Annex	1A	to	the	Agreement	Establishing	the	World	Trade	Organization	(referred	to	in	the	agreements	in	Annex	1A	as	the	“WTO	Agreement”),	the	provision	of	the	other	agreement	shall	prevail	to	the	extent	or	the	conflict.”225		After	considering	the	provisions	in	GATT	1994,	the	provisions	of	NAFTA	will	be	considered	and	if	there	are	any	conflicting	provisions,	resolve	them	in	the	manner	contemplated	by	the	agreements.	4.1 GATT	1947,	GATT	1994,	and	WTO	and	Their	Applicability	to	Fresh	Water	Resources	GATT	1947	comprises	four	parts.		Parts	I	and	II	are	the	parts	that	need	to	be	considered	in	order	to	answer	the	question	reading	the	applicability	to	fresh	water																																																									223	when	using	the	term	“the	Parties”	I	am	using	it	in	the	manner	in	which	is	consistent	with	the	usage	in	NAFTA	and	refers	to	the	signatories,	being	the	Government	of	Canada,	the	Government	of	the	United	Mexican	States,	and	the	Government	of	the	United	States	of	America.	224 NAFTA, Article 103. 225 WTO, Annex 1A. 	 75	resources.		Part	I	sets	out	the	general	principle	of	Most-Favoured-Nation	Treatment.		This	principle	is	outlined	in	Article	I(1),	which	states	that:	With	respect	to	customs	duties	and	charges	of	any	kind	imposed	on	or	in	connection	with	importation	or	exportation	or	imposed	on	the	international	transfer	of	payments	for	imports	or	exports,	and	with	respect	to	the	method	of	levying	such	duties	and	charges,	and	with	respect	to	all	rules	and	formalities	in	connection	with	importation	and	exportation,	and	with	respect	to	all	matters	referred	to	in	paragraphs	2	and	4	of	Article	III,*	any	advantage,	favour,	privilege	or	immunity	granted	by	any	contracting	party	to	any	product	originating	in	or	destined	for	any	other	country	shall	be	accorded	immediately	and	unconditionally	to	the	like	product	originating	in	or	destined	for	the	territories	of	all	other	contracting	parties.226	Article	I	(2),	(3),	and	(4)	outline	certain	exceptions	to	the	Most-Favoured-Nation	principle,	which	are	mostly	recognizing	pre-existing	agreements	between	nations.	Part	II	contains	specific	provisions	and	rules.		Included	in	this	section	are	the	articles	pertaining	to	National	Treatment	(Article	III),	Anti-Dumping	(Article	VI),	Elimination	of	Quantitative	Restrictions	(Article	XI),	Subsidies	(Article	XVI),	State	Trading	Enterprises	(XVII),	Emergency	Action	(XIX),	General	Exceptions	(XX),	and	Security	Exceptions	(Article	XXI).		This	part	supplements	the	general	equal	treatment	provision	in	Article	I	and	identifies	practices	which	had	been	used	in	the	past	to	restrict	imports	from	targeted	nations,	which	were	often	seen	as	a	threat	to	the	domestic	industry.227																																																											226 GATT 1947, Article I(1). 227 GATT 1947, Part II. 	 76	The	first	step	in	the	analysis	to	determine	if	water	is	subject	to	the	WTO	regime	is	to	determine	if	water	fits	within	the	definition	of	“good”	or	“product”	as	defined	in	the	legal	texts.		One	striking	feature	of	GATT	1947	and	GATT	1994	is	that	there	is	no	definition	section	that	sets	out	definitions	of	the	terms	used	in	the	agreements.		As	such,	the	general	intention	of	the	agreements	has	to	be	determined	and	specific	articles	of	the	agreements	have	to	be	read	in	order	to	determine	the	“ordinary	meaning”	of	the	terms	contained	in	the	agreements.		Analyzing	the	usage	and	context	of	the	terms	throughout	the	agreements	assists	in	arriving	at	a	definition	of	the	terms.			Prior	to	analyzing	the	texts,	it	is	necessary	to	determine	a	standard	definition	for	the	terms	“goods”	and	“product”	as	a	starting	point.		As	Sullivan	sets	out	in	her	work,	and	as	discussed	previously,	the	dictionary	meaning	of	a	term	is	not	conclusive,	however	it	does	provide	a	starting	point	and	baseline	from	which	to	proceed.		The	Oxford	English	Dictionary	defines	“goods”	as	“saleable	commodities;	merchandise,	wares”.		“Commodity”	is	defined	as	“a	thing	of	use	or	value;	specifically,	a	thing	that	is	an	object	of	trade,	especially	a	raw	material	or	agricultural	crop”.		“Merchandise”	is	defined	as	“the	commodities	of	commerce;	goods	to	be	bought	and	sold”	and	“wares”	is	defined	as	“articles	of	merchandise	or	manufacture;	goods,	commodities”.		“Product”	is	defined	as	“a	thing	produced	by	an	action,	operation,	or	natural	process;	…	that	which	is	produced	commercially	for	sale.”		 77	The	purpose	and	intent	of	GATT	is	set	out	in	the	preamble.		Included	in	the	statement	of	the	desire	for	economic	growth	among	the	Members		so	as	to	improve	the	standard	of	living	among	the	parties	by	reducing	barriers	to	trade,	the	preamble	contains	the	aspiration	that	the	objectives	can	be	achieved	in	part	by	“developing	the	full	use	of	the	resources	of	the	world	and	expanding	the	production	and	exchange	of	goods.”228		This	preamble	would	suggest	that	it	was	the	intention	of	the	parties	when	GATT	1947	was	negotiated	that	resources,	outputs	of	production,	and	goods	would	be	subject	to	the	provisions	contained	in	the	subsequent	articles	of	the	agreement.		This	also	is	in	line	with	the	definitions	of	“goods”	and	“products”	as	found	in	the	Oxford	English	Dictionary.		In	order	to	be	certain	about	the	scope	of	the	agreement,	we	have	to	look	deeper	into	the	text	to	see	how	the	intentions	are	specifically	expressed	and	the	terms	are	specifically	used.			A	review	of	the	text,	including	the	annexes	and	amendments	since	its	entry	into	force,	shows	that	the	term	“good”	or	“goods”	in	the	context	of	a	commodity	appears	15	times.		In	Annex	I	–	Notes	and	Supplementary	Provisions,	the	term	“goods”	has	a	limiting	provision	in	GATT	1947	Article	XVII	Paragraph	2.		It	states	that	“the	term	“goods”	is	limited	to	products	as	understood	in	commercial	practice,	and	is	not	intended	to	include	the	purchase	or	sale	of	services.”229		This	together	with	the	statement	in	the	preamble	that	the	purpose	is	to	“expand[	]	the	production	and	exchange	of	goods”230	would	lead	to	a	strong	inference	that	the	subject	of	GATT																																																									228 GATT 1947, Preamble. 229 GATT 1947, Article XVII(2). 230 GATT 1947, Preamble. 	 78	would	be	commodities	which	have	gone	through	an	industrial	process	and	afterwards,	are	the	subject	of	transboundary	exchange.			When	the	text	is	further	reviewed,	the	terms	“product”	and	“products”	are	used	221	times.		With	this	use	of	the	term	“product”	more	prevalent	in	the	text	of	GATT	than	the	term	“goods”	together	with	the	specific	limiting	provision	in	Annex	I,	it	would	be	reasonable	to	read	the	agreement	as	covering	items	of	exchange	which	have	gone	through	an	industrial	process	prior	to	being	considered	a	“good”	or	“product”	of	trade.	However,	from	the	review	of	the	texts	of	GATT	1947	and	GATT	1994,	it	is	inconclusive	whether	the	importation	or	exportation	of	fresh	water	resources	is	included	within	the	definition	of	“good”	or	“product”.		With	this	uncertainty,	a	more	conclusive	answer	may	be	found	in	other	documents	or	statements	of	the	parties	on	this	matter.		The	international	community	has	addressed	the	issue	of	fresh	water	resources	in	relation	to	the	use,	allocation,	and	protection	of	transboundary	watercourses	in	a	number	of	agreements.		The	agreements	that	have	been	reviewed	have	not	referred	to	the	fresh	water	resources	as	a	commodity,	which	would	be	subject	to	other	agreements	such	as	GATT.		A	broader	review	of	the	international	agreements	in	place	that	deal	with	all	waters	shows	a	general	intent	on	the	prevention	of	pollution	or	the	safe	access	to	and	navigation	of	the	waters.		 79	In	these	circumstances,	there	is	little	guidance	from	other	sources	to	assist	in	determining	whether	fresh	water	resources	are	subject	to	the	rules	of	trade	agreements.		As	such,	applying	various	theoretical	approaches	to	the	question	and	arriving	at	an	acceptable	and	considered	manner	in	which	to	resolve	the	question	will	have	to	be	undertaken	in	order	to	make	the	determination.	4.2 Do	Any	of	the	Provisions	in	NAFTA	Modify	the	Relationship	Developed	in	GATT	as	Among	the	NAFTA	Parties?	Turning	to	the	text	of	NAFTA,	the	relevant	provisions	to	determine	if	there	is	a	different	approach	to	the	classification	of	fresh	water	resources	under	NAFTA	than	under	GATT	are	contained	in	the	Preamble,	Chapter	Two	–	General	Definitions,	and	Chapter	Twenty-One	–	Exceptions.	The	Preamble	to	NAFTA	sets	out	the	desired	goals	and	guiding	principles	that	the	three	countries	expressly	resolved	should	apply	to	trade	among	and	between	the	Parties.		Specifically,	the	Preamble	states	that	the	Parties	intend	on	“build[ing]	on	their	respective	rights	and	obligations	under	the	General	Agreement	on	Tariffs	and	Trade	and	other	multilateral	and	bilateral	instruments	of	cooperation”.231		They	also	resolve	to	“undertake	each	of	the	proceeding	[goals]	in	a	manner	consistent	with	environmental	protection	and	conservation”,	“safeguard	the	public	welfare”,	“promote	sustainable	development”,	and	“strengthen	the	development	and	enforcement	of	environmental	laws	and	regulations”.232		These	goals	and	principles																																																									231 NAFTA, Preamble. 232 Ibid. 	 80	are	instructive	when	analyzing	the	text	to	answer	the	question	of	the	applicability	to	fresh	water	resources.			Unlike	GATT,	Chapter	Two	of	NAFTA	has	a	section	of	definitions	of	general	application.		In	Article	201,	“goods	of	a	Party”	is	defined	as	“domestic	products	as	these	are	understood	in	the	General	Agreement	on	Tariffs	and	Trade	or	such	goods	as	the	Parties	may	agree,	and	includes	originating	goods	of	that	Party.”233		Although	there	is	a	formal	definition	of	“goods	of	a	Party”	in	the	agreement,	it	is	so	broadly	defined	so	as	not	to	be	of	particular	assistance	in	determining	if	fresh	water	resources	are	a	“good”.		Looking	back	to	the	previous	discussion	of	the	meaning	of	“good”	or	“product”	in	GATT,	the	definition	of	a	“good”	or	“product”	would	imply	that	some	industrial	process	would	have	to	be	applied	to	the	fresh	water	resource	for	it	to	fall	within	the	definition	in	Article	201.		As	with	the	earlier	discussion,	it	is	not	conclusive	whether	fresh	water	resources	are	a	“good”	under	NAFTA	as	bulk	transfer	of	fresh	water	resources	requires	no,	or	minimal,	industrial	processing	in	order	to	export	it.		The	result	is	similar	to	GATT	in	that	one	would	have	to	look	to	extrinsic	evidence	in	order	to	determine	the	intentions	of	the	Parties	as	to	whether	or	not	fresh	water	resources	are	to	be	subject	to	the	NAFTA	trade	rules.	