e risks of potential US trade action by, inter alia, seeking amendments to NAFTA and by negotiating a bilateral agreement with the US that would eliminate the possibility of such conflicts. However, the more pressing concern has to do with the other way in which Canadian water conservation measures might be challenged, that is by way of investor-state claim under NAFTA or one of several bilateral investment treaties to which Canada is a party. Canada’s exposure to such claims is far more problematic that the risks of a state-to-state dispute for several reasons. To begin with investor-state claims are more likely to arise because access to these extra-ordinary remedies is virtually unqualified. In addition, foreign investors would not be bound by any bilateral understanding or agreement among the NAFTA parties concerning the application of NAFTA disciplines to water, unless their rights under Chapter 11 were abrogated by explicit amendment. Nor would foreign investors likely feel constrained by any political or diplomatic considerations that discourage state-initiated complaints. Finally, the broadly framed and unprecedented character of the constraints on government initiative engendered by these investment provisions, are far more onerous than those established by other elements of Canada’s international trade obligations. Indeed, as the Sun Belt Water case illustrates, the potential for such claims is more than theoretical. In our opinion therefore, the risk of such claims not only underscores the importance of moving quickly to implement federal legislation banning water exports, but it also reinforces the need to negotiate international measures to prevent them from arising in the future. Therefore, notwithstanding the risks of state-to- state procedures, the first priority is to reduce Canada’s exposure to investor-state claims concerning water. 2. Is the regulation of water as a "natural resource" an adequate sa...
