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June 24, 2010

On Eve of G-20 Summit, Canadian Government Bashes Others for Trade Distortions While Poised to OK Huge Subsidy for Asbestos Exports

EU Parliamentarian Calls for WTO Challenge of $58 Million Loan Guarantee Subsidy for Deadly Exports

WASHINGTON, D.C. – “Hypocrisy!” may be the leading headline coming out of the imminent G-20 and G-8 summits as news of host country Canada’s pending $58 million loan guarantee subsidy to restart Canadian asbestos exports slams into the government’s recent pre-summit lectures about the need for participating countries to avoid trade distortions, Public Citizen said today.

“The Canadian government endlessly chastises other countries’ purported trade distortions but apparently the Harper administration’s fealty to free trade does not apply to Canada creating a massive new subsidy that would boost exports of a deadly substance, asbestos,” said Lori Wallach, director of Public Citizen’s Global Trade Watch division.

The open-pit Jeffrey Mine in Asbestos, Quebec, has exported huge amounts of asbestos for the past century. Now, its surface asbestos supply exhausted, the company is under bankruptcy protection. After not being able to find financing on the private market, the mine’s owners have sought a $58 million loan guarantee from the Quebec government to open a new underground mine so that it can export asbestos to developing countries for the next 25 years. Under World Trade Organization (WTO) rules, a loan guarantee that facilitates financing on terms more favorable than otherwise available in the market is considered a subsidy. The subsidy is expected to be approved by July 1.

Very little of the asbestos that would be mined at the Jeffrey Mine would enter commerce in Canada. Almost all of it would be exported – with much going to WTO-member nations to whom Canada has trade obligations that forbid export subsidization. While WTO rules generally discipline government subsidies, export subsidies are explicitly forbidden. 

The Harper government attacked U.S. Buy America provisions in the 2009 Economic Stimulus bill that fully complied with U.S., WTO and North American Free Trade Agreement (NAFTA) obligations. Yet, Prime Minister Stephen Harper’s minister of Natural Resources, Christian Paradis, is a leading advocate of this major subsidy to boost Canadian exports despite trade pacts rules that forbid export subsidy trade distortions.

“You do not have to be a fan of the current trade rules to be outraged by the stunning hypocrisy of the Canadian government supporting a massive government subsidy to resume operations at an asbestos mine whose deadly product will mainly be exported to developing countries,” Wallach said. 

European parliamentarian Stephen Hughes (U.K.) recently tabled an inquiry calling for a WTO challenge of the proposed Canadian subsidy. The European Union has banned all use of asbestos and extraction, manufacture and processing of asbestos products in 2005.

“A new WTO challenge of a new Canadian export subsidy certainly would make a mockery of the Canadian government’s pre-summit briefings that have criticized other countries’ purported slide toward protectionism and trade distortions,” Wallach said.

Quebec and the rest of Canada, like other industrialized countries, refuse to use asbestos and are experiencing an epidemic of asbestos-related disease from past use. The world’s leading health authorities have called for asbestos to be banned. Fifty-two countries have banned all forms of asbestos.

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