The	issue	of	foreign	access	to	Canada’s	fresh	water	resources	was	a	live	issue	during	the	negotiation	of	NAFTA.		In	response	to	this,	the	Canadian	government	took	the	position	that	NAFTA	“does	not	apply	to	water	in	its	natural	state.”234		While																																																									233 NAFTA, Article 201. 234 Johansen, David Bulk Water Removals, Water Exports and the NAFTA, 20 February 2001, revised 31 January 2002.  Library of Parliament, Parliamentary Information and Research Service.  PRB 00-41E, Catalogue Number YM32-5/00-41E-PDF, p 8. 	 81	NAFTA	was	still	being	negotiated,	the	Canadian	government	released	a	publication	in	August	1992	entitled	The	NAFTA	Manual235	which	states	that	NAFTA	does	not	apply	to	large-scale	exports	of	water	or	inter-basin	transfers	or	diversion	of	water,	which	is	states	is	contrary	to	federal	policy.		The	government	states	that	NAFTA	only	applies	to	water	packaged	as	a	beverage	or	in	tanks.236		Furthermore,	the	then	Assistant	Deputy	Attorney	General	of	Canada,	Konrad	von	Finkenstein,	appeared	before	the	House	of	Commons	Legislative	Committee	on	Bill	C-115	(NAFTA	Implementation)	and	stated	that	the	trade	in	water	requires	that	water	be	a	good	and	subject	to	the	NAFTA	rules,	it	would	have	to	be	bottled	or	put	in	tanks,	otherwise	it	was	not	a	good.237	In	addition,	to	answer	the	question	about	the	applicability	of	NAFTA	to	fresh	water	resources,	the	governments	of	Canada,	United	States,	and	Mexico	issued	a	joint	statement	in	December	1993	expressly	stating	that	the	intention	of	the	Parties	was	that	water	was	not	subject	to	the	rules	of	NAFTA	unless	it	“entered	into	commerce	and	become[s]	a	good	or	product.”238		In	light	of	this	Joint	Statement,	the	parliamentary	testimony,	and	The	NAFTA	Manual,	there	is	sufficient	extrinsic	evidence	to	support	the	conclusion	that	water,	other	than	bottled	water	or	water	in	tanks,	was	not	intended	to	be	subject	to	the	trade	rules	in	NAFTA.																																																										235 North American Free Trade Agreement:  The NAFTA Manual (Ottawa: External Affairs and International Trade Canada, 1992). 236 The NAFTA Manual, 1992, p.6 and the section entitled NAFTA – Water, no page numbers provided. 237 Johansen, Bulk Water Removals, p. 9. 238 1993 Statement by the Governments of Canada, Mexico, and the United States. 	 82	4.3 The	Competing	Ideas	of	Public	Good	and	Commercial	Resource	to	Aid	in	Deciding	the	Preferred	Interpretation	Fresh	water	is	a	unique	compound	that	is	essential	for	all	forms	of	life	on	earth	and	there	are	no	substitutions	for	fresh	water.		However,	competing	views	on	how	to	categorize	and	treat	fresh	water	resources	in	our	economic	and	legal	systems	have	developed.		Before	coming	to	a	determination	what	the	preferred	interpretation	of	the	provisions	of	NAFTA	and	WTO	is,	it	is	important	to	engage	in	a	discussion	about	the	competing	approaches	to	natural	resource	use,	consumption	and	conservation.		On	its	face,	the	discussion	appears	to	be	dichotomous,	however,	on	a	deeper	analysis	there	is	more	of	a	continuum	of	approaches	ranging	from	the	complete	non-commoditization	of	water,	due	to	its	perceived	nature	as	a	public	good,	to	an	approach	based	on	property	rights,	which	advocates	for	the	market	being	the	regulator.	Professor	Edith	Brown	Weiss	identifies	the	main	question	as	whether	the	market	is	the	best	mechanism	to	regulate	the	consumption	of	fresh	water	as	it	may	result	in	a	more	efficient	use	of	water	and	meet	the	water	needs	of	various	users,	municipal	and	agricultural.		She	points	out	that	these	entities	are	in	the	market	of	buying	and	selling	fresh	water	resources	and	“some	argue	that	fresh	water	is	a	commodity,	which	ought	to	have	a	price,	and	that	the	price	ought	to	be	high	enough	to	ensure	that	water	is	used	efficiently.”247		She	recognizes	that	there	is	an																																																									247 Brown	Weiss,	Edith,	“Water	Transfers	and	International	Trade	Law”	in	Edith	Brown	Weiss,	Laurence	Boisson	de	Chazournes	&	Nathalie	Bernasconi-Osterwalder,	eds.	Fresh	Water	and	International	Economic	Law	(Oxford:		Oxford	University	Press,	2005),	p.	61. 	 83	unanswered	question	as	to	the	applicability	of	trade	law	to	the	fresh	water	resource.		As	she	states	it,	the	answer	to	the	question	“whether	the	GATT	1994	applies	to	bulk	transfers	of	water	has	important	policy	implications	for	international	trade,	water	and	agricultural	policy,	and	ecosystem	protection”248	and	thus,	the	final	determination	must	be	carefully	thought	out.		In	her	opinion	there	are	reasons	for	and	against	the	applicability	of	trade	agreements	to	fresh	water	resources.		Considerations	which	favour	the	applicability	include	the	recognition	that	it	is	a	commodity,	levels	the	playing	field	for	trade	in	fresh	water	resources,	and	it	protects	against	disguised	barriers	to	trade.		Considerations	against	the	applicability	of	trade	agreements	include	the	constraint	of	a	state’s	ability	to	protect	ecological	systems,	complications	to	long-term	management	of	fresh	water	resources,	allowing	trade	considerations	to	dominate	the	resolution	of	conflicts	in	uses,	and	the	abdication	of	authority	to	resole	claims	to	trade	dispute	settlement	mechanisms.249	Brown	Weiss	explains	that	water	did	not	have	a	price	except	for	the	cost	of	its	extraction	and	treatment	until	the	last	half	of	the	twentieth	century.		It	was	during	the	last	half	century	or	so	that	water	has	become	a	subject	of	water	markets	and	began	being	priced.250		It	has	been	during	this	time	that	a	market	developed	on	an	international	scale	but	at	the	same	time	some	states	where	resistant	to	the	export	market	developing	within	their	jurisdictions.251		It	is	from	this	newly	emerging	landscape	that		the	question	arises	as	to	the	applicability	of	international	trade																																																									248 ibid, p. 77. 249 ibid, p. 80 – 81. 250	Brown	Weiss,	Edith,	“Water	Transfers	and	International	Trade	Law”	in	Fresh	Water	and	International	Economic	Law	p.	61.	251	ibid.		 84	agreements	to	the	fledgling	international	market	for	fresh	water	resources.252		Brown	Weiss	identifies	the	conflicting	positions	being,	on	the	one	hand,	a	view	that	“water	is	a	commodity,	which	ought	to	have	a	price,	and	that	the	price	ought	to	be	high	enough	to	ensure	that	water	is	used	efficiently”253		and,	on	the	other	hand,	a	view	that	“the	commodification	of	water	[is]	inappropriate	and	regard[s]	fresh	water	as	a	public	good,	or	as	the	common	heritage	of	humankind.”254		In	her	opinion,	this	shows	an	apparent	conflict	between	environmental	and	human	rights	disciplines	and	that	of	international	trade.255	This	description	of	the	conflicting	approaches	is	echoed	by	Urs	Lauterbacher	and	Ellen	Weigandt.		They	set	out	the	dichotomy	in	terms	of	symbolic	value	and	intrinsic	value	of	water.256		The	proponents	of	the	symbolic	value	of	water	do	so	because	of	its	essential		qualities	and	importance	to	life257	and	espouse	the	position	that	there	is	a	basic	human	right	to	water	which	would	result	in	not	price	being	attributable	to	fresh	water	resources.258		The	proponents	of	the	intrinsic	value	of	water	do	so	based	on	the	apparent	and	localized	scarcity	of	fresh	water	resources,	which	invites	the	application	of	economic	principles	to	create	a	market	and	derive	a	price	for	the	fresh	water	resource.																																																											252	ibid.	253	ibid.	254	ibid.	255	ibid,	p.	62	256	Lauterbacher,	Urs	and	Ellen	Weigandt,	“Cooperation	or	Confrontation:		Sustainable	Water	Use	in	an	International	Context”	in	Fresh	Water	and	International	Economic	Law,	p.	13	257	ibid.	258	ibid.		 85	According	to	the	proponents	of	the	intrinsic	value	approach,	water	has	a	cost	(including	the	costs	of	extraction,	maintenance,	opportunity	costs,	and	externalities	of	its	use	and	consumption)	and	an	associated	price.		It	follows	from	this	that	the	most	important	exercise	is	to	determine	the	proper	price	in	order	to	achieve	the	optimal	use.259		Lauterbacher	and	Weigandt	argue	that	“[s]ociety	must	therefore	derive	norms,	rules,	and	institutions	that	provide	incentives	to	achieve	equitable	and	efficient	use	of	this	vital	resource.”260		They	argue	that	in	order	to	achieve	the	goal	of	optimal	use,	recognizing	property	rights	in	the	fresh	water	resource	is	the	most	appropriate	way	to	optimize	its	exploitation	and	distribution.261	Céline	Lévesque	also	describes	this	tension	between	the	competing	views.		Lévesque	focuses	on	the	North	American	context	and	acknowledges	the	two	competing	views	but	also	argues	that	the	way	fresh	water	resources	are	characterized	varies	according	the	circumstances.		She	identifies	examples	when	water	is	treated	as	a	public	good	and	when	it	is	considered	a	commodity	and	governed	by	international	trade	rules.		Through	her	analysis	of	the	NAFTA	Chapter	11	challenge	Bayview	Irrigation	District	et	al	v.	United	Mexican	States262,	Lévesque	concludes	that	“from	a	trade	law	perspective,	a	bottle	of	water	sold	as	a	‘good’	or	‘product’	is	subject	to	international	trade	disciplines.”263		When	water	is	in	its	natural	state	as	part	of	a	river	flow,	aquifer,	or	a	lake,	it	is	not	subject	to	trade	law.																																																										259	ibid.	260	ibid.	261 ibid. 262	Award	of	ICSID	Arbitral	Panel,	Bayview	Irrigation	District	et	al	v.	United	Mexican	States,	ICSID	Case	No.	ARB	(AF)/05/1	(2007)	(International	Centre	for	Settlement	of	Investment	Disputes).	263	Lévesque,	Céline,	“Investment	and	Water	Resources:		Limits	to	NAFTA”	in	Sustainable	Development	in	World	Investment	Law,	p.	414.		 86	However,	“beyond	this	certainty,	…	,	much	relating	to	water	and	its	commodification	remains	open	to	debate.”264		As	Lévesque	puts	it	“[t]he	‘extremes’	of	course	are	more	easily	dealt	with:	water	bottle	versus	river	flow	…	[t]he	water	muddies	considerably,	however,	in	the	middle	zone.”265	The	answer,	in	her	opinion,	rests	on	which	side	of	the	debate	gains	primacy;	sustainable	development	and	environmental	considerations,	or	trade	considerations.266		The	fundamental	point	on	which	the	two	sides	disagree	is	at	which	point	“water	can	be	said	to	have	‘entered	into	commerce’”267	She	argues	that	as	a	result	of	the	Bayview	decision,	water	rights	are	subject	to	trade	laws	but	it	is	not	clear	if	trade	law	is	applicable	in	other	situations.	This	uncertainty	of	fresh	water	resources’	status	within	trade	law	and	the	tension	between	the	two	sides	of	the	debate	is	addressed	by	William	Schreiber.		