ederal strategy which has to do with the risks inherent in negotiating such an Accord in the NAFTA context. For reasons we describe below, while an Accord would itself do nothing to actually prohibit water exports, it might well undermine this objective by exposing Canada to investor-state claims that would not otherwise arise, or that would be easier to defend against should they be brought. We believe that this risk exists because of the National Treatment obligations engendered by NAFTA. 3.2 An Accord May Increase Canada’s Exposure to NAFTA Based ClaimsWe should begin by noting a critical distinction between the National Treatment obligations of the federal and provincial governments, respectively. While the federal government in obligated to provide best-in-Canada treatment to all foreign investors, the same is not true for provincial governments, which are obligated only to provide best-in- province treatment to such investors. Thus Article 1102(3): National Treatment, provides: The Treatment accorded by a Party …. Means with respect to a state or province, treatment no less favourable than the most favourable treatment accorded, in like circumstances, by that state or province to investors, and to investments of investors, of the Party of which it forms a part. [emphasis added]However, in our view, by entering into an Accord, provincial governments may be exposing themselves to claims that they provide best-in-Canada treatment with respect to any licenses or permits to provincial water resources they have the authority to grant. Thus an export approval sanctioned by another province or the federal government may well set a standard with respect to which all other provinces must conform. Such a claim may be asserted on one or both of two grounds. The first would assert that the Accord itself, and any action taken pursuant to it, be considered subject to federal, not provincial National Treatment obligations. The succes...
