Trade treaty 'chill': New Brunswick abandons public auto insurance in face of trade treaty threats

June 30, 2004

OTTAWA--A study released today concludes that the New Brunswick government should have proceeded with public auto insurance, despite threats from the foreign insurance industry to sue under international trade treaties to thwart the policy.

The Lord government announced today that it would reject the recommendations of an all-party legislative committee to adopt a public auto insurance system. "New Brunswick citizens are experiencing trade treaty 'chill' first-hand," said CCPA trade specialist and co-author Scott Sinclair. "Regrettably, the Lord government was cowed by industry threats, including the threat of trade treaty litigation, from taking this excellent public policy initiative."

The CCPA study, "Public Automobile Insurance and Trade Treaties" argues that neither the NAFTA nor the WTO rules preclude New Brunswick from going ahead with public auto insurance. The impediments posed by these agreements, while significant, are navigable, it asserts.

Trade lawyer and co-author Steven Shrybman called insurance industry claims that a public insurance scheme violates NAFTA by expropriating foreign investors "highly controversial and aggressive." If foreign investors were ever successful, Ottawa--not the NB government--would be liable for any damages, he pointed out.

In the case of the WTO services agreement, or GATS, the study explains that the federal government can accommodate a new public auto insurance system by using special treaty procedures to change its 1997 financial services commitments.

New Brunswick should not have backed down in the face of trade treaty threats, the study asserts. "Despite this setback, the decision whether to create public auto insurance is still in the hands of NB's citizens," said Sinclair, "and they should make it without interference from broadly worded NAFTA and GATS rules."

"These investment treaty provisions are extreme and bear little or no relation to trade," said Shrybman. "They must be scaled back so that they do not interfere with democratic decisions about important public services."


For more information contact:
Kerri-Anne Finn, Communications officer, CCPA, 613-563-1341 x306.

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