In	his	work	about	sustainable	development,	he	discusses	the	necessary	balancing	of	economic	concerns	with	environmental	protection.268		Unlike	Lauterbacher	and	Weigandt,	Schreiber	considers	that		that	there	is	arguably	a	human	right	to	water.		Schreiber	takes	the	position	that	the	international	community	should	be	placing	a	priority	on	the	use	and	sustainable	development	fresh	water	resource	in	order	to	respect	any	human	right	to	water.		The	recognition	of	a	human	right	to	water	would	impose	certain	obligations	on	states	to	ensure	that	the	resource	is	used	in	a	responsible	manner	for	the	global	community.		But	it	is	up	to	the	individual	states	to																																																									264	ibid.	265	ibid,	p.	416.	266	ibid,	p.	415.	267	ibid.	268	Schreiber,	William,	“Realizing	the	Right	to	Water	in	International	Investment	Law:	An	Interdisciplinary	Approach	to	BIT	Obligations”	48	Nat.	Resources	J.	431,	at	p.	432.		 87	determine	how	that	obligation	is	fulfilled.269		Complicating	this,	as	Schreiber	states,	is	the	position	of	the	World	Bank	and	International	Monetary	Fund	(IMF)	that	water	is	an	economic	good	and	their	promotion	of	privatization	of	state-owned	water	utilities.		Schreiber	argues	“this	economic	emphasis,	by	commodifying	water	as	a	resource,	detracts	from	water’s	role	as	a	necessary	part	of	social	and	cultural	goods.”270		The	implications	of	the	actions	of	the	IMF	is	that	fresh	water	resources	would	become	an	economic	resource,	providing	financial	benefits	to	corporations	at	the	expense	of	respecting	a	human	right.		Schreiber’s	position	that	there	is	a	human	right	to	water	relies	on	General	Comment	15	of	the	International	Covenant	on	Economic,	Social,	and	Cultural	Rights	(ICESCR)271	and	how	it	defines	the	nature	of	the	right.		He	states	that	the	“right	to	water	is	a	fundamental	human	right	implicitly	recognized	within	the	International	Bill	of	Rights	and	that	…	the	right	to	water	is	a	prerequisite	for	all	other	human	rights.”272		The	International	Bill	of	Rights	contains	primary	rights	and	each	right	is	interdependent	and	indivisible	from	other	rights.		Schreiber	argues	water	is	a	prerequisite	for	the	realization	of	all	other	human	rights	and	the	fact	that	fresh	water	resources	are	not	explicitly	referred	to	in	human	rights	declarations	and	bills	of	rights	should	not	limit	the	interpretation	and	not	include	fresh	water	resources.273			Schreiber	arrives	at	this	position	as	the	ICESCR	recognizes	a	right	to	water	as	a	basic	human	right	but	limits	it	to	a	necessary	amount	for	personal	and																																																									269 ibid, p. 433. 270	ibid,	p.	434.	271	ibid,	p.	438.	272	ibid,	p.	438.	273	Ibid,	p.	440.		 88	domestic	use.		In	recognizing	this	right,	Schreiber	argues	that	development	and	commercialization	of	water	needs	to	be	balanced	with	the	content	of	the	human	right	to	water.		It	flows	that	states	cannot	infringe	the	individual’s	access	to	water	in	favour	of	third	parties	or	foreign	states.		Furthermore,	states	will	have	to	refrain	from	causing	harm	to	the	water	source	and	ensure	the	safety	of	the	water	user.274		In	particular,	Schreiber	warns	that	the	consequences	of		increasing	privatization	of	water	systems	and	the	pressures	of	international	investment	treaties	interfere	with	the	ability	of	the	individual	to	exercise	the	right	to	water.	In	contrast	to	Schreiber’s	position,	Professor	Pooja	Parmar	challenges	the	current	discourse	on	the	human	right	to	water	as	being	the	result	of	developments	in	international	human	rights	law	and	sustainable	development.		Parmar	does	not	dispute	the	goal	of	the	human	right	to	water	and	the	importance	of	ensuring	access	to	the	resource.		Rather,	Parmar	challenges	the	basis	for	establishing	the	right	as	grounded	in	Western	liberal	ideology	which,	in	her	opinion,	is	the	result	of	the	“dominant	‘universal’	human	rights	discourse	[that]	is	in	fact	‘a	globalized	Western	localism’.”275		This	localism	does	not	take	into	consideration	the	plurality	of	lived	experiences	and	does	not	address	many	forms	of	suffering	and	depravation.		Her	basic	premise	is	that	a	human	right	to	water,	in	a	legal	sense,	does	not	reflect	what	the	people	aspiring	to	human	rights	mean	by	a	human	right.276		Her	concern	in	using	human	rights	discourse	when	addressing	the	needs	of	people	for	such	a	basic																																																									274	ibid,	p.	445.	275	Parmar,	“Revisiting	the	Human	Right	to	Water”	Australian	Feminist	L.J.,	06/2008,	Issue	28,	p.	81.	276	ibid,	p.	81.		 89	human	need	is	that	the	uncertainty	and	dispute	around	what	the	human	right	encompasses	“renders	rights	susceptible	to	co-optation	by	hegemonic	forces.”277		Parmar	proposes	that	the	special	nature	of	the	fresh	water	resources	and	the	need	to	avoid	the	pitfalls	of	the	current	rights	discourse,	which	tends	to	view	the	right	as	an	entitlement	to	a	minimum	volume	of	water,	should	take	us	away	from	the	focus	on	a	basic	entitlement	and	toward	a	focus	on	the	local	needs.		This	focus	will	shift	the	concept	from	limiting	the	potential	right,	thus	further	marginalizing	the	lived	experience,	to	the	concept	of	identifying	the	local	needs.		She	proposes	further	that	“[o]nce	measured	and	prescribed,	needs	are	translated	into	entitlements.”278		This	would	have	the	desired	effect	on	limiting	the	development	of	the	water	resource	in	a	way	that	would	respect	the	rights	of	the	local	citizenry.	On	the	other	hand,	the	market	efficiency	approach	to	water	is	an	economics	based	approach	to	the	use	and	conservation	of	resources.		The	writers	who	follow	this	approach	generally	are	of	the	opinion	that	economic	market	forces	will	result	in	a	price	of	water	that	provides	for	sustainable	development	and	a	certain	level	of	conservation,	thus	reaching	an	equilibrium	point	of	supply	and	demand.		This	costs/price	approach	is	based	on	the	basic	economic	principle	that	economic	actors	act	rationally,	often	referred	to	as	homo	economicus.		This	assumption	leads	to	a	belief	held	by	many	commentators	in	the	international	trade	discipline	that	there	is	an	economic	balance	that	will	be	achieved	even	if	the	commodity	in	question	is	an	exhaustible,	scarce,	or	special	resource.																																																									277	ibid,	p.	82.	278	ibid,	p.	89.		 90	To	illustrate	this,		Professor	Joseph	Dellapenna	states,	“efficient	management	of	public	goods	is	problematic:		If	one	invests	in	developing	or	improving	a	public	good,	others	who	invest	or	pay	nothing	(‘free	riders’)	will	benefit	from	the	investment	because	they	cannot	be	excluded.”279		As	a	result,	he	states,	there	is	a	disincentive	to	invest	in	these	projects	and	requires	the	community	to	take	on	the	responsibility	that	all	will	pay.		If	this	is	not	done,	then	demand	will	approach	supply	and	the	result	will	be	that	the	users	are	“locked	into	a	‘tragedy	of	the	commons’,	destroying	the	resource.”280		This	view,	according	to	Dellapenna,	resulted	in	the	increased	call	for	market	regulation	of	the	use	of	fresh	water	resources.		It	was	bolstered	in	the	early	1980’s,	coinciding	with	the	election	of	the	Thatcher	government	in	the	United	Kingdom	and	the	Reagan	Administration	in	the	United	States.		These	governments	were	receptive	to	decreased	government	involvement	in	many	sectors	of	the	economy	and	favoured	market	forces	as	the	regulator	of	the	supply,	demand,	and	ultimately	the	price	for	resources.		In	this	environment,	advocates	of	the	market	alternative	found	a	voice	and	were	being	listened	to	by	all	levels	of	governments.		Some	of	the	results	of	this	lobbying	were	the	privatization	of	water	utilities	and	the	creation	of	a	market	for	“raw	water”281.			The	proponents	of	economic	regulation	of	fresh	water	resources	believe	that	sustainable	use	will	result	when	all	costs,	financial	and	social,	are	taken	into	account	when	setting	the	price,	and	thus	affecting	the	demand.		Rational	management	of	the																																																									279 Dellapenna, Joseph W., “The Market Alternative”, in J.W. Dellapenna and J. Gupta, eds., The Evolution of the Law and Politics of Water, (Dordrecht, Nld.:  Springer, 2009), p. 374 280 Dellapenna, The Market Alternative, p. 374. 281 ibid, p. 378. “Raw water” is the terms used to describe water in bulk in its natural sources. 	 91	resource	and	efficient	use	is	the	ultimate	goal	and	justification	of	the	market	being	the	mechanism	to	regulate	the	use	of	the	water	resource.282		As	Dellapenna	states	“[t]he	supposition	that	economic	theory	accurately	represents	how	people	think,	and	therefore	enables	accurate	prediction	of	how	they	will	behave,	has	failed	in	numerous	experiments	…	studies	show	that	irrationality	is	built	into	how	people	make	decisions,	irrationality	that	prevents	the	market	models	from	working	as	economists	assume.”283	Professor	Dan	Tarlock	also	considers	the	economic	arguments	for	classifying	water	as	a	commodity.		He	describes	is	as	follows:	The	basic	idea	behind	current	water	reallocation	policy	is	that	the	market	rather	than	water	administrators	(bureaucrats)	should	determine	the	comparative	value	of	alternative	water	uses.		From	an	economic	perspective,	water	is	simply	another	commodity	to	be	bought	and	sold	with	the	lowest	possible	transaction	costs.		Economists	have	long	argued	that	too	much	water	is	devoted	to	low	value	uses	and	thus	water	allocation	patterns	are	inefficient.		The	difference	between	the	value	of	water	for	irrigated	agriculture	and	alternative	uses	remains	the	primary	economic	rationale	for	water	marketing.		A	1996	United	States	National	Academy	of	Science/National	Research	Council	report	explains	the	marginal	position	of	irrigations	concisely:		‘[t]he	value	of	water	in	agriculture	is	generally	less	than	in	industrial	and	municipal	uses	…	[and]	[b]ecause	it	is	so	expensive	to	develop	additional	water	supplies,	only	the	higher-value	water	uses	are	likely	to	be	justified	economically’.284	Tarlock,	like	Dellapenna,	associates	the	rise	in	acceptance	of	the	economic	justification	for	the	commodification	of	water	with	the	rise	of	neo-liberal	thought,	as	supported	by	the	Thatcher	and	Reagan	governments.		He	identifies	effect	on	local																																																									282 ibid, p. 382. 283 ibid, p. 383. 284 Tarlock, “Water Transfers:  A Means to Achieve Sustainable Water Use” in Fresh Water and International Economic Law, p. 38. 	 92	level	operations	of	the	shift	in	policy	at	the	higher	levels	as	follows:	“the	shrinking	fiscal	support	for	water	development	and	the	devolution	of	federal	power	have	created	a	more	fluid	water	policy	environment.		