{"id":338,"date":"2008-09-24T07:36:00","date_gmt":"2008-09-24T12:36:00","guid":{"rendered":"http:\/\/itn.mattrock.ca\/2008\/09\/24\/us-investor-threatens-arbitration-over-investments-in-canadian-health-care-sector\/"},"modified":"2013-02-11T07:35:41","modified_gmt":"2013-02-11T13:35:41","slug":"us-investor-threatens-arbitration-over-investments-in-canadian-health-care-sector","status":"publish","type":"post","link":"https:\/\/www.iisd.org\/itn\/2008\/09\/24\/us-investor-threatens-arbitration-over-investments-in-canadian-health-care-sector\/","title":{"rendered":"US investor threatens arbitration over investments in Canadian health-care sector"},"content":{"rendered":"

By Damon Vis-Dunbar
\n24 September 2008<\/strong><\/p>\n

An American businessman has revived long-held suspicions that the North American Free Trade Agreement\u2019s investment chapter may hinder Canada\u2019s ability to regulate its public health-care system.<\/p>\n

In a letter sent to the Canadian government in July 2008\u2014a so-called Notice of Intent\u2014Melvin J. Howard accuses provincial authorities of putting up \u201cpolitically motivated\u201d roadblocks to proposed investments in health-care facilities, in breach of the government\u2019s commitments to American investors under NAFTA<\/span>. The letter sets in motion a 90-day period which must elapse before formally serving a claim.<\/p>\n

Mr. Howard alleges breaches of the national treatment and most-favoured-nation treatment provisions in NAFTA\u2019s Chapter Eleven, and seeks nearly US$ 160 million in damages.<\/p>\n

The letter refers to a lack of \u201cuniformity\u201d among provincial health-care agencies in Canada. \u201cThere are serious inconsistencies throughout Canada in terms of the Canada Health Act and Provincial health care programs,\u201d writes Mr. Howard. \u201cCenturion and its counter parties seek to be compensated for damages for barriers to entry and expropriation.\u201d Mr. Howard also argues that efforts to set up private surgical facilities in the city of Vancouver were sabotaged by community activists, \u201cin their belief that no American company should be providing surgical services.\u201d<\/p>\n

One of the investments proposed by Centurion Health Corporation, a company chaired by Mr. Howard, was a hospital on Vancouver Island. Centurion was advocating for a public-private partnership\u2014an arrangement that the Provincial Government of British Columbia began experimenting with in 2002\u2014in which responsibilities that had previously been performed solely by government agencies were contracted to the private sector. A 2006 preliminary five-year financial forecast for this particular hospital, sent to ITN<\/span> by Mr. Howard, estimated that the total capital costs would amount to some $180 million, including construction costs.<\/p>\n

While the Notice of Intent is dated 11 July 2008\u2014with Canada acknowledging receipt of the notice that same month\u2014news of the threatened arbitration broke in September\u00a0 in an op\/ed in Canada\u2019s Embassy Magazine*. It soon roused the attention of defenders of Canada\u2019s public health-care system who have warned in the past that NAFTA could restrict government policies in the sector.<\/p>\n

The Canadian Union of Public Employees (CUPE) said: \u201c… the federal government has been ignoring concerns that NAFTA investment rules put the Canadian health care system at risk. Now, these concerns are becoming substantiated …\u201d<\/p>\n

The degree to which government policies in the health-care sector are immune from NAFTA investment claims has been a matter of debate in Canada. An annex of the NAFTA carves out all health-care policies in place prior to January 1, 1994, but commentators have argued that changes to health-care policies made after 1994 could become to object of a NAFTA claim.<\/p>\n

For example, two Canadian researchers wrote in 2003: \u201cThis situation could arise if public health care in Canada were to be expanded to new areas such as prescription drugs or dental care. US private health insurance companies and pharmaceutical companies with a presence in Canada would likely use Chapter 11 of NAFTA (the investor-state provisions of the Investment chapter) to sue for billions in compensation for lost business.\u201d**<\/p>\n

Mr. Howard\u2019s claim relates to a different scenario. Having allowed private investors into the health-care market, Mr. Howard contends that the provincial government of British Columbia was bound to treat American and Canadian investors with the same standard of treatment. He argues that they were not.<\/p>\n

For its part, the Canadian government has only provided a brief comment, saying that they are \u201ccurrently assessing this claim and is consulting with the Government of British Columbia\u201d. Canada is gearing up for an election on 14 October 2008, and a spokesperson for the Department of Foreign Affairs and International Trade said they would not issue any comments that could be used to stoke partisan debates.<\/p>\n

*\u201cUS Investor Threatens First Ever Health Care Suit\u201d, By Luke Eric Peterson, Embassy, 17 September\u00a0 2008
\nhttp:\/\/www.embassymag.ca\/html\/index.php?display=story&full_path=\/2008\/september\/17\/nafta\/<\/a><\/p>\n

** \u201cCompetition in the WTO<\/span> and FTAA: A Trojan Horse for International Trade Negotiations\u201d, By Marc Lee and Charles Morand, The Canadian Centre for Policy Alternatives, August 2003
\nhttp:\/\/www.policyalternatives.ca\/documents\/National_Office_Pubs\/competition_policy.pdf<\/a><\/p>\n