Expropriation madness.

Trade interests have again trumped citizen interests, as a chemical company has used an obscure but powerful provision of the North America Free Trade Agreement (NAFTA) to roll back a Canadian environmental and public health measure - and to exact a reported $13 million from the Canadian government for its troubles.

In 1995, the Canadian parliament banned the import or inter-provincial trade of MMT, a gasoline additive that is manufactured only by the Richmond, Virginia-based Ethyl Corporation. MMT is used as a substitute for lead additive, which Ethyl also produced until recently.

Many scientists believe MMT, which contains the heavy metal manganese, to be a potential public health hazard. Automakers allege it gums up car engines.

Ethyl responded to the MMT ban with an unprecedented lawsuit.

It invoked a provision of NAFTA which allows companies to sue governments directly for expropriation of their property.

Then it argued that the government's ban on trade in MMT - which had the same real-world effect as, but was technically different from, a direct ban - discriminated against Ethyl. "Theoretically," said Ethyl Canada President David Wilson at the time the suit was filed, "in order to continue operating as a business, Ethyl is being required to build manufacturing and blending facilities in each of the provinces and territories of Canada. This is a local content preference that violates Canada's NAFTA obligations."

The company also argued that its reputation was damaged by the claim that MMT was harmful to human health. Proponents of the ban acknowledge that the scientific evidence around the health effects of MMT is uncertain, but say there is substantial cause for worry. They urge erring on the side of safety.

In sum, the company argued, the government's action effectively expropriated its property, including its expected future profits and goodwill.

While this argument may sound like the exaggerated rants of a bleary-eyed NAFTA critic who has spent too much time with his or her head buried in the NAFTA text, it turned out to be convincing enough to persuade the Canadian government to settle the case.

In July, the Canadian government agreed to rescind the MMT regulation, pay Ethyl a reported $10 million and issue a statement giving MMT a clean bill of health. Canadian government lawyers reportedly told officials they stood to lose much more if they failed to settle.