NEWS RELEASES

November 13, 2000 (5:00 p.m. EST) No. 266

NAFTA TRIBUNAL RULES AGAINST CANADA

The Government of Canada today acknowledged receipt of a NAFTA Tribunal decision that concluded that Canada's temporary ban on the export of PCB waste between November 1995 and February 1997 breached two provisions of the NAFTA's investment chapter.

This is a partial award. The next stage of the arbitration will determine the amount of damages that S.D. Myers has suffered, if any. Chapter 11 of the NAFTA prohibits the award of punitive damages.

The ruling does not require Canada to change its environmental laws, including its regulations to control PCBs. The Tribunal's decision was with respect to an interim order, which is no longer in effect. Nothing in the decision detracts from Canada's ability to regulate the safe movement and disposal of hazardous wastes, including PCB wastes. The Tribunal directly acknowledged that NAFTA members "have a right to establish high levels of environmental protection. They are not obliged to compromise their standards merely to satisfy the political or economic interests of other states."

The Tribunal upheld claims by S.D. Myers Inc. of Tallmadge, Ohio that Canada breached its obligations under NAFTA Chapter 11 with respect to: National Treatment (1102), and Minimum Standard of Treatment (1105). This decision also held that Canada did not breach Chapter 11 with respect to Performance Requirements (1106) and Expropriation (1110).

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A detailed backgrounder is attached.

For further information, media representatives may contact:

Media Relations Office

Department of Foreign Affairs and International Trade

(613) 995-1874

This document is also available on the Department of Foreign Affairs and International Trade's Internet site:

http://www.dfait-maeci.gc.ca

Backgrounder

CHRONOLOGY

NAFTA CHAPTER 11 - S.D. MYERS INC.

DECISION OF THE TRIBUNAL

1. On July 22, 1998, S.D. Myers Inc.(headquartered in Tallmadge, Ohio) served on the Government its Notice of Intent to Submit a Claim to Arbitration under the investor-state dispute settlement provisions of Chapter 11 (Investment) of the NAFTA.

2. On October 30, 1998, S.D. Myers filed a Claim to Arbitration, which started the formal arbitration process. S.D. Myers alleges that Canada's PCB Waste Export Interim Order (issued November 20, 1995, rescinded February 4, 1997) breached the following NAFTA obligations: (i) Article 1102 - National Treatment; (ii) Article 1105 - Minimum Standard of Treatment; (iii) Article 1106 - Performance Requirements; and (iv) Article 1110 - Expropriation. S.D. Myers claims that the Canadian export ban prohibited it from conducting its business in Canada. S.D. Myers has claimed damages of not less than US$20 million.

3. The Tribunal was fully established on March 4, 1999, with S.D. Myers's appointment of Dr. Bryan Schwartz, Professor of Law, University of Manitoba, and both parties agreeing to the appointment of Professor Martin Hunter (U.K.) as presiding arbitrator. Canada's appointee to the Tribunal was Edward Chiasson of Vancouver, B.C.

4. In accordance with the Tribunal's timetable, Canada submitted its Statement of Defence on June 18, 1999. On July 20, 1999, S.D. Myers submitted its Memorial (i.e. main argument). Canada submitted its Counter-memorial on October 5, 1999. Supplementary briefs were delivered on December 15, 1999, and pre-hearing submissions on January 14, 2000.

5. Both the U.S. and Mexico had representatives present throughout the proceedings, although only Mexico made any submissions to the Tribunal. Mexico intervened on questions of interpretation of Chapter 11 obligations, which were largely supportive of Canada's position.

6. Substantive hearings took place before the Tribunal in Toronto on February 14-16, 2000.

7. The Tribunal decision was delivered to the parties on November 13, 2000.