Healthcare and NAFTA

So here is the promised post on how private involvement in healthcare would play within NAFTA.

Before I start, here is a caveat: I am, by no means, a NAFTA lawyer. I've spent the past two years studying world trade, as a topic, more intently than I've studied anything else, but that does not make me an expert.

What I can talk about is the argument that others have made, namely that if government of Canada allows for private involvement in healthcare then it cannot stop American firms from competing in the industry. This is basically true.

Various chapters of NAFTA follow very closely the WTO chapters (which I have written about below) and would yield similar results. However, what makes NAFTA different is its often misunderstood Chapter 11 on Investor Relations. (There are lots of other differences, but this is what most people have focused on.)

Chapter 11 basically says that the governments of Canada, US, and Mexico may not nationalize company's from other signatories. So Canada could not randomly one day say that it had nationalized all Halliburton assets in Canada. Throughout various cases, this has come to mean that governments cannot take steps that would unreasonably harm the financial well being of a foreign firm.

Here is an example:

Methanex Corp. v. United States of America
Methanex Corporation, a Canadian marketer and distributor of methanol, submitted a claim in June 1999 alleging that the U.S. is in breach of its obligations under Chapter Eleven through California's enactment of a ban on the use or sale in California of the gasoline additive MTBE. Methanol is an ingredient used to manufacture MTBE.

(Incidentally if you go here, you'll see that Canada has been a respondent in fewer Chapter 11 cases than either US or Mexico. This chapter has been great for Canadian business even if people at TC refuse to help our business file them.)

Chapter 11 is the only one of its kind in international law. It allows private individuals or companies to sue foreign governments for violation of their private rights. Here is a good paper on its implications.

Given how case law has been developed, it is reasonable to assume that if the gov't of Canada did not allow American HMO's to participate in the Canadian market it coudl get sued. Of course, this does not mean that American companies could buy up all Canadian hospitals or insurance companies. (There is an exception that allows the gov't to review and approve all acquisitions under the Investment Canada Act.)

Now here is the kicker: NOTHING has changed due to recent Supreme Court decision. In fact, as far as NAFTA is concerned, things have been pretty much the same since Alberta passed Bill 11 - that allowed for private healthcare facilities. If there was an evil US plan to sue Canada under Chapter 11, it would have already begun with a test of Bill 11.

If you have any specific questions email me or leave a comment, otherwise I will consider this the end of my posts on world trade and healthcare. (Because I can’t say for sure this is how things will go and these short posts do not do any justice to how complicated the process would.)