-------------------------------------------------------------------------- Toronto Star, Mar. 3, 2002. 01:00 AM Globalization - coming to your town? Critics fear new trade agreement could restrict powers of city governments Sherry Peters, Special To The Star VANCOUVER - The power of Canadian municipalities to pass zoning regulations and control such things as retail store hours may run afoul of an international trade agreement. World Trade Organization negotiators have listed local bylaws that could favour smaller businesses over larger ones as potential violations of the General Agreement on Trade in Services (GATS). The details of GATS are being worked out during the current round of WTO negotiations in Geneva. Signed by the federal government, GATS is binding on all levels of government in Canada, including municipalities. If municipal powers become subject to GATS, large retailers that claim local bylaws covering store density and hours of operation give smaller retailers an advantage could challenge those bylaws at the WTO as unfair trade barriers. "This is what globalization is all about," says Toronto Councillor Jack Layton, who is also president of the Federation of Canadian Municipalities. "It starts with the nation-state, then it hits at the provincial and local level. "This should send a chill down the spine of every local councillor and mayor in Canada." GATS "potentially strips away municipal power," adds West Vancouver Councillor Victor Durman. "I believe that any local community represented by their municipal representatives should be able to set regulations that reflect local concerns and desires and not have it overruled by an international tribunal." Representatives of the WTO's 144 member nations, including Canada, are preparing a list of grounds for challenging domestic regulations they believe create barriers to trade. Trade rules permit one country to challenge another member country's domestic policies if they are seen to be trade-restrictive. Insiders say some countries have been under significant pressure from large retailers to target regulations they believe favour smaller businesses. According to leaked minutes of a meeting last fall, at least two delegations to the trade talks argued that local regulations governing zoning and hours of operation should be subject to GATS. And a second internal document indicates that WTO staff agree that such local regulations be included as possible trade restrictions. Under these circumstances, municipalities would have to ensure that any regulations they placed on development, such as prohibiting the construction of a 24-hour, big-box store in a residential neighbourhood, met the GATS test of being "no more burdensome than necessary." West Vancouver is one of many municipalities in British Columbia that has raised concerns about the potential local and regional impact of international trade agreements. The issue came to the public's attention last year when the Greater Vancouver Regional District announced that it was considering contracting out the designing, building and operating of new water treatment facilities. But such a contract could fall under the umbrella of the North American Free Trade Agreement, which in turn could undermine local decision-making about water treatment. After the region's lawyers could not rule out the possibility, the plan was abandoned. Ellen Gould, an independent trade researcher from Georgetown University in Washington, recently told West Vancouver council that "the federal government completely ignored the jeopardy they were placing municipalities in." If things such as zoning are included in the new international agreement, "any regulations local councils pass in order to restrict the building of big-box stores, limit housing developments that are out of character with the neighbourhood or restrict how long stores can stay open could be challenged," she said. Gould explained the burdensome test could be a difficult one for municipalities to meet: "If there are neighbourhood concerns about excess noise from traffic to Wal-Mart, (municipalities) may not be able to simply zone to prohibit a big-box retail store. They might have to accept Wal-Mart's proposal to buffer the noise through landscaping, changes to access roads, etc." Some observers suggest that the push to curb regulations that may favour small stores is coming from firms such as Wal-Mart and large European retailers, including IKEA and Boots. Wal-Mart was to have opened 11 so-called Supercenters in the United States last month. The 24-hour stores range in size from about 110,000 to 230,000 square feet. The fact that zoning and hours of operation are being put forward for discussion in Geneva has added to the concerns of Canadian municipalities about international trade deals. "This confirms our worst fears —— that an unelected panel of officials meeting in secret would be able to decide local matters like zoning and hours of operation," Layton says. "We know that the Wal-Marts of the world are out there putting significant resources to try to stop the kind of techniques that local government use to try to protect the character and local businesses of their area." But federal trade representatives say municipalities have nothing to worry about. Vince Sacchetti, senior policy analyst with Industry Canada, suggests matters like municipal zoning and restrictions on hours of operation are simply "a garbage list of examples" that might be covered under GATS. "I can't believe it would go to the WTO," he says. "We have not yet had a full discussion. It's ongoing ... We're just complying a list. So far, only three out of the 144 members have submitted their lists." Gould, however, says a member of the European Union's trade negotiation team has approved the inclusion of zoning and hours of operation in GATS. "If the federal government doesn't want it on there, they better speak up now," she says. "There is a critical meeting to define what's up for grabs on domestic regulations in March." Andre Lemay, a spokesperson for Foreign Affairs in Ottawa, also says municipal concerns are not warranted. "GATS was basically made to measure for Canada. In 95 per cent or more of the cases, we are already playing by the rule of the WTO. "What GATS wants to do is provide market access," Lemay says. "But no municipality will lose its right to create regulations. This is protected right in the preamble." Gould says the right to regulate is not guaranteed in the preamble, but has to be balanced with the commitment to expand trade. She also rejects the made-for-Canada argument and says Ottawa has been unable to interest Canadian businesses in the deal. "The GATS is an agreement that was driven by American-based transnational corporations. They dominate the service sectors in all areas. What is the Canadian equivalent of PricewaterhouseCoopers or Microsoft? "They (the federal government) try to entice them out to meetings, but the turnout is always very small. They have enormous trouble interesting anybody in the business community in GATS." Lemay says that if municipalities want issues of zoning and hours of operation off the negotiating table, "then we will promote that position at the WTO." But if, after federal-municipal consultations, "51 or 55 per cent of municipalities say they want it on (the list), then who are we to say no." The Federation of Canadian Municipalities has prepared a list of written questions it would like answered by the federal government. "It will be very clear from those answers the extent to which they are prepared to get into the truth of the matter," says federation lawyer Donald Lidstone. Municipalities believe "that land use planning and land use control historically, traditionally and constitutionally are a matter of local jurisdiction." Lidstone also says Ottawa should already be well aware that municipalities do not want zoning or hours of operation on the trade list. According to the June 11, 2000, issue of World Trade Agenda, a newsletter published by a former communications director with the WTO, large retailers and wholesale firms expect to see the distribution services sectors a priority in GATS. "Despite accounting for between 25 and 30 per cent of all enterprises in most economies, distribution services have largely been ignored in past WTO services negotiations," the newsletter said. But big-name chains like Wal-Mart and Marks & Spencer "have global strategies for which market access conditions and domestic regulatory restraints in new markets are crucial." Legal Notice:- Copyright 1996-2002. Toronto Star Newspapers Limited.