Alone among the world's trade treaties, NAFTA allows foreign investors to sue the Canadian government directly if any public policy or governmental action denies them investment or profit opportunities. To date, Canada has been hit by 15 such lawsuits costing more than $18.5 million with another $533 million in claims pending. This is by far the highest among the three NAFTA partners.
Now, a group of 200 private investors led by Arizona businessman Melvin J. Howard is planning to use the NAFTA national treatment mechanism to pry open Canadian medicare -- often described by neoconservatives as "the last great uncracked oyster in the North American marketplace."
In July, Howard filed legal papers to set the suit in motion and is only awaiting the outcome of the Oct. 14 federal election to start negotiations.
Howard and his partners want to open a private surgical centre in B.C. similar to the Cambie Clinic owned by Dr. Brian Day, past-president of the Canadian Medical Association, but are facing what they call anti-American roadblocks in several municipalities.
They are demanding Ottawa reimburse them $4 million in actual costs and another $150 million in foregone profits.
Mike McBane, co-ordinator of the pro-medicare National Health Coalition, says the Howard lawsuit is "an extremely serious warning to provinces not to privatize the delivery of the health care system. We've always known there were serious risks to (medicare) to the extent that we privatize it because it was only protected if it was delivered on a non-commercial basis."
The use of NAFTA's Chapter 11 to put medicare out of business -- more accurately, to make it a for-profit, private, and likely American, business -- has long been feared by medicare's supporters. They have never believed government assurances that NAFTA grandfathered medicare beyond the reach of foreign insurance companies and health maintenance organizations (HMOs) seeking to replace it with U.S. private for-profit medicine.
News of the first NAFTA salvo against Canada's most cherished national social program was published in Embassy: Canada's Foreign Policy Newsletter in a Sept. 17 article by Luke Eric Peterson. Peterson is the editor of Arbitration Editor, an electronic news service tracking international lawsuits between multinationals and sovereign governments.
Peterson says government guarantees about medicare's security may have been valid "at least as (our health care system) stood in 1994 when NAFTA came into force... What's less clear, however, is whether the growing flirtation by various provinces with greater private financing and delivery of certain forms of health care is eroding Canada's legal defences... (W)hen the provinces start experimenting with greater private financing and involvement in the health care sector, such experimentation may oblige the federal government to extend certain standards of NAFTA treatment to U.S. investors."
Peterson points out that the Romanow Royal Commission on the Future of Medicare warned that Canada might not have medicare today had it been bound by NAFTA in the 1960s. "Quite simply, the price of paying off all of the private insurance operators might have been too high and the government would not have introduced a single-payer system...
"Concerns have long been raised that the NAFTA's 'expropriation' provisions might prevent governments from bringing private sectors of the economy into the public fold," he continued. "For example, Liberal proposals for a national Pharmacare plan raised questions as to whether such a public scheme might encroach upon -- or, in NAFTA terms, expropriate -- the turf of private insurers. If that were the case, Ottawa might need to compensate any U.S. investors who lost their business at the hands of the government."
It's significant to note that NAFTA's Chapter 11 effectively gives foreign investors greater rights than Canadian investors, because Canadians are restricted in their ability to sue their own government.
McBane says privatizers and foreign investors are emboldened by what he calls a "perfect storm": a federal government that believes in provincial autonomy, not national standards; the 2005 Supreme Court Chaoulli decision that private medical services do not abridge medicare and are a fundamental human right; and the CMA's new support for two-tier medicine.
He cites a speech Prime Minister Stephen Harper gave in 2001 when he was president of the National Citizens Coalition in which he stated: "(W)hat we clearly need is experimentation -- with market reforms and private delivery options within the public system. And it is only logical that, in a federal state where the provinces operate the public health care systems and regulate private services, that experimentation should occur at the provincial level."
Continues McBane: "The dangerous thing is, you establish a private clinic and then it gets sold... We know why foreign investment wants it because they see public health care budgets as a cash cow."