Intervenor: Vol 23. No 3 July - September 1998

How Canada Became a Shill for Ethyl Corp.

NAFTA and the Erosion of Federal Environmental Protection

In early April, 1997 the Liberal government of Jean Chrétien, for one of the few times since its election in 1993, acted to "err", as the government put it, on the side of human health and the environment. Invoking its trade powers, Parliament passed a law restricting the import and interprovincial transport of the neuro-toxic MMT (methylcyclopentadienyl manganese tricarbonyl), a gasoline additive that contains the heavy metal, manganese.

Within days, the US multinational Ethyl Corp., the sole supplier of MMT in Canada, invoked the "expropriation" clause (article 1110) of the investment chapter of NAFTA to sue the government for $350 million Canadian for damages and lost income. With the NAFTA agreement working exactly as it was designed to, the pressure of significant potential public liability mounted on the federal government and on July 20th, 1998 it backed down, settling out of court before the NAFTA arbitral panel could rule.

In a final cruel irony the $13 million US ($19.5 million Canadian) compensation payment to Ethyl for lost profits and legal costs exceeds the total 1998 Environment Canada budget for enforcement and compliance programmes ($16.9 million Canadian). The government will also issue a statement to the effect that the manganese-based additive is neither an environmental nor a health risk which, or course, Ethyl will use to market MMT internationally.

With all we know about lead, manganese and other heavy metal poisoning why are we running one more collective experiment on our kids when safer alternatives to MMT exist and are widely used in the US? How did we end up in this sorry situation? The answer to that question is a long and involved, but ultimately very instructive, little Canadian vignette.

This story has two basic themes. On the one hand we have to go back to the 1920s and trace the role of Ethyl Corp. in bringing us first lead anti-knock gasoline additives and then MMT. On the other hand we need to go back to November 1993, when the Chrétien government-to-be worked so hard to make sure NAFTA came to Canada.

In 1923, lead was introduced into gasoline by the Ethyl Corporation in a joint venture with General Motors, Standard Oil of New Jersey, and DuPont. The toxicity of lead had been well established for 100 years, but GM wanted to put lead in gas in order to compete with the Ford Motor Company. GM had developed a more powerful gasoline engine than Ford, but the engine tended to "knock" because of its higher compression. Lead stopped the knocking. Ethanol, made from agricultural crops, could have done the job. But ethanol occupies up to 10 percent of the gas tank and the oil companies were not about to give away that share of their market to US farmers. Instead they chose to put a few drops of lead into each gallon of gas, (1).

On May 20, 1925, the U.S. Public Health Service convened a conference to examine the potential public health dangers posed by leaded gasoline-more than was done when MMT was introduced into Canada in the 1970s for use in unleaded fuels. At the conference, a parade of research scientists and public health officials testified that lead is a very unhealthy substance:

  • it is an accumulative poison; 
  • in the form of dust, it is most likely to cause acute lead poisoning;
  • lead poisoning, when not fatal, causes "intellectual irritability and dysfunction";
  • lead penetrates the placenta and affects the unborn; and
  • there are no easily recognizable symptoms of slow lead poisoning.

Dr. Yandell Henderson of Yale University summarized the conference this way: "We have in this room, I find, two diametrically opposed conceptions. The men engaged in industry, chemists, and engineers, take it as a matter of course that a little thing like industrial poisoning should not be allowed to stand in the way of a great industrial advance. On the other hand, the sanitary experts take it as a matter of course that the first consideration is the health of the people.", (2).

The debate continues to this day.

By 1940 most gasoline sold had lead in it. Thirty-five years later the EPA reduced the allowable level of lead in gasoline because it interfered with the efficient workings of catalytic converters. Finally, in the 1980s, the overwhelming evidence of lead-associated damage in children's nervous systems led to the phasing out of lead in gasoline, first in the US and later in Canada. Ethyl fought every step of the way.

Between 1926 and 1985, when the U.S. Congress phased out most leaded gasoline use, seven million metric tons of lead dust (15.4 billion pounds) blew out of automobile exhausts and into the environment. In third world nations the massive lead contamination continues, (3).

Lead levels along roads in Nigeria are reaching 7000 parts per million, about 15 times greater than the level required to be designated a toxic Superfund [highly polluted] site in the U.S. In Mexico City half the children tested have dangerous levels of lead, (4).

