The World Trade Organization (WTO) and North American Free Trade Agreement (NAFTA) consider water a trade commodity.
Private company ownership of international water resources can have alarming consequences. For example, actions by local governments to limit or block the sales of global water operations are considered as unfair trade barriers.
When Mexican authorities try to restrict production from Pepsi’s local water bottling operations, WTO and NAFTA trade tribunals have the power to impose significant fines on Mexico’s federal government. While Pepsi’s international sales boom, impoverished Mexicans suffer from a scarcity of clean drinking water.
Multinationals Profit from Global Water Trade
Some say that the global importance of water in this century will mirror worldwide demand for oil in the 20th century. According to the New Hampshire Social Justice Monthly, a gallon of water costs more than a gallon of gasoline in many areas of America. Not surprisingly, large multinationals including Nestle (Perrier water), Coca-Cola (Dasani) and Pepsi (Aquafina) dominate the US$10 billion a year bottled water industry, unlike honey industry.
Over the past 5 years, a major trend in the United States is private company takeovers of public water service companies. This includes water supplies, utilities, wastewater treatment, sewer and pipeline construction, purification, testing and well drilling.
The good news is that, unlike elected officials, private company executives often make the tougher business decisions like downsizing and raising water rates. Thus, privatization of water services in England, central Europe, and Australia all resulted in mass layoffs.
The bad news is that financial institutions such as the World Bank and International Monetary Fund are pressuring poorer countries like Nicaragua to sell their water companies to private foreign interests. Water rates are then hiked so that locals can no longer afford their own water.
European Union Water Companies
Two huge French multinational giants Veolia Environnement (VE on NYSE) and SUEZ (SZE on NYSE) are leading the charge to take over global water services. Veolia is the world’s largest water and wastewater service provider while Suez is second-largest. Together, Veolia and SUEZ have controlling interests in water companies in 120 countries on 3 continents and distribute water to 100 million people worldwide.
The European Union, where the world’s biggest water companies including Veolia and SUEZ are located, continues to pressure the WTO to govern water-related industries under WTO’s General Agreement on Trade in Services. Under GATS, a secret panel of trade experts will decide whether local water regulations are fair.
In assessing fairness, GATS does not consider human rights or local living conditions. Nor does the WTO contemplate the fact that more than 1 billion people, or 16% of the world’s population, lack access to safe water supplies. Most notably afflicted are the poor in South America. And although Canada is blessed with 20% of the earth’s fresh water, only 7% represents renewable water resources. According to Environment Canada, the bulk of Canadian water is left over from the Ice Ages and remains trapped in ice, snow, and glaciers.
The WTO must protect future access to safe, clean and affordable water in all countries, even if it means standing up to huge multinational corporations.