ss effective strategies, that would still represent an improvement over the status quo. The are: an interpretative note issued by the Commission clarifying that the definition of investment set out in the Chapter was not intended to include any claim to water; or, an addition to Annex 1138.2 to exclude from dispute settlement under the Chapter, federal and/or provincial legislation banning bulk water exports. Of the two, we believe the latter approach is more likely to be effective because it should substantially reduce the possibility of investor-state challenges to Canadian water export control measures. Addressing Potential Challenges under NAFTA Chapter 12: ServicesNo analogue to Article 1131.2 exists in Chapter 12, however both Article 1201.2: Scope and Coverage and Article 1206: Reservations set our various exceptions to the provisions of the Chapter. As is the case with respect to Chapter 11, Annexes to the Chapter offer another opportunity to exclude water export measures from the application of service related disciplines. In all cases, however, formal amendment of the provisions of the Chapter would have to be sought in order to exempt water export controls measures from challenge under the Chapter. In our opinion, and for reasons just noted with respect to the Chapter 11, the best approach would be to seek a specific exclusion for federal and provincial water protection legislation. A less attractive alternative would be to amend Article 1201.2 to exclude all water related services from other application of Chapter 12 rules. A General Exception for Water under NAFTAWhile state-state disputes concerning water may be less likely to arise than investor-state claims, they nevertheless pose a significant risk to water export control measures and should in our view be addressed if the integrity of those measures is to be assured. For this reason, and for the purposes of comprehensiveness, the better course to addressing potential...
