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Canada, 3 January 2002 -- In November 2001, a major U.S.-based chemical producer filed a US$100 million lawsuit against the Canadian government for banning use of the pesticide lindane on canola crops. Crompton Corp. is suing Canada under the North American Free Trade Agreement (NAFTA), a trilateral free trade agreement signed in 1992 between Canada, the U.S. and Mexico.

Corporations have challenged national environmental and health bans of suspected toxins using NAFTA several times using the agreement's controversial Chapter 11. The chapter grants private investors and corporations the right to sue NAFTA governments for damages if they feel that their investments have been hurt by national laws or regulations. In the precedent-setting case where the Canadian government was sued for banning the toxic gasoline additive MMT, the government settled the dispute by agreeing to repeal the ban, issue a public apology to the U.S.-based producer Ethyl Corp. and pay the company damages of US$13 million.

Although lindane is banned for use on canola crops in the U.S., the Canadian government's move to do the same prompted the suit by Crompton Corp. The company claims that the Canadian government broke an earlier agreement it made with the Pest Management Regulatory Agency (PMRA), a Canadian government agency that oversees pesticide registration. Crompton Corp. had agreed to stop making lindane products at the end of 1999 pending a full PMRA review of the pesticide's safety, to be completed by the end of 2000. The U.S. Environmental Protection Agency (EPA) is currently completing its own review and reregistration of lindane for a number of other uses in the United States.

In a push for 'harmonization' of regulations, Crompton Corp. agreed that it would not request the reinstatement of lindane in Canada if both the PMRA and the EPA found it unsafe to use on canola. However, the agreement also stipulated that if either government agency deemed lindane safe for use on canola, then it would be reregistered in Canada.

Although PMRA studies are not complete, the Canadian government banned lindane for use on canola as of July 1, 2001. While Crompton Corp. has protested, the Canadian government maintains that it has the fundamental right to ban the pesticide.

Under NAFTA, Crompton Corp. and the Canadian government have 90 days to reach a compromise after which, if no solution has been agreed upon, Crompton can ask for a binding arbitration panel that will decide whether or not Canada has to pay damages.

Many speculate that other trade pressures, not health and environmental concerns, were behind Canada's decision. American canola growers, barred from using lindane, have complained that they are at a competitive disadvantage compared to Canadian growers since lindane substitute products are considerably more expensive.

One of Pesticide Action Network International's Dirty Dozen pesticides, lindane is persistent in the environment, highly toxic, a suspected endocrine disrupter and has been linked to breast cancer. Documented health effects of exposure to lindane include dizziness, seizures, nervous system damage, immune system damage and birth defects. It has been found in breast milk and blood samples throughout the world, and is the persistent chemical found most often in the arctic environment.

A draft North American Regional Action Plan has been developed for lindane under the Commission for Environmental Cooperation, the environmental side agreement to NAFTA. The plan calls for significant reduction of lindane use in the region. Lindane is currently being phased out in Europe after the European Union banned it for all agricultural and horticultural uses in 2000.

Crompton Corp. produces and markets chemicals globally with annual sales of approximately US$3 billion. The company is the major producer of lindane products in Canada. Main lindane producers in the U.S. include Aventis CropScience and Syngenta.

Sources: The Globe and Mail December 10, 2001; Public Citizen "NAFTA Chapter 11 Investor-to-State Cases: Bankrupting Democracy" September 2001, available at http://www.citizen.org/publications/release.cfm?ID=7076; http://www.foei.org/activist_guide/tradeweb/ethyl.htm; PANUPS October 24, 2000; http://www.cromptoncorp.com; Global Pesticide Campaigner, Fall 2000.

Contact: PANNA.

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