Worth pa­per it’s printed on?

The Guardian (Charlottetown) - - OPINION - Rus­sell Wanger­sky Rus­sell Wanger­sky is TC Me­dia’s At­lantic re­gional colum­nist. He can be reached at rus­sell.wanger­sky@tc.tc — Twit­ter: @Wanger­sky.

They waited al­most un­til New Year’s Eve to do it, but Res­o­lute For­est Prod­ucts has de­cided to make things in­ter­est­ing in the world of gov­ern­ments “in­vest­ing” in busi­ness.

Here’s the sit­u­a­tion in a nut­shell: the Nova Sco­tia gov­ern­ment, in an ef­fort to save a clos­ing pa­per mill in Port Hawkes­bury, N.S., pro­vided the op­er­a­tion with fund­ing to keep it ready for a new op­er­a­tor, and also pro­vided money to its new own­ers over the next 10 years. In to­tal, it was some­thing like $160 mil­lion in sup­port. (The same mill is also in a bat­tle with U.S. trade reg­u­la­tors over whether it re­ceives sub­si­dized elec­tri­cal rates, but that’s an­other story.)

The Port Hawkes­bury mill makes glossy mag­a­zine pa­per: Res­o­lute For­est Prod­ucts also had a mill making that pa­per in Shaw­ini­gan, Que., which Res­o­lute says it had to close be­cause it could not com­pete with the sub­si­dized Port Hawkes­bury op­er­a­tion.

As a re­sult, on Dec. 30, Res­o­lute an­nounced it would be go­ing to a North Amer­i­can Free Trade Agree­ment (NAFTA) ar­bi­tra­tion panel, ar­gu­ing the Cana­dian gov­ern­ment should pay it a min­i­mum of $70 mil­lion for its Shaw­ini­gan losses. The com­pany says the sub­sidy had the re­sult of “de­priv­ing Res­o­lute of its in­vest­ment in that mill, and the value of other in­vest­ments, in vi­o­la­tion of the com­pany’s rights un­der NAFTA as a U.S. in­vestor in Canada.” (Un­der NAFTA rules, the fed­eral gov­ern­ment as­sumes re­spon­si­bil­ity for the ac­tions of provin­cial gov­ern­ments.)

This is, of course, not the first time Res­o­lute For­est Prod­ucts has gone to the NAFTA well look­ing for fed­eral money.

Its cor­po­rate pre­de­ces­sor, AbitibiBowa­ter, used a NAFTA ar­bi­tra­tion panel rul­ing to win­kle $130 mil­lion out of the fed­eral gov­ern­ment af­ter then-New­found­land and Labrador premier Danny Wil­liams ex­pro­pri­ated the com­pany’s forestry as­sets (and, ac­ci­den­tally, its pol­luted mill site in Grand Falls-Wind­sor, as well).

AbitibiBowa­ter, then in pro­tec­tion from its cred­i­tors, and the Cana­dian gov­ern­ment reached a set­tle­ment agree­ment in that case, agree­ing, in part, that the money would go to Res­o­lute in­stead: “Pay­ment made un­der this set­tle­ment agree­ment shall be made to the new com­pany.” (No one has yet com­plained un­der NAFTA that hav­ing the money go to Res­o­lute, in­stead of AbitibiBowa­ter’s cred­i­tors, con­sti­tuted un­fair gov­ern­ment in­vest­ment. But wouldn’t that just be hi­lar­i­ous?)

All of this, of course, raises an in­ter­est­ing ques­tion: how much can in­ter­na­tional trade agree­ments be used to tie the hands of provin­cial gov­ern­ments look­ing to come to the aid of their con­stituents? Does a duly elected gov­ern­ment get to say how it can prop­erly spend money, or does that de­ci­sion rest in the hands of trade agree­ment ar­bi­tra­tion pan­els? Does that mean that there one set of stan­dards for com­pa­nies that op­er­ate solely within their own na­tion, while there are bet­ter rules to pro­tect the in­ter­ests of multi­na­tion­als?

Those are in­ter­est­ing ques­tions, es­pe­cially while we are look­ing down the pipe­line at new trade deals, in­clud­ing one with Euro­pean coun­tries that’s cur­rently be­ing con­verted into le­gal text, and a new deal with Pa­cific na­tions.

Imag­ine that an At­lantic provin­cial gov­ern­ment put money into a fish­ing or ship­build­ing op­er­a­tion in its prov­ince. (I know — when has that ever hap­pened?) Other com­pet­ing com­pa­nies in the re­gion would just have to put up with the spend­ing. But a for­eign multi­na­tional has the trade tools to be a lit­tle more … res­o­lute.

Hardly seems like a fair and even play­ing field.

Port Hawkes­bury, N.S., pa­per mill

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