Neither	irrigated	agriculture	nor	municipal	water	suppliers	will	be	able	to	control	the	policy	agenda	as	they	did	in	the	past.”285		Furthermore,	Tarlock	states	“water	marketing	advocates	argue	that	reduced	transaction	costs	will	promote	more	transfers.		Proposals	to	reduce	the	transaction	costs	of	transfers	include	streamlining	existing	processes	and	creating	incentives	to	conserve	and	transfer	the	saved	water.”286	The	primary	means	by	which	markets	for	fresh	water	resources	are	created	is	by	the	creation	of	water	rights,	a	form	of	property	right.		By	creating	a	property	right,	the	holder	of	the	right	is	able	to	alienate	the	subject	of	the	right	by	sale	or	licence	and	exercise	it	with	minimal	interference	from	the	state.		With	parties	holding	such	proprietary	rights,	they	are	free	to	enter	into	agreements	to	sell	the	right	to	extract	fresh	water	resources	to	a	third	party	who	will	provide	the	greatest	economic	advantage	to	the	rights	holder.		This	market	approach	to	the	allocation	and	use	of	fresh	water	resources	is	consistent	with	neoclassical	economic	ideals,	that	is,	that	the	market	allocates	resources	more	efficiently	than	governments.287			The	notion	that	the	market	will	result	in	an	efficient	allocation	of	resources	is	based	on	the	assumption	that	the	costs	are	known	and	considered	and	that	the	demand	and	supply	will	result	in	the	fresh	water	resources	being	allocated	to	the																																																									285 ibid, p. 39. 286 ibid, p. 40. 287 ibid, p. 38. 	 93	best	and	highest	value	use.		However,	what	is	often	missing	in	the	analysis	is	the	full	appreciation	of	the	long	term	costs,	both	financial	and	environmental.		When	these	future	costs	are	taken	into	account,	they	are	discounted	to	reflect	the	future	aspect	and	the	probability	that	they	will	be	incurred.		By	discounting	these	costs,	and	not	taking	into	account	externalities,	the	present	price	that	the	buyer	would	pay	will	not	be	sufficient	to	offset	all	the	costs,	including	future	costs.		The	market	tends	to	focus	on	the	immediate	cost	of	getting	the	resource	from	the	seller	to	the	buyer.288		One	aspect	of	the	creation	of	water	rights,	either	by	recognition	of	riparian	rights	or	prior	appropriation,	is	that	the	power	dynamics	in	relation	to	the	use	and	regulation	of	fresh	water	resources	is	altered.		As	Tarlock	states,	the	party	that	controls	the	policy	agenda	holds	the	power	in	relation	to	allocation	and	uses	of	fresh	water	resources.		If	the	market	is	to	govern,	the	power	is	shifted	from	local	water	management	districts	and	the	state	to	buyers	and	sellers	who	determine	the	allocation	and	use	based	on	who	will	pay	more	for	the	fresh	water	resource.289		One	of	the	implications	of	this	is	that	the	state	loses	the	ability	to	implement	policies	and	programs,	such	as	regional	development	and	environmental	conservation.		In	addition,	the	government	loses	the	role	of	the	arbiter	of	competing	demands	for	the	resources.		It	also	loses	the	ability	to	be	a	buffer	of	the	vagaries	of	the	market	forces.290																																																											288 ibid, p. 41 289 ibid, p. 40 290 ibid, p. 40. 	 94	With	the	government	losing	most	of	its	influence	on	the	planning,	use,	and	allocation	of	fresh	water	resources,	long	term	stability	is	compromised.		Markets	tend	to	be	quick	to	react	to	changes	in	supply	and	demand,	whereas	government	policy	is	slower	to	shift	and	balances	competing	interests	based	on	policy.			In	regions	where	there	is	a	market	mechanism	that	allocates	fresh	water	resources,	the	experience	has	been	that	ad	hoc	measures	have	been	introduced	to	address	non-economic	issues	such	as	environmental	concerns,	economic	diversification,	and	social	issues.291		The	market	allocation	may	be	seen	as	a	rational	and	efficient	mechanism	to	allocate	fresh	water	resources,	but	it	risks	creating	water	monopolies,	over-exploitation,	predatory	pricing,	and	inequities	in	distribution.292	As	can	be	seen	by	the	arguments	in	favour	of	the	application	of	economic	and	market	approaches	to	the	use	of	the	water	resource,	the	focus	is	on	efficient	use	and	management	through	a	proper	price	level.		This	approach,	as	mentioned	above,	is	predicated	on	the	idea	that	the	actors	will	act	rationally	and	the	price	will	reflect	all	the	costs,	financial	and	social.		However,	since	many	of	the	social	costs	will	not	be	known	for	many	years	in	the	future,	it	is	not	known	how	the	market	will	reflect	those	costs	in	setting	the	price.		One	would	hope	that	the	present	valuing	of	the	future	effects	and	costs	would	be	such	that	future	and	intergenerational	effects	would	be	adequately	reflected	which	would	result	in	a	bias	in	favour	of	lower	consumption	today	for	a	more	sustainable	supply	for	the	future.																																																											291 ibid, p. 41. 292 ibid, p. 59. 	 95	Another	frailty	in	the	economic	market	approach	is	that	once	an	essential	resource	becomes	a	commodity	of	trade,	its	supply	and	distribution	can	be	used	as	a	bargaining	chip	for	states	or	multinational	enterprises	to	achieve	other	goals.		Although	this	might	be	rational	for	the	holder	of	the	supply	to	use	the	resource	as	a	bargaining	chip	to	achieve	business	and	political	goals,	this	is	not	what	economists	anticipate	when	they	assume	that	parties	would	act	rationally.		This	has	been	seen	numerous	times	in	relation	to	the	international	market	for	crude	oil	and	the	oil	price	shocks.		In	the	event	that	an	exporter	of	fresh	water	resources	withholds	the	supply	to	a	region	in	need	of	additional	water,	the	price	increases	in	that	region	which	would	likely	result	in	a	windfall	to	the	exporter.		This	would	through	the	market	into	disequilibrium	and	likely	violate	one	of	the	principles	of	trade	agreements.		Although	the	recipient	region	would	have	recourse	through	the	dispute	resolution	mechanism,	the	length	of	time	to	have	the	matter	heard	would	result	in	significant	increases	in	the	costs	to	the	affected	region	or	require	developing	alternate	sources.		This	distortion	in	the	market	place	is	opposite	to	the	goals	of	the	economic	approach	as	the	market	would	be	in	disequilibrium	and	the	optimal	distribution	of	the	fresh	water	resource	would	not	be	achieved.	4.4 What	Are	the	Potential	Effects	of	Exogenous	Shock	on	the	Treatment	of	Fresh	Water	Resources	Under	GATT	and	NAFTA?	As	illustrated	by	the	discussion	above,	the	determination	of	the	issue	of	whether	bulk	water	transfers	are	subject	to	trade	rules	will	be	dependent	on	which	side	of	the	discussion	one	takes.		If	it	is	determined	that	the	definitive	interpretation		 96	(or	a	strong	determination)	of	the	applicability	of	trade	agreements	to	fresh	water	resources	by	the	definition	of	“good”	or	“product”	or	with	strong	and	reasoned	foundation	that	is	generally	accepted	by	the	parties,	there	is	a	level	of	certainty	going	forward	how	to	categorize	and	treat	fresh	water	resources	at	international	law	and	its	status	could	only	be	changed	by	means	of	multi-lateral	negotiation.		If	the	situation	results	in	an	equivocal	determination	of	the	issue	(or	a	soft	determination),	in	other	words	where	there	is	a	general	acceptance	of	the	characterization	of	fresh	water	resources	yet	there	in	an	ongoing	debate,	the	question	is	not	resolved	and	the	applicability	of	trade	agreements	to	fresh	water	resources	would	be	subject	modification	and	reinterpretation	over	time	in	light	of	contemporaneous	circumstances.			If	one	adds	the	international	relations	theory	of	exogenous	shock	to	the	discourse,	it	may	resolve	the	matter	in	favour	of	certainty	over	ambiguity.				As	has	been	illustrated	in	the	discussion	of	the	theory	of	exogenous	shock,	long	held	policy	positions	can	be	fundamentally	altered	when	unexpected	situations	arise	as	a	result	of	crises	in	geographic	regions	or	economic	sectors.		These	crises	result	in	the	acceptance	of	previously	rejected	policy	options	and	can	result	in	changes	to	domestic	and	international	regulations.		In	the	case	of	fresh	water	resources	and	bulk	exports,	a	crisis	in	one	region	may	result	in	a	shift	in	the	characterization	of	fresh	water	in	its	natural	state	from	public	resource	to	that	of	a	commodity	of	trade	in	the	attempt	to	get	access	to	other	state’s	supplies	to	alleviate	their	shortfall.		 97	To	better	illustrate	this,	one	could	employ	a	hypothetical	situation.		In	this	hypothetical	situation,	it	will	be	assumed	that	the	soft	determination	of	the	issue	of	the	applicability	of	trade	rules	to	fresh	water	is	that	they	do	not	apply.		Assume	that	the	State	of	California	is	the	major	producer	of	agricultural	produce	in	North	America,	and	that	industry	is	a	significant	contributor	to	the	state’s	GDP	as	well	as	to	the	national	GDP.		Let’s	now	assume	that	there	is	a	significant	drought	in	California	which	has	caused	the	failure	of	a	majority	of	the	food	crops.		This	results	in	a	significant	decrease	in	the	state’s	GDP	and	causes	a	financial	crisis.		This	crisis	has	ripple	effects	and	is	also	felt	nationally	as	well	as	in	Canada,	but	to	a	lesser	extent.		As	a	result,	the	State	of	California	and	The	United	States	government	put	in	place	emergency	water	sharing	legislation	and	create	a	market	for	fresh	water	in	its	natural	state	and	provides	for	the	bulk	transfer	of	this	water	to	California.	In	these	circumstances,	let’s	now	assume	that	California	wants	to	access	British	Columbia’s	fresh	water	resource	to	alleviate	its	drought	and	get	its	agricultural	industry	back	on	track.		The	California	and	United	States	governments	begin	putting	political	pressure	on	the	Canadian	and	British	Columbian	governments	to	allow	for	the	purchase	of	and	bulk	transfer	of	water	from	the	lakes	and	rivers	of	British	Columbia,	and	elsewhere	if	needed.		This	would	be	forcing	the	Canadian	and	British	Columbia	governments	to	reverse	its	previously	held	policy	of	preventing	bulk	transfers	of	water	from	watersheds.		This	economic	shock	and	political	pressure	from	Canada’s	largest	trading	partner	could	be	significant	enough	to	cause	the	Canadian	officials	to	reconsider	previously	rejected	policy	options:	bulk	transfer	of	fresh	water	resources.		This	situation	has	been	seen	before,	particularly		 98	in	the	1980s	when	the	Canadian	officials	shifted	for	a	policy	of	non-integration	with	the	United	States	and	entered	into	a	free	trade	agreement	with	the	United	States	due	to	the	depression	of	1981.			