Waiting for the other shoe to drop

The move came as a bit of a surprise. Most people were unaware that the feds were actually negotiating with Abitibi about this.

After the province expropriated Abitibi’s assets, the company filed a lawsuit under the North American Free Trade Agreement (NAFTA) charging that the province violated the international accord and acted in an arbitrary, discriminatory and illegal manner. Abitibi originally wanted $500 million for their properties. 

What Ottawa did here is quite interesting. They offered AbitibiBowater $130 million to drop the lawsuit. AbitibiBowater agreed. This kind of action can be looked at two ways. We can say that Ottawa is stepping up to the plate for Newfoundland and Labrador and putting this matter to bed on our behalf or we can say that Ottawa accepts the company’s original charge. 

The federal government has its own bevy of corporate lawyers and constitutional experts and somewhere down the line they may have concluded that the province did indeed act arbitrarily and outside the law. If that’s the case, then they are doing themselves a favour, not us.  

In a news release from the Department of Foreign Affairs and International Trade, the government says they wanted to avoid a potentially long and costly legal proceeding. From the release: “This approach reaffirms the government of Canada’s commitment to maintaining a rules-based business environment that facilitates free trade and encourages investment.”  Rules based business environment — is that not an admission that the rules were somehow broken by the actions of the Newfoundland legislature? Is it possible that the Canadian government feared a loss of foreign investment because of the province’s actions?

Well, they don’t call him Danny Chavez for nothing now, do they?

Williams has praised the settlement. He says he is pleased with the outcome, especially the financial commitment from Ottawa. Newfoundland and Labrador is not being asked to contribute one red cent to the arrangement. Williams says our overall contribution to the country makes this move a fair one.  I wonder if the Harper administration would agree with that point of view.

We are not quite out of the woods yet. Newfoundland and Labrador will now have to pick up the environmental clean-up costs associated with AbitibiBowater sites in the province. We have not been given any indication of how much that could be. It will certainly run into millions. 

Even the opposition parties are praising the AbitibiBowater settlement. NDP Leader Lorraine Michael said she was surprised by the deal but thought it a good result for the province. Interim Opposition Leader Kelvin Parsons says the settlement is all part of being a federation.

Yet, there is something about this that doesn’t feel right. 

If you are accused of doing something arbitrary, discriminatory and illegal, shouldn’t you get your day in court? Shouldn’t the head of the house defend you? What if you are guilty and the government simply settles up to avoid embarrassment or a harsher outcome? What does that imply?

Lorraine Michael wondered aloud about the $130 million settlement for AbitibiBowater, “I wonder what’s going to happen down the road. Is the federal government going to find a way to have the province pay for this, considering that it was brought on by the provincial government?”

If past practice is a predictor of future action, we can expect that down the road we will pay for this, though an obvious connection to some future federal government decision and this out of court settlement might not be easily seen.

What does this say about the way our government works? The decision to expropriate Abitibi assets was welcomed by just about everyone in the province.

While there were some whispers and warnings that things might not be as they appeared, the expropriation deed was done in record time. So fast, in fact, we even took control of stuff we didn’t want. No one planned on picking up the actual paper mill in the process. The province admitted to that mistake.

Did Ottawa do this deal with AbitibiBowater because they think the expropriation itself was a mistake as well? 

One can’t be sure, but it feels like it.

Randy Simms is host of the VOCM/CFCB open line radio program. He can be reached at rsimms@nf.sympatico.ca.