Bridges Trade BioRes • Volume 5 • Number 15 • 2nd September 2005
NAFTA Tribunal Rules Against Canadian Methanol Producer
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On 9 August, a North American Free Trade Agreement (NAFTA) tribunal released its findings that dismissed a Canadian methanol producer’s US$970 million lawsuit against the United States and ordered the company to pay US$4 million in legal fees. In the lawsuit, Vancouver-based Methanex Corp. asserted that because they supply a key ingredient of “methyl tertiary butyl ether” (MTBE) — a gasoline additive that reduces greenhouse gas emissions in vehicles — the State of California’s ban on the gasoline additive violated their rights under NAFTA’s Chapter 11, which protects foreign investors’ interests. California instituted the ban in 1999 after traces of the chemical was found in local water supplies. Then California Governor Gray Davis asserted that the ban was necessary because MTBE has been linked to cancer and the chemical presented a threat to human health and the environment. Methanex charged that MTBE’s carcinogenic links were not scientifically grounded and that Davis’ ban was instead influenced by domestic manufacturers of ethanol — an MTBE substitute now widely used in California and other states that have implemented similar bans. When a NAFTA panel found in 2002 that Methanex’s allegations of protectionism were unfounded, the company revised its claim and charged that Governor Davis had established the MTBE ban in exchange for political contributions by major ethanol producers (see Bridges Weekly, 14 November 2002). The NAFTA tribunal unanimously dismissed Methanex’s claim on the basis of merit and jurisdiction.
“NAFTA Panel Rules Against Methanex in MTBE Case,” REUTERS, 9 August 2005; “Trade Tribunals Must Not Trump State, Local Laws,” SAN FRANCISCO CHRONICLE, 23 August 2005; “Methanex Loses US $1B Fight Over Gas Additive,” FINANCIAL POST, 10 August 2005; “Trade Panel Rejects Canadian Firm’s Challenge to California MTBE Ban,” AP, 10 August 2005.
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