This	hypothetical	could,	however,	have	a	different	result	if	there	were	a	strong	determination	regarding	the	application	of	trade	rules	to	fresh	water	resources.		If	the	definition	of	“good”	or	“product”	did	not	include	fresh	water	resources	as	no	industrial	process	had	been	applied,	it	would	be	harder	for	the	shock	to	result	in	a	reconsideration	of	a	policy	as	it	would	be	backed	by	the	strength	of	the	determination	under	international	trade	law.		In	order	for	the	political	and	economic	pressure	to	result	in	a	change	in	the	status	quo,	extensive	negotiations	to	re-open	the	trade	agreements	to	add	fresh	water	resources	to	the	definition	of	a	“good	or	product	of	trade”	or	to	negotiate	an	additional	agreement	specifically	dealing	with	the	transboundary	bulk	transfer	of	fresh	water	resources.		In	the	case	of	the	trade	agreements,	this	process	would	be	a	multi-lateral	process	that	would	have	numerous	challenges	and	would	take	a	significant	period	of	time.			In	the	case	of	a	new	transboundary	bulk	water	transfer	agreement,	negotiating	an	agreement	from	scratch	would	likely	also	take	a	significant	length	of	time.		These	situations	would	be	less	reactionary	to	the	crisis	and	would	likely	result	in	a	more	measured	response	to	the	crisis	and	political	pressure.	If	the	goal	of	states	is	to	have	sovereignty	over	their	fresh	water	resources	and	for	the	international	community	to	have	a	degree	of	certainty	regarding	the	applicability	of	trade	rules,	the	preferred	situation	would	be	to	agree	that	fresh		 99	water	resources	are	not	included	in	the	definition	of	“good”	or	“product”	in	GATT.		This	would	allow	states	to	enact	domestic	legislation	and	regulation	for	its	protection	and	conservation,	as	well	as	to	ensure	a	sustainable	domestic	supply	without	the	chilling	effect	of	reprisals	from	other	states	by	using	provisions	in	trade	agreements.			Since	this	is	not	necessarily	the	current	situation	and	the	applicability	of	trade	provisions	is	uncertain,	there	may	be	other	means	by	which	to	exclude	the	rules	of	trade	law	from	applying	to	fresh	water	resource.		In	particular,	the	exception	provisions	in	contained	in	GATT	Article	XX.		4.5 If	Fresh	Water	Resources	Are	Interpreted	to	Be	Included	in	the	Definition	of	“Good”	or	“Product”,	Can	Article	XX	Be	Used	to	Exempt	Fresh	Water	Resources	from	the	Rules	of	GATT?			For	the	purposes	of	the	discussion	regarding	fresh	water	resources,	the	important	sections	of	Article	XX	are:		the	chapeau;	subsection	(b)	–	necessary	to	protect	human,	animal,	or	plant	life	or	health;	and	subsection	(g)	–	relating	to	the	conservation	of	exhaustible	natural	resources.293	The	chapeau	has	been	the	subject	of	a	number	of	disputes	and	has	been	written	about	in	WTO	jurisprudence.		Since	the	objective	of	GATT	and	other	trade	agreements	is	the	reduction	or	elimination	of	trade	barriers,	exceptions	to	the	trade																																																									293 GATT 1947, Article XX. 	 100	rules	are	restricted,	as	one	would	expect.		However,	there	are	certain	domestic	policies	that	a	state	should	be	able	to	pursue	that	may,	in	effect,	be	inconsistent	with	the	overall	objectives	of	the	trade	agreement.		This	requires	compromise	and	a	balancing	with	duties	and	other	obligations.		The	exceptions	in	Article	XX	result	in	a	“recurring	difficulty	…	to	strike	a	balance	between	policies	that	are	in	line	with	a	government’s	legitimate	objective	but	sensitive	to	non-discrimination	against	foreign	competition	and	measures	that	are	in	line	with	government’s	legitimate	objectives	but	inconsistent	with	the	ideals	of	free	trade.”294		The	WTO	Appellate	Body	(AB)	issued	a	report	in	the	dispute	between	the	United	States,	appellant,	and	Brazil	and	Venezuela,	appellees.295	The	AB	considered	in	US	–	Gasoline	the	issue	of	whether	a	measure	imposed	by	a	state	is	consistent	with	Article	XX	upon	the	application	of	a	two-tiered	test.		The	AB	relied	on	the	provisions	of	the	Vienna	Convention	on	the	Law	of	Treaties	regarding	general	rules	of	interpretation.		This	provision	states,	“a	treaty	shall	be	interpreted	in	good	faith	in	accordance	with	the	ordinary	meaning	to	be	given	to	the	terms	of	the	treaty	in	their	context	and	in	the	light	of	its	objects	and	purpose.”		The	AB	considered	the	wording	of	Article	XX	and	first	turned	to	the	text	in	XX(g)	regarding	conversation	of	exhaustible	resources.		The	AB	determined	that	the	measure	in	question	fell	within	the	terms	of	XX(g),	the	AB	then	turned	to	the	chapeau	of	Article	XX.		In	order	for	the																																																									294	Ngangjoh-Hodu,	Yenkong,	“Relationship	of	GATT	Article	XX	Exceptions	to	Other	WTO	Agreements”	Nordic	Journal	of	International	Law	(2011)	219	–	234,	p.	221.		See	also	Doyle,	Christopher,	“Gimme	Shelter:		The	“Necessary”	Element	of	GATT	Article	XX	in	the	Context	of	the	China	–	Audiovisual	Products	Case”	Boston	University	International	Law	Journal,	Vol.	29:	143.	295	Report	of	the	World	Trade	Organization	Appellate	Body	United	States	–	Standards	for	Reformulated	and	Conventional	Gasoline	AB-1996-1,	WT/DS2/AB/R	29	April	1996.	(US	–	Gasoline).		 101	measure	to	be	a	valid	exception	under	this	article,	it	also	has	to	satisfy	the	requirement	that	the	measure	“not	be	so	applied	as	to	frustrate	or	defeat	the	legal	obligations	of	the	holder	of	the	right	under	the	substantive	rules	of	the	General	Agreement	[and]	…	must	be	applied	reasonably,	with	due	regard	to	the	legal	duties	of	the	party	claiming	the	exception	and	the	legal	rights	of	the	other	parties	concerned.”296			Subsequently,	the	AB	issued	a	report	in	1998	in	US	–	Shrimp	Turtle297,	a	dispute	between	the	United	States,	appellant,	and	India,	Malaysia,	Pakistan,	and	Thailand,	appellees.		The	AB	addressed	the	matter	of	a	measure	which	the	United	States	imposed	requiring	“the	use	of	approved	TEDs	[turtle	excluder	devices]	at	all	times	and	in	all	areas	where	there	is	a	likelihood	that	shrimp	trawling	will	interact	with	sea	turtles,	with	certain	limited	exceptions.”298		The	AB	addressed	the	issue	of	Article	XX(g)	again	and	found	the	Dispute	Panel	misapplied	the	two-tiered	test	the	AB	had	established	in	US	–	Gasoline	and	reaffirmed	that	the	approach	should	not	be	a	“chapeau-down”	approach,	rather	the	approach	is	first	to	assess	the	measure	as	against	the	particular	exceptions	in	Article	XX(a)	to	(j),	then	consider	the	objectives	contained	in	the	chapeau.		As	the	AB	commented	in	US	–Shrimp	Turtle,	after	a	measure	is	provisionally	justified	under	one	of	the	subsections,	“if	it	is	ultimately	to																																																									296	US	–	Gasoline,	p.	22.	297	Report	of	the	World	Trade	Organization	Appellate	Body	United	States	–	Import	Prohibition	of	Certain	Shrimp	and	Shrimp	Products	AB-1998-4,	WT/DS58/AB/R	12	October	1998.	(US	–	Shrimp	Turtle).	298	US	–	Shrimp	Turtle,	p.	2.		 102	be	justified	as	an	exception	under	Article	XX,	[it]	must	also	satisfy	the	requirements	of	the	introductory	clauses	–	the	“chapeau”	–	of	Article	XX.”299	It	would	appear	that	the	terms	of	the	exceptions	with	respect	to	health	and	exhaustible	resources	would	be	relatively	easy	to	satisfy	the	requirements	of	the	chapeau	if	it	can	be	shown	that	the	measures	imposed	are	legitimate	regulatory	policy	choices	and	not	a	disguised	restraint	of	trade.300		As	the	Dispute	Panel	noted	in	United	States	–	Restrictions	on	Imports	of	Tuna301,	“the	objective	of	sustainable	development,	which	includes	the	protection	and	preservation	of	the	environment,	has	been	widely	recognized	by	the	contracting	parties	to	the	General	Agreement.”302		The	Panel	further	stated	that	it	“had	to	resolve	whether	the	contracting	parties,	by	agreeing	to	give	each	other	in	Article	XX	the	right	to	take	trade	measures	necessary	to	protect	the	health	and	life	of	plants,	animals	and	persons	or	aimed	at	the	conservation	of	exhaustible	natural	resources,	had	agreed	to	accord	each	other	the	right	to	impose	trade	embargoes	for	such	purposes	…	and	found	that	[no	recognized	method	of	interpretation]	lent	any	support	to	the	view	that	such	an	agreement	was	reflected	in	Article	XX.”303	The	question	that	arises	from	the	decisions	interpreting	Article	XX,	is	whether	Article	XX	could	be	used	to	prohibit	or	restrict	the	importation	or	exportation	of	fresh	water	resources.																																																									299	ibid,	p.	55.	300	N.-Hoda,	p.	225.	301	Report	of	the	Panel	United	States	–	Restrictions	on	Imports	of	Tuna	DS29/R,	16	June	1994	(US	–	Tuna	Dolphin).	302	US	–	Tuna	Dolphin,	p.	56.	303	ibid,	p.	57.		 103	In	addition	to	the	text	of	the	chapeau	to	Article	XX,	the	two	exceptions	which	would	apply	to	any	restriction	of	trade	in	fresh	water	would	be	found	in	Article	XX(b)	and	XX(g).		Articles	XX(b)	provides	for	measures	necessary	for	the	protection	of	human,	animal,	or	plant	life	or	health.		It	is	indisputable	that	water	is	necessary	for	the	health	and	continued	life	of	all	humans,	plants,	and	animals.		However,	in	order	for	the	trade	restriction	to	be	a	valid	one,	the	measure	must	be	necessary	for	the	protection	of	life	or	health.		In	a	country	like	Canada,	which	has	an	abundance	of	fresh	water,	any	measure	restricting	the	exportation	of	fresh	water	resources	from	its	boundaries	would	likely	fail	the	two-tiered	test.		If	there	were	to	be	a	shortage	of	water	in	a	particular	watershed	or	aquifer	in	a	region	of	Canada,	domestic	measures	could	be	taken	to	alleviate	that	shortage,	including	restrictions	on	municipal,	industrial,	and	agricultural	uses,	temporary	diversion	of	watercourses,	or	bulk	transfers	from	areas	of	abundance.		Given	Canada’s	hydrogeology,	it	would	be	difficult	to	envisage	a	situation	in	which	the	Canadian	government	could	impose	a	complete	ban	on	exports	of	fresh	water	resources	in	order	to	protect	life	and	health.		As	such,	the	first	part	of	the	two-tiered	test	would	not	be	met	and	the	provision	in	the	chapeau	would	not	have	to	be	addressed.			Article	XX(g)	could	have	a	different	result,	however.		This	provision	allows	for	restrictions	on	trade	for	the	conservation	of	exhaustible	natural	resources,	if	done	in	conjunction	with	restrictions	on	domestic	consumption.		The	first	question	to	be	answered	to	determine	if	this	provision	could	apply	is	whether	fresh	water	resources	are	an	“exhaustible	natural	resource”.		 104	In	the	past,	the	water	cycle	was	seen	as	an	ever	renewal	of	the	fresh	water	resource,	especially	in	Canada.		Levels	in	lakes	and	rivers	dropped	in	summer	months	with	a	corresponding	increase	in	the	springtime.		Rain	would	replenish	depleted	supplies	of	water,	as	would	the	snow	when	it	melted.		