Parched US demands rights to Canada's water

A bitter feud is brewing between the United States and Canada over one of the latter's most precious assets – water.

The argument, which is about to come to a head, centres on whether water counts as a protected natural resource, as a raw commodity, or as a service.

The final decision is of major importance to both countries – the US is desperate for freshwater supplies to its dry states in the south-west, but Canada is committed to protecting its much-prized lakes, rivers and glaciers.

The row has arisen as a result of the North American Free Trade Agreement (Nafta), the system set up to remove trade barriers between the US and its neighbours, Canada and Mexico.

Under Nafta rules, members have the right to demand imports of anything officially defined as either a commodity or a service. Canada, whose water reserves represent 9 per cent of all the fresh water on earth, has for some years fought to keep its water out of these brackets, managing this because of the vagueness of the Nafta agreement.

But the issue has now reached the personal attention of George Bush. In a recent speech, the President gave the strongest suggestion that he intends to push for freshwater imports from Canada. Commodities analysts on Wall Street expect a resolution by the end of this year.

For Canada, the speech raised the spectre of the US being able in the future to make unlimited "bulk imports" of water, and the outcry has been significant. Environmentalist groups highlight the ecological risk of stripping large quantities of water from the environment, and point to the already low levels in the nation's biggest lakes and rivers. Even the Canadian government is behind this view: "Water is not simply a tradable good like sugar or coffee. The question is an environmental one, not a straight business issue," said a spokesperson.

The initial reaction by the Canadian Prime Minister Jean Chrétien was to confirm his government's commitment to stopping any exports, whatever the Nafta rules say. The Canadian public, however, has expressed doubts their politicians can resist US demands much longer.

The US certainly seems prepared to play hard-ball on the issue, and already has the support of some of those who drew up the Nafta agreement in 1993. "Water in any form, including ice and snow, should be on the list of primary resources – under the same definition as petroleum," says former Nafta negotiator Mel Clark.

The issue has been legally tested before. Several years ago, a Californian company, Sun Belt Water, attempted to use Nafta to sue authorities in British Columbia for refusing them the right to export water to the US. Although that case is on indefinite hold, Canada fears the final assault on its water will come through the courts.