What is wrong with a society which says, the evidence is overwhelming, we won't subject our kids to this form of legalized poisoning any longer, and then lets Ethyl and other corporations go on poisoning kids around the world? When lead was banned in US gasoline, Ethyl continued to sell its product overseas and turned to MMT to replace its lost lead revenues. As recently as 1997, Ethyl's lead anti-knock products were 14% of sales and 43% of operating profits. In 1996, they generated 59% of operating profits and in 1995 their profit in lead was 74%, (5).

And now they want us to repeat the same sad saga but with MMT, which contains another heavy metal, manganese, a proven neuro-toxin.

If MMT were a new product which had not been sold in the US, Ethyl Corp. would have to prove it was safe. Because it has been around for a while, even though significant long-term health studies have not been done, the onus is on its critics to prove it is harmful. The only major difference from the 1920s is that the auto giants are no longer in lock-step with the oil companies' interests. Taking a page from an Environmental Defense Fund campaign, GM Canada has written to all the major oil refiners in Canada asking them to voluntarily refrain from using MMT. A number of them already sell MMT-free gas in some markets. They are also actively trying to drum up support for this campaign from NGOs across Canada.

The oil industry on the other hand, who, together with the governments of Alberta, Saskatchewan, Nova Scotia and Quebec challenged the legislation under the Canadian Agreement on Internal Trade, is unwavering in the defence of its bottom-line. Alain Perez of the Canadian Petroleum Products Institute puts it this way, "Our first priority is getting rid of federal legislation that uses its jurisdiction over interprovincial trade to get at the formulation of auto fuels."

Global warming is heating up political debates. Air pollution is taking lives (some 1400 in Ontario according to the Ontario Medical Association) and that's forcing a serious look at why sulphur levels in Canadian gasoline are so much higher than in the US. The oil companies have a lot to lose if public health becomes an important issue for governments.

Most of the industrialized world does not use MMT as an octane-enhancer in gasoline. It is banned in many of the most smog-prone areas of the United States, including California and much of the Eastern Seaboard. Eighty-five percent of US oil refiners have confirmed that they are not currently using MMT. Alternatives exist and they are not that expensive. If the petroleum companies replaced MMT with other additives, it would cost drivers only about $5 annually (for those who drive 16,000 kilometers a year, or so). That cost can be compared to the cost of replacing spark plugs yearly, or replacing an oxygen sensor for something in the neighbourhood of $250, if the auto company claims of significant impairment of on-board diagnostics are true, (6).

And we'd get better air as a bonus.

It seems a no-brainer, but the post-NAFTA world is not that straight forward. Which brings us back to Jean Chrétien and NAFTA. If NAFTA did not exist, MMT would still be banned in Canada. Ethyl would have had to convince the US government to go to bat for it with the Canadian government, or sue Canada in a Canadian court. In a Canadian court, a judge can balance corporate property rights with the public interest, something glaringly absent from the deliberations of NAFTA arbitration panels.

For all intents and purposes, NAFTA gives corporate interests a form of veto power over national public policy. Not surprisingly, Ethyl used it. As Dalton Camp wrote in the Toronto Star on July 29th 1998 this "is a bizarre episode in Canada's own history-a government bill approved by the Parliament of Canada has been vetoed by Ethyl Corp. of Virginia."

It did not have to be this way. In late November 1993, Jean Chrétien and his Liberal Party ran against the Mulroney legacy and won hands down. In that election campaign they pledged in their famous "Red Book" that if the Labour and Environmental Side Agreements did not protect Canadian interests, the new cabinet would not pass the required order-in-council necessary to implement NAFTA in Canada. This was important because NAFTA was still before the US Congress and drafts of Clinton's implementing legislation contained language that might force Chrétien to actually carry through on his election promise.

In an unprecedented move, before he was even officially sworn in as Prime Minister, Chrétien sent his primary fixer, Eddie Goldenberg, to Washington to implore the Clinton administration to tone down the implementing legislation. Working out of a hotel room (because, officially the Liberal Party operative could not use the Canadian embassy), Goldenberg was successful at getting the most objectionable aspects of the legislation changed. The rest, as they say, is history.

Ken Traynor is a researcher, and the International Programme coordinator at CELA

1 Morris, David - The Ethyl Corporation: Back to the Future - Institute for Local Self Reliance, September 9, 1997
2 Rachel's Environment & Health Weekly #541
3 Rachel's, ibid
4 Morris ibid
5 Ethyl Corp. 1998 10-K Report to the US Securities and Exchange Commission
6 "It's worthwhile questioning motives on the need for MMT", The Montreal Gazette, February 21, 1997