The	cycle	was	seen	as	a	constant	and	there	were	little	worries	about	the	resource	disappearing.		In	fact,	most	Canadians	have	been	told	that	Canada	has	as	much	as	25%	of	the	world	supply	of	fresh	water.		Professor	John	B.	Sprague,	as	freshwater	scientist	(limnologist),	postulates	that	this	misinformation	is	based	on	the	volume	of	water	in	Canada’s	fresh	water	lakes.		However,	he	points	out	that	water	sitting	in	lakes	is	different	from	the	renewable	supply.304		According	to	Sprague	“the	renewable	supply	is	what	falls	from	the	sky	and	runs	off	in	rivers,	often	passing	through	lakes	as	it	moves	to	the	sea	[s]ome	goes	underground,	replenishing	aquifers	that	can	be	tapped	by	wells	[t]hese	flows	are	renewed	every	year	and	count	as	the	water	supply.”305		Sprague	adopts	the	World	Resource	Institute’s	(WRI)306	definition	of	renewable	fresh	water	as	“salt-free	water	that	is	fully	replaced	in	any	given	year	through	rain	and	snow	that	falls	on	continents	and	island	and	flows	through	rivers	and	streams	to	the	sea.”307		Using	this	definition	and	using	the	WRI’s	data,	Canada	has	approximately	6.5%	of	the	world’s	renewable	fresh	water	supply.																																																											304	Sprague,	John	B.	“Great	Wet	North?		Canada’s	Myth	of	Water	Abundance”	in	Karen	Bakker,	ed.,	Eau	Canada:	the	future	of	Canada’s	water	(Vancouver:		UBC	Press,	2007),	p.	23.	305	ibid.	306	The	World	Resource	Institute,	according	to	their	published	mission	and	goals,	is	an	independent,	no-partisan,	non-profit	global	research	institute	which,	as	one	of	its	goals,	the	goal	to	“achieve	water	security	by	mapping,	measuring,	and	mitigating	water	challenges.”	307	Sprague,	“Great	Wet	North?”,	p.	23.		 105	Sprague	points	out	that	many	of	the	policy	decisions	surrounding	the	use	and	conservation	of	the	water	supply	has	been	based	on	the	previous	misconception	of	the	volume	of	the	Canadian	supply	of	fresh	water.		If	this	misconception	persists,	then	policy	decisions	based	on	an	assumption	of	an	excess	supply	of	water	could	have	significant	consequences	if	the	renewable	supply	is	not	able	to	balance	the	consumption.308	In	the	context	of	trade	rules,	an	argument	could	be	made	for	the	restriction	of	commercial	exportation	of	fresh	water	resources	from	Canadian	water	basins	based	on	the	WRI	definition	of	renewable	water	supply.		If	it	could	be	shown	that	the	volume	of	rain	and	snow	is	lower	than	that	which	has	historically	been	recorded,	then	there	could	be	valid	restrictions	as	the	fresh	water	supply	would	not	be	a	renewable	resource,	rather	an	exhaustible	resource.			However,	any	restriction	on	the	transboundary	transfer	of	fresh	water	resources	would	have	to	be	imposed	together	with	restrictions	on	domestic	uses.		Arguably,	this	could	be	done	on	a	water	basin	by	water	basin	basis,	rather	than	nationally.		In	order	for	this	exception	to	the	trade	rules	apply	if	fresh	water	is	determined	to	be	subject	to	trade	rules,	there	must	be	sufficient	evidence	to	support	the	claim	that	fresh	water	in	Canada	is	exhaustible.		There	is	some	evidence	that	some	water	basins	are	experiencing	lower	than	historical	levels,	however,	that	is	likely	not	enough	at	this	time	to	declare	fresh	water	as	an	exhaustible	resource	in	Canada.																																																									308	ibid,	p.	31.		 106	4.5.1 Chapter	11	and	Its	Potential	Chilling	Effect	on	Imposing	Environmental	and	Conservation	Measures	As	was	illustrated	by	the	Sun	Belt	case,	there	is	a	risk	of	litigation	pursuant	to	NAFTA	Chapter	Eleven	if	governments	rescind	licenses	due	to	change	in	environmental,	or	other,	policies.		This	risk	of	Chapter	Eleven	claims	could	influence	the	choices	of	policies	implemented,	or	changes	in	policies,	that	a	government	may	consider	if	the	circumstances	arise	which	would	normally	see	restrictions	on	use	of	fresh	water	resources.		If	an	exogenous	risk	were	to	be	present,	it	could	have	a	chilling	effect	on	governmental	actions	in	respect	of	the	fresh	water	resources	and	the	full	consideration	of	potential	Chapter	XX	exemptions	not	be	realized.		In	the	Sun	Belt	case,	the	Chapter	Eleven	notice	was	precipitated	by	the	British	Columbian	government	changing	its	policy	on	bulk	water	exports	and	cancelling	a	license	to	export	water	to	California.		The	potential	financial	liability	to	the	Canadian	government	as	a	result	of	this	action	was	the	claimed	loss	of	the	value	of	the	investment	and	income	stream	which	would	have	flowed	from	the	continuing	exportation.	Chapter	Eleven	of	NAFTA	covers	investments	that	an	investor	of	one	Party	makes	in	a	commercial	enterprise.		The	basic	principles	of	national	treatment	and	most-favoured-nation	treatment	are	applicable	to	investments	under	this	chapter.		The	risk	to	the	Parties	can	be	substantial	if	the	impugned	action	interferes	with	a	large	scale,	long-term	project,	such	as	the	bulk	transfer	of	fresh	water	resources	from	one	jurisdiction	to	another.		Although	there	may	be	domestic	policy	reasons	to		 107	make	a	decision	such	as	in	the	Sun	Belt	case,	there	may	be	monetary	consequences	if	the	interpretation	of	the	provisions	of	NAFTA	are	such	that	the	investment	is	in	an	enterprise	the	goal	of	which	is	trade	in	goods	or	the	provision	of	services.	Professor	Paul	Kibel	and	Jon	Schutz	discuss	this	issue	of	NAFTA	Chapter	Eleven	Investment	provisions	and	its	applicability	to	investment	in	water	resources.309		They	look	at	a	case	involving	the	1944	Rivers	Treaty	between	Mexico	and	the	United	States	regarding	the	Rio	Grande310	and	a	Chapter	Eleven	claim	brought	by	private	water	users	in	the	State	of	Texas	against	Mexico.311		According	to	Kibel	and	Schutz,	this	decision	of	the	International	Centre	for	Settlement	of	Investment	Disputes	(ICSID)	in	this	case312	represents	the	“most	significant	consideration	of	the	legal	relationship	between	cross-border	water	law	and	foreign	investment	law.”313		The	claimants,	Bayview	Irrigation	District,	claimed	that	due	to	Mexico	not	living	up	to	its	obligations	under	the	1944	Rivers	Treaty	by	guaranteeing	a	specified	volume	of	water	in	the	Rio	Grande,	the	members	of	Bayview	Irrigation																																																									309 Kibel, Paul Stanton and Jon Schutz, “Two Rivers Meet:  At the Confluence of Cross-Border Water Law and Foreign Investment Law” in  M-C. Cordonier Segger, M.W. Gehring, and A. Newcombe, eds. Sustainable Development in World Investment Law (The Hague, Netherlands: Kluwer Law Intl., 2011) p. 749 ff. 310 Treaty Relating to the Utilization of Colorado and Tijuana Rivers and of the Rio Grande, United States and Mexico, 3 Feb. 1944, 59 US Stat. 1219, T.S. 994, 3 U.N.T.S. 313 [1944 Rivers Treaty]. 311 Request for Arbitration Under the Rules Governing the Additional Facility for the Administration of Proceedings by the International Centre for Settlement of Investment Disputes and the North American Free Trade Agreement between Bayview Irrigation District et al., and The United Mexican States (19 Jan. 2005), online: <http://naftaclaims.com/Disputes/Mexico/Texas/TexasClaims_NOA-19-01-05.pdf> [Notice of Arbitration]. 312 Award of ICSID Arbitral Panel, Bayview Irrigation District et al. v. United Mexican States, ICSID Case No. ARB (AF)/05/1 (2007) (International Centre for Settlement of Investment Disputes), at 11–12, online: World Bank, www.naftaclaims.com/Disputes/Mexico/Texas/Bayview_Jursdictional_Award_19-05-07.pdf>  [June 2007 ICSID Award]. The Decision is available at: www.naftaclaims.com/Disputes/Mexico/Texas/Bayview_Jursdictional_Award_19-05-07.pdf  313 Kibel and Schutz, “Two Rivers Meet”, p. 752. 	 108	District	were	not	able	to	withdraw	their	allocated	volume	of	water	for	agricultural	purposes	resulting	a	decreased	agricultural	yield	and	consequential	financial	losses.314			In	its	decision,	the	ICSID	NAFTA	Chapter	Eleven	Tribunal	considered	the	claimants	asserted	claim	to	a	specific	volume	of	water.		The	Tribunal	concluded	that	“private	non-State	parties	(such	as	the	Texans)	did	not	have	standing	to	enforce	rights	granted	to	Mexico	and	the	United	States	under	the	1944	Rivers	Treaty,	and	that	even	such	State-to-State	claims	would	likely	be	governed	by	the	dispute	resolution	mechanisms	set	forth	in	the	1944	Rivers	Treaty”315	rather	than	NAFTA.		However,	Kibel	and	Schutz	argue	that	the	Tribunal’s	reasoning	opens	up	the	possibility	that	a	breach	of	a	treaty	between	nations	could	be	the	basis	of	a	Chapter	Eleven	claim	if	it	were	found	that	the	claimant	had	an	investment	in	another	NAFTA	Party	under	the	other	treaty.316			This	could	well	expand	the	scope	of	liability	on	the	federal	governments	of	the	NAFTA	Parties	to	obligations	outside	of	those	contemplated	during	the	negotiation	of	NAFTA	to	pre-existing	treaty	obligations.		4.6 	Does	the	Discourse	on	Food	Security	and	International	Trade	Assist	in	Answering	the	Question?			As	is	seen	by	the	foregoing	discussion,	it	is	unsettled	whether	fresh	water	resources	are	a	good	or	product	under	trade	law,	or	if	the	general	exemptions	would																																																									314 ibid, pp 758 – 760. 315 ibid, p 765. 316 ibid, p 767. 	 109	apply	to	the	bulk	transfer	of	the	resource.		Given	the	special	nature	of	the	resource,	we	can	look	for	guidance	to	another	essential	element	for	human	life:		food.			Food	items	are	subject	to	trade	law,	and	have	been	from	the	beginning	of	trade	and	trade	law.		Colonial	empires	were	established	by	the	trade	in	agricultural	products.		In	Great	Britain,	protectionist	laws	were	brought	in	to	shield	local	producers	from	cheaper	imported	products.		The	“Corn	Laws”	were	enacted	by	the	British	Parliament	in	1815	with	the	Importation	Act	1815.317		The	effect	of	this	legislation	was	to	drive	up	food	prices,	especially	the	main	staples	such	as	bread.		These	laws	also	had	the	effect	of	denying	the	colonies	a	market	for	their	goods	upon	which	they	had	become	dependent.		The	British	Parliament	took	notice	of	this	and,	in	the	case	of	Canada,	enacted	the	Canada	Corn	Act318	in	1843	to	allow	for	the	importation	of	Canadian	grain	at	lower	import	duties.		The	laws	were	generally	repealed	in	1846	which	lead	to	a	decrease	in	the	price	of	grains	due	to	the	influx	of	cheaper	imported	grains.		This	increase	in	importation	and	decrease	in	local	production	also	corresponded	to	a	decrease	in	agricultural	labourers	who	left	the	country	to	find	work	in	urban,	industrial	labour	jobs.319	With	such	a	dramatic	change	in	the	agricultural	sector	in	Great	Britain	in	the	late	1800’s,	a	situation	of	food	insecurity	was	created.		