With the global economy transporting natural resources like wood, food, and oil around the world like never before, it’s not surprising that the newest commodity export is water. When the conservative Ontario government in late 1998 licensed the export of Great Lakes water for shipment to Asia by a private, Canadian-based company, the Great Lakes states found themselves caught in a troubling trade dispute that has important implications for regions around the world.

The preservation of existing water supplies has taken on a new sense of urgency in the Great Lakes. Lakes Michigan, Huron and Erie have receded more than three feet since April 1997. Lakes Superior and Ontario are down 1½ feet - and water levels may hit record lows by the end of summer. The low Great Lakes water levels are already directly impacting local businesses including marinas, restaurants, tourism, shipping, and fishing.

Given the ecological uncertainty of declining water levels, it would seem reckless to ship water from the Great Lakes overseas. There are several bills before the US Congress that would temporarily halt such sales. Unfortunately, the Ontario government is likely within its legal rights to approve water exports.

In fact, some trade lawyers believe that any attempt to ban such exports would be a violation of the rules of the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO). NAFTA and the WTO severely limit the rights of all levels of government, such as U.S. states and Canadian provinces, to limit this kind of commercialization of natural resources. The WTO does allow for some forms of protection if the natural resource is in danger. However, this only means that Canada or the United States has the right to prohibit exports of its own water, not to protect the shared resource.

NAFTA regulations are even weaker, guaranteeing companies nearly complete access to all natural resources and limiting the power of all levels of U.S., Canadian and Mexican governments to protect the resources with legislative or regulatory action. Neither the WTO nor NAFTA have supported an environmental law or regulation that was challenged under their current rules. For example, attempts by British Columbia to protect its forests and fish from overharvesting in the late '80s and early '90s were declared to be in violation of trade rules by the WTO's predecessor, the General Agreement on Tariffs and Trade (GATT). Also, Canadian laws prohibiting a gasoline additive (MMT) and blocking the export of dangerous PCB chemicals have resulted in lawsuits under rules of NAFTA, weakening environmental protection rules of NAFTA-member countries.

The commodification of water is not unique to the Great Lakes. Corporations have plans to export water from Norway, Newfoundland, Canada, and Alaska. And the water business is not all exports. Earlier this year, a Bechtel Corp. subsidiary more than doubled drinking water costs for the people of Bolivia. The hikes were met with massive protests that shut down the city Cochabamba for four days. Finally, the company rescinded the rate hikes. In India and Mexico, Monsanto is attempting to enter the water business, which it sees as an extension of the agriculture business.

Water resources will likely be a frequent battleground this century. The World Bank forecasts that demand for water will double in the next two decades, with 52 countries predicted to have water shortages by 2025.

Given the current anti-environmental bias of NAFTA and the WTO, the most effective way to stop the export of our lakes may be for lawmakers to ban the degradation of our lakes by all users -- foreign and domestic. This would allow the application of conservation measures to all uses, including exports. For example, if restrictions were strong regarding local water use, such as agricultural irrigation and industrial application, exports would be part of this broad regulation.

Therefore, the environmental impact of water taken for export to Asia would be considered on the same level as the impact of water taken for Michigan power plants. There would be no discrimination based on where the water winds up -- the primary focus would be the environmental impact of the water removal.

This non-discriminatory approach to overall water-quality protection might circumvent the international trading regulations that jeopardize Great Lakes water. But over the long-term, we need to change the rules of NAFTA and the WTO to restore the power to state and local governments to protect their own natural resources and human health. Unfortunately, the budget and mandate of the potentially helpful NAFTA Commission on Environmental Cooperation has been recently reduced.

MARK RITCHIE is president of the Institute for Agriculture and Trade Policy.