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NAFTA & the Expos

The Oregon legislature is considering a piece of legislation called the MLB Jobs Bill. The implied intent, (leaving aside the effect or lack thereof) is to create jobs for people in Oregon by inducing MLB to relocate the Expos from Montreal to Portland. If this were a car factory, an "Auto Jobs Bill" would be carefully scrutinized by the Canadians to see if it violated the North American Trade Agreement, which precludes such subsidies. And rightly so.

But what about the Expos? Do subsidies which entice teams to relocate across the border violate NAFTA? David Luchuk considers the question:

Chapter 11 prohibits governments from taking any action that degrades the value of a foreign investor's property. This is tied to the concept of expropriation. Expropriation is the taking of private property by government. NAFTA uses a broadly expanded definition that applies to any government action that results in a seizure of property "tantamount" to expropriation. This is called regulatory expropriation. Is the legislated relocation of the Expos a regulatory expropriation? Again, it's not clear.

In 1998, the Government of Canada looked into NAFTA's applicability to professional sports. That special sub-committee dismissed the idea of using NAFTA to challenge the legality of tax breaks at American sports facilities. Nonetheless, one of the law firms it heard from during those sessions strongly recommended using Chapter 11 to raise such a challenge. This firm argued that capital subsidies and preferential tax treatment in the United States unduly diminish the value of foreign investments, namely Canadian sports franchises.

These proceedings are a matter of public record. One of North America's foremost authorities on trade disputes recommended that the Government of Canada pursue this line of inquiry. This predates the relocation debate by several years.

The basis for the recommendation can be found here (pdf, lengthy). There are useful facts in both links.

While we're on the Expos, I highly recommended Luchuk's abbreviated history of baseball in Montreal for those interested in the history of the game. They've been playing ball in Canada much longer than I thought