When	political	events	resulted	in	the	outbreak	of	World	War	I,	Great	Britain	found	itself	experiencing	a	shortage	of	food	and	steps	had	to	be	taken	to	increase	domestic	production	to	feed																																																									317 Importation	Act	1815,	55	Geo.	3	c.	26. 318 Canada Corn Act (1843), 6-7 Vict. 1843, c. 29. 319 Easterbrook, William Thomas and Hugh G.J. Aitken, Canadian Economic History (Toronto:  University of Toronto Press, 2002), p. 287 ff. 	 110	its	citizens.		Protectionist	measures	were	re-instated	over	the	next	few	years	in	an	attempt	to	stabilize	the	domestic	food	supply	and	reduce	dependence	on	external,	volatile	sources.320	As	Professor	Carmen	Gonzalez	states	this	protectionism	was	well	established	by	the	time	GATT	1947	was	signed.		The	protectionism	was	institutionalized	and	in	the	post-World	War	II	period	“the	United	States	and	Western	Europe	provided	generous	subsidies	to	their	agricultural	producers	and	utilized	both	tariff	and	non-tariff	import	barriers	to	protect	them	from	foreign	competition.”321		In	her	opinion,	“the	1947	GATT	succeeded	in	reducing	tariffs	on	manufactured	goods,	but	permitted	agricultural	protectionism	to	flourish	in	the	United	States	and	Western	Europe.”322		At	the	same	time	that	these	protectionist	measures	and	subsidies	were	being	used	in	the	“Global	North”	(primarily	Western	Europe,	United	States,	and	Canada),	the	“Global	South”	struggled	with	the	lack	of	resources	needed	to	diversify	economically	and	“most	developing	countries	imposed	taxes	on	agricultural	producers	to	finance	industrialization	and	lacked	the	resources	to	provide	farmers	with	significant	subsidies.”323	In	the	1970’s,	the	prices	of	petroleum	products	increase	significantly	and	affected	the	fuel	intensive	agricultural	sector.		As	a	result	of	this	many	developing	countries	borrowed	heavily	to	finance	the	importation	of	the	needed	fuel	and	other	petroleum	based	agricultural	inputs.		When	interest	rates	started	to	increase	in	the																																																									320 ibid. 321 Gonzalez, Carmen, “The Global Food Crisis: Law, Policy, and the Elusive Quest for Justice” Yale Human Rights & Development L.J. [Vol. 13 2010] p. 466. 322322 ibid. 323 ibid. 	 111	early	1980’s,	and	agricultural	commodity	prices	fell,	“developing	countries	incurred	crippling	amounts	of	debt	that	they	were	increasingly	unable	to	repay	[and]	[b]y	the	mid-1980s,	two-thirds	of	African	countries	and	nearly	three-quarters	of	Latin	American	countries	had	agreed	to	implement	structural	adjustment	programs	mandated	by	the	World	Bank	and	the	IMF	as	conditions	for	receiving	new	loans	or	restructuring	existing	debt.”324		This	debt	crisis	ushered	in	more	economic	reforms,	spearheaded	by	the	Global	North,	and	caused	heightened	vulnerability	of	the	Global	South	to	food	insecurity.	As	Gonzalez	points	out,	“it	is	important	to	recognize	that	world	market	prices	for	agricultural	inputs	and	agricultural	commodities	are	distorted	by	the	market	power	of	transnational	corporations.”325		She	points	out	further	that:	three	companies	control	eighty-two	percent	of	all	U.S.	corn	exports.	The	top	three	agrochemical	corporations	control	approximately	half	of	the	global	agrochemical	market,	and	the	top	ten	control	nearly	ninety	percent	of	that	market.	Although	thousands	of	seed	companies	and	breeding	institutions	were	in	existence	decades	ago,	ten	firms	currently	dominate	over	two	thirds	of	the	world’s	proprietary	seed	sales.	This	market	concentration	enables	a	small	number	of	agribusiness	conglomerates	to	manipulate	market	prices	to	their	advantage	at	the	expense	of	small	farmers	and	consumers	in	the	Global	North	as	well	as	the	Global	South.	In	addition,	these	agribusiness	conglomerates	dominate	the	agricultural	research	agenda,	and	have	used	their	considerable	political	influence	to	persuade	U.S.	government	officials	to	support	biofuels	as	the	solution	to	climate	change,	to	promote	genetic	engineering	as	the	solution	to	the	food	crisis,	and	to	demand	greater	access	to	developing	country	markets	in	bilateral	and	multilateral	trade	negotiations	while																																																									324 ibid, p. 468. 325 ibid, p. 470. 	 112	maintaining	lavish	agricultural	subsidies	in	the	domestic	market.326	In	order	to	protect	food	security	in	vulnerable	areas	from	exogenous	shocks,	Gonzalez	argues	that	steps	have	to	be	taken	to	reform	international	agricultural	trade.		She	sees	that	“.	[w]hat	is	required	is	a	fundamental	reorientation	of	policy	at	the	national	and	international	levels	away	from	deregulation	toward	targeted	and	thoughtful	regulatory	strategies	designed	to	respect,	protect,	and	fulfill	the	human	right	to	food.”327		She	premises	her	argument	on	the	right	found	in	The	International	Covenant	on	Economic,	Social	and	Cultural	Rights	which	recognizes	the	“fundamental	right	of	everyone	to	be	free	from	hunger”	and	imposes	obligations	on	states	to	protect	that	right.		In	addition,	she	relies	on	the	Universal	Declaration	of	Human	Rights328	and	its	protection	of	the	human	right	to	food.		She	argues	that	this	extends	to	states	which	are	not	signatories	to	the	The	International	Covenant	on	Economic,	Social	and	Cultural	Rights329	as	the	Universal	Declaration	of	Human	Rights	has	been	elevated	to	the	status	of	customary	international	law.330		Finally,	Gonzalez	argues	that	to	ensure	food	security	and	the	protection	of	the	human	right	to	food	“will	require	a	holistic	re-conceptualization	of	international	law	that	integrates	human	rights,	environmental	protection,	and	trade	and	investment	law	rather	than	relegating	them	to	separate	spheres.	Such	a	vision	must	be	premised	on	the	hierarchical	superiority	of	human	rights	norms	and	must	regard																																																									326 ibid, p. 470. 327 ibid, p. 473. 328 Universal Declaration of Human Rights, G.A. Res. 217a (iii), U.N. Doc a/810 at 71 (1948). 329 International Covenant on Economic, Social and Cultural Rights, 993 UNTS 3, [1976] ATS 5, 6 ILM 360 (1967). 330 ibid,	p. 474. 	 113	trade	and	investment	as	means	toward	the	realization	of	human	rights	and	environmental	objectives	rather	than	as	ends	in	themselves.”331	When	we	consider	Gonzalez’s	arguments	with	respect	to	the	revisioning	of	international	trade	and	investment	law	regarding	agricultural	commodities	and	food	security,	we	can	see	that	similar	conditions	exist	with	respect	to	trade	in	fresh	water	resources.		Her	argument	that	the	re-conceptualization	of	the	law	is	need	in	relation	to	food	security	could	give	guidance	and	support	to	the	argument	that	fresh	water	resources	should	not	be	considered	as	a	subject	of	trade	and	investment	law	as	the	fundamental	nature	of	the	resource	is	vital	to	human,	animal,	and	plant	life.		If	one	were	to	reverse	the	focus	from	trade	rules	applying	to	resources	and	commodities,	we	can	further	the	goals	of	conservation	and	protection	of	the	resource	by	exempting	fresh	water	resources	from	trade	agreements.		If	there	were	to	be	a	need	for	fresh	water	resources	in	a	region	experiencing	drought	or	other	water	crisis,	then	other	international	cooperation	or	agreements	could	be	negotiated	to	transfer	the	needed	supply	to	that	region.		This	could	result	in	a	more	effective	means	of	resource	protection	and	conservation	as	well	as	supporting	human	and	environmental	rights	and	goals.	4.7 Answering	the	Question:		Do	International	Trade	Agreements	Apply	to	Fresh	Water	Resources?	As	is	illustrated	above,	the	answer	to	the	question	whether	Canada’s	international	trade	obligations	apply	to	fresh	water	resources	is	not	clear	cut.																																																										331 ibid,	p. 477. 	 114	However,	when	we	look	at	the	text	of	the	WTO	and	NAFTA	and	apply	the	principles	of	statutory	interpretation,	it	lends	itself	to	a	conclusion	that	fresh	water	resources	are	not	a	“good”	or	“product”	found	in	the	agreements.		When	the	standard	definitions	of	“good”	and	“product”	are	considered,	an	industrial	process	needs	to	applied	to	the	resource	in	order	for	it	to	be	included	in	the	definition	of	a	good,	product,	or	a	commodity	of	trade.		However,	if	the	fresh	water	resources	become	a	de	facto	commodity	of	trade	due	the	the	existence	of	a	market	for	the	resources,	there	may	be	an	argument	that	fresh	water	resources	are	subject	to	trade	rules.			If	extrinsic	evidence	is	considered,	it	may	be	shown	that	the	intention	of	the	parties	is	that	fresh	water	resources	are	intended	to	be	exempt	from	the	application	of	trade	rules.		The	extrinsic	evidence	includes	the	1993	statement	by	the	leaders	of	the	NAFTA	parties	regarding	fresh	water	resources,	international	treaties	and	conventions,	and	domestic	legislation	and	regulations.		We	can	see	from	these	instruments	that	fresh	water	resources	are	not	intended	to	be	treated	as	a	commodity,	rather	more	akin	to	a	public	good.			Since	it	is	not	clear	which	interpretation	holds	with	respect	to	the	texts	of	the	WTO	and	NAFTA,	we	can	look	at	the	various	approaches	to	fresh	water	resources	to	assist	us	in	coming	to	a	preferred	definition.		These	approaches	split	between	considering	fresh	water	resources	as	public	good	or	as	a	commodity	of	trade	in	the	commercial	market.		As	the	discussion	has	illustrated,	there	are	weaknesses	with	respect	to	preferring	the	market	alternative	as	the	preferred	approach	as	conservation,	environmental	protection,	and	regulation	of	the	exploitation	of	the		 115	resources	by	the	government	may	be	hampered	by	the	market	being	the	means	by	which	the	resources	are	allocated.	It	may	be	a	more	socially	acceptable	approach	to	consider	fresh	water	resources	as	a	public	good	and	not	a	commodity	of	trade.		Accepting	this	as	the	preferred	approach	would	result	in	the	resources	falling	outside	the	ambit	of	trade	obligations	and	would	allow	governments	to	implement	policies	and	regulations	to	allocate	fresh	water	resources	among	competing	interests	with	the	goal	being	the	maximum	overall	societal	benefit.		Although	proponents	of	the	market	approach	would	argue	that	there	are	inefficiencies	in	the	allocation	of	fresh	water	resources	by	treating	it	as	a	public	good,	these	inefficiencies	would	likely	be	acceptable	to	the	general	populace.		The	goals	to	be	achieved	would	include	the	protection	of	regional	agricultural	and	industrial	industries,	environmental	protection,	and	the	protection	of	domestic	urban	supplies	of	water.			