By Cindy Macdonald
Resolute Forest Products is once again turning to the North American Free Trade Agreement (NAFTA) to protest the actions of Canadian governments.
In the final days of 2015, Resolute announced the filing of a Notice of Arbitration under NAFTA with regard to measures taken by the former provincial NDP government in Nova Scotia and the former Conservative government of Canada in support of the Port Hawkesbury paper mill in Nova Scotia.
Resolute contends that those measures discriminated in favor of Port Hawkesbury and resulted in the closing of Resolute’s Laurentide mill in Quebec in October 2014, depriving Resolute of its investment in that mill. The company states that those measures are in violation of Resolute’s rights under NAFTA as a U.S. investor in Canada.
This is not the first time Resolute has used NAFTA rules to its advantage. In 2010, when the company was known as AbitibiBowater, it requested arbitration with regard to the expropriation of the company’s assets in Newfoundland and Labrador, including the Grand Falls-Windsor mill and hydroelectric infrastructure.
The Government of Canada chose to pay AbitibiBowater $130 million in compensation for the expropriation, to avoid potential long and costly legal proceedings. As part of the settlement, AbitibiBowater withdrew its request for NAFTA arbitration.
In the current case regarding Port Hawkesbury Paper, Resolute is seeking damages for direct losses of approximately US$70 million, consequential damages, and additional costs and relief. According to Resolute, under NAFTA and applicable principles of international law, Canada is responsible for Nova Scotia’s acts.
Resolute Forest Products owns or operates more than 40 pulp, paper, tissue and wood products facilities in the United States, Canada and South Korea, as well as power generation assets in Canada.
Resolute’s actions add another layer of complexity to the issues surrounding the purchase and restart of the Port Hawkesbury Paper mill. Several U.S. papermakers also took offense to the perceived support that Port Hawkesbury Paper received from the provincial government. They instigated an investigation by the U.S. Department of Commerce which resulted in a countervailing duty on supercalendered paper imported from Canada to the U.S. The duty affects not only Port Hawkesbury Paper, but also Resolute Forest Products, Catalyst Paper and Irving Pulp & Paper.