On August 27, 2014, a NAFTA panel dismissed a claim by the Canadian pharmaceutical company, Apotex Inc., that had argued that the US government had breached the non-discrimination clauses in the Agreement by issuing an Import Alert over the company’s Canadian drug manufacturing processes.
In 2008 -2009. the US Food and Drug Administration had inspected Apotex Inc.’s manufacturing facilities in Ontario in response to complaints about the safey of certain Apotex products sold in the US. The inspections revealed alleged deviations from what FDA regarded as good manufacturing practices. The FDA placed the company on “Import Alert”, meaning that its drugs could be detained at the border by US customs officials. The Apotex facilities were removed from the Import Alert in 2011.
In February 2012, Apotex initiated NAFTA arbitration against the US government, claiming that the Import Alert violated US obligations under NAFTA Chapter Eleven to accord Apotex and its investments national and most-favored-nation treatment. Apotex also claimed that the FDA adopted the Import Alert without due process, in violation of the customary international law minimum standard of treatment.
The story was picked up by Barrie McKenna of the Globe and Mail, who sought out my views on the significance of the panel decision. Below is an extract from his article.
Tribunals have generally been very reluctant to undercut the right of countries to take actions for legitimate public policy purposes, pointed out Lawrence Herman, a Toronto trade lawyer.
A 2011 NAFTA panel similarly upheld Quebec’s right to restrict the use of certain pesticides.
“These decisions show that governments have a legitimate right to protect the health and safety of their citizens,” he said. “And if it isn’t a biased measure and has sound scientific underpinnings, they won’t interfere. The sky-is-falling rhetoric that we’ve heard is highly exaggerated.”
A win by Apotex in the case would not have affected the right of the FDA to act, but could have forced it to pay compensation.
Those cases are now part of the jurisprudence that panels would look to in the future, including any stemming from the Canada-Europe free-trade agreement, Mr. Herman argued.
“There is no doubt that panels established under [the Canada-Europe free trade agreement] would look to the jurisprudence worldwide,” he said.
Mr. Herman also pointed out that more restrictive rules will make it much more difficult for companies to sue under the Canada-Europe deal than under NAFTA.