Another	reason	why	the	public	good	approach	to	fresh	water	resources	is	the	preferred	approach	is	that	the	governmental	regulation	and	allocation	of	fresh	water	resources	to	competing	uses	would	be	less	susceptible	to	exogenous	shocks	than	would	a	market	driven	system	of	allocation.		Fresh	water	resources	are	a	vital	resource	and	it	would	be	in	the	public’s	interest	to	protect	the	resource	from	being	subjected	to	policy	options	that	had	previously	been	rejected	as	not	being	optimal.		If	an	economic,	environmental,	or	political	shock	were	to	occur	that	was	significant	enough	for	the	government	to	reconsider	previously	rejected	policy	options,	it	may	result	in	the	government	opening	up	Canadian	watersheds	and	water	basins	for		 116	extraction	of	fresh	water	resources	for	export	to	trading	partners	as	if	it	were	like	any	other	good	or	product.		In	order	to	avoid	this,	a	recognition	that	fresh	water	resources	are	not	a	commodity,	but	are	a	public	good,	may	result	in	the	government	being	able	to	resist	such	shocks.	Taking	into	consideration	the	interpretation	of	the	legal	texts,	the	statements	of	the	parties	to	NAFTA	concerning	the	applicability	to	fresh	water	resources,	other	international	treaties	and	conventions,	and	domestic	legislation	concerning	the	conservation,	allocation	and	preservation	of	fresh	water	resources,	the	conclusion	is	that	the	provisions	contained	in	the	WTO	and	NAFTA	do	not	apply	to	fresh	water	resources	as	they	are	not	a	“good”	or	“product”.			 		 117	5 Retracing the Upstream Path: Summary and Future Considerations Looking	back	to	the	beginning	of	this	enquiry,	the	goal	is	to	determine	whether	fresh	water	resources	are	subject	to	Canada’s	international	trade	obligations.		The	importance	of	engaging	in	the	enquiry	rests	on	the	ever	increasing	focus	on	fresh	water	resources	as	an	exploitable	resource	which	has	increasingly	been	stressed	due	to	municipal,	domestic,	agricultural,	and	industrial	uses.		These	uses	have	drawn	down	the	natural	aquifers	in	many	regions	of	the	world	and	the	response	has	been,	in	some	cases,	looking	to	distant	reserves	of	fresh	water	resources	which	potentially	can	augment	the	local	reserves.		Two	such	examples	are	the	cases	Snowcap	Waters	Ltd.	and	Rain	Coast	Water	Corp.	that	had	planned	to	ship	fresh	water	resources	from	British	Columbia	to	California.	Since	there	have	been	proposals	for	bulk,	transboundary	exports	of	fresh	water	resources,	the	determination	of	the	applicability	of	international	trade	obligations	is	particularly	timely.		In	order	to	come	to	a	determination	of	the	three	questions	are	posed	to	guide	the	enquiry.		These	questions	are	posed	in	order	to	determine	if	fresh	water	resources	are	included	in	the	definition	of	a	“good”	or	“product”	contained	in	the	legal	texts	of	NAFTA	and	GATT.		The	first	question	that	is	posed	focuses	the	enquiry	on	the	legal	characterization	of	fresh	water	resources	in	the	selected	international	legal	instruments	to	determine	if	it	is	subject	to	the	obligations	contained	in	the	trade	agreements.		The	second	question	posed	is	if	the	first	question	cannot	be	answered,	what	other	interpretive	tools	can	be	employed	to	come	to	an	answer.		Finally,	the	third	question	is	if	international	trade	obligations		 118	apply	to	the	the	bulk	export	of	fresh	water	resources,	are	there	any	exemptions	which	can	be	employed	to	limit	or	prohibit	the	bulk	export	of	the	resource.	In	order	to	answer	these	questions,	a	traditional	legal	doctrinal	analysis	is	employed.		The	legal	doctrinal	analysis	provides	a	method	of	analyzing	the	legal	texts	of	the	international	agreements	and	other	legal	materials	in	an	orderly	and	systematic	manner.		This	methodology	allows	one	to	engage	with	the	primary	materials	based	on	the	ordinary	meaning	of	the	words	and	phrases	used	in	the	texts.		As	Rubin	Edwards	states,	what	legal	scholars	do	in	employing	this	methodology	is	“to	evaluate	a	series	of	events,	to	express	values,	and	to	proscribe	alternatives.”332		In	order	to	answer	the	questions	that	are	posed,	this	methodology	supports	the	review	of	the	historical	context,	competing	normative	frameworks,	and	to	consider	alternative	conclusions	in	order	to	come	to	a	conclusion.	To	begin	the	task	of	answering	the	questions,	and	in	following	the	dictates	of	the	methodology,	a	review	of	the	development	of	Canada’s	international	trade	policy	and	foreign	relations	is	undertaken.		This	review	allows	an	evaluation	of	the	series	of	events	which	have	led	us	to	the	current	legal	environment	and	gives	us	a	context	to	see	the	change	in	expressed	values	and	choices	made	in	the	area	of	international	trade	and	foreign	policy.		The	Macdonald	Commission	report	provides	a	comprehensive	look	at	the	series	of	events	and	values	which	led	up	to	Canada	entering	into	the	Canada	–US	Free	Trade	Agreement	which	was	a	stark	departure	from	the	previously	held	policy	toward	international	trade.		The	international																																																									332 Rubin, Edward L. “Law And and the Methodology of Law”, p. 522. 	 119	relations	theory	of	exogenous	shock	has	been	used	to	explain	such	a	significant	shift	in	Canada’s	international	trade	policy.		Using	this	theory	to	explain	the	policy	shift	provides	a	basis	on	which	to	identify	potential	challenges	to	existing	and	future	policy	choices	and	pressures	in	relation	to	the	interpretation	of	trade	agreements.	After	engaging	in	a	review	of	other	international	agreements	which	concern	Canada’s	fresh	water	resources,	a	textual	analysis	of	GATT	and	NAFTA	is	conducted	to	determine	if	the	terms	“good”	and	“product”	contained	in	the	agreements	include	fresh	water	resources.		When	the	ordinary	meanings	of	the	words	are	considered	and	viewed	in	the	context	of	the	entire	agreements,	the	answer	to	the	question	is	“likely	no”	but	it	is	inconclusive	due	to	the	imprecise	definitions	of	“good”	and	“product”	and	the	lack	of	guidance	as	to	what	level	of	industrial	processing	must	be	applied	to	the	fresh	water	resource	in	order	for	a	resource	to	become	a	good	or	product.	Given	that	the	answer	is	inconclusive,	extrinsic	evidence	is	canvassed	an	attempt	to	uncover	the	intention	of	the	parties	to	the	agreements.		In	addition,	alternative	views	of	the	legal	status	of	fresh	water	resources	are	considered.		When	this	is	done,	the	questions	are	answer	and	the	conclusion	is	that	the	provisions	of	NAFTA	and	GATT	do	not	apply	to	fresh	water	resources	as	they	are	not	a	“good”	or	“product”	as	contemplated	by	the	agreements.	However,	when	this	conclusion	is	viewed	in	light	of	the	possibility	of	an	exogenous	shock,	the	conclusion	could	be	challenged	in	favour	of	one	that	has	been	considered	a	proscribed	alternative.		This	potentiality	is	one	which	keeps	the	issue		 120	alive	and	worthy	of	continued	attention	by	policy	makers	and	academics.		By	remaining	in	the	policy	makers’	conscience,	adequate	attention	can	be	paid	to	the	matter	in	line	with	prevailing	social	and	political	attitudes	so	as	not	to	gradually	move	toward	an	unexpected	or	unwanted	result	–	that	is	that	fresh	water	resources	in	bulk	would	be	subject	to	trade	regulation	as	a	good	or	product.	As	is	shown	in	the	review	of	other	legal	instruments,	the	International	Joint	Commission	is	an	established	and	long	standing	body	which	is	uniquely	situated	to	regularly	monitor	the	pressures	on	Canada’s	fresh	water	resources	and	the	shifting	attitudes	towards	its	uses	and	protection.		The	expertise	and	knowledge	that	the	IJC	has	could	be	leveraged	in	the	future	to	evaluate	proposed	shifts	from	existing	policy	options,	as	between	Canada	and	the	United	States,	to	ensure	that	the	optimal	balance	between	use	and	conservation	of	the	fresh	water	resource	is	achieved,	including	the	possibility	of	bulk	exports.	The	nature	and	extent	of	Aboriginal	and	treaty	rights	as	protected	by	s.	35	of	the	Constitution	Act	1982	is	one	emerging	area	which	could	have	a	significant	impact	on	future	policy	options	in	relation	to	the	use	and	conservation	of	fresh	water	resources.		It	also	may	have	an	impact	on	the	ability	of	Canada	to	agree	to	any	international	agreements	which	affect	the	bulk	transfer	of	fresh	water	resources,	especially	from	areas	that	are	subject	to	Aboriginal	title	or	traditional	territory	claims.		As	this	area	of	law	is	in	its	infancy,	policy	makers	will	have	to	keep	abreast	of	the	developments	as	it	will	have	a	direct	impact	on	exploitation	of	natural	resources,	including	fresh	water	resources.		 121	In	addition	to	future	domestic	considerations,	there	are	considerations	that	would	be	applicable	on	a	North	American	wide	basis.		There	are	increasing	attempts	by	US	corporations	and	water	districts	to	access	more	fresh	water	resources	which	will	exert	pressure	on	policy	makers.		This	pressure	could	shift	the	range	of	acceptable	policy	options	in	favour	of	bulk	transboundary	transfers.		However,	the	risk	of	NAFTA	Chapter	11	claims	against	the	federal	government	may	have	an	opposite	effect	as	there	is	a	risk	that	permitting	transfers	and	subsequently	cancelling	or	restricting	the	transfers	could	result	in	claims	for	significant	compensation	for	investment	losses	to	be	paid	by	the	federal	government.	Finally,	there	are	global	considerations.		Since	GATT	is	a	multi-national	agreement,	many	parties	could	try	to	apply	pressure	to	add	fresh	water	resources	as	a	natural	resource	product	and	have	the	trade	rules	apply.		This	pressure	is	likely	to	come	from	states	that	lack	sufficient	fresh	water	resources	due	to	various	factors,	such	as	hydrogeology,	increased	industrialization,	or	population	growth.		These	states	will	have	to	look	outside	their	borders	to	satisfy	their	increased	needs	and	may	try	to	gain	access	to	resources	through	trade	agreements.		Connected	to	this	is	the	possibility	that	the	pressure	put	on	water	rich	states	would	be	advanced	in	the	guise	of	a	humanitarian	need	or	that	it	is	required	to	satisfy	a	basic	human	right.		Although	it	is	possible	to	satisfy	humanitarian	needs	or	purported	human	rights	by	separate	agreements	between	states,	there	will	likely	be	pressure	resolve	this	by	use	of	the	already	existing	framework	of	NAFTA,	GATT	or	other	bi-lateral	trade	agreements.		 122	The	conclusion	is	that	bulk	transboundary	transfers	of	fresh	water	resources	are	not	intended	to	be	subject	to	international	trade	rules.		However,	the	recognition	of	the	increasing	need	for	domestic,	industrial,	and	agricultural	uses	shows	that	the	matter	needs	to	be	part	of	the	ongoing	policy	discourse	in	relation	to	natural	resources	and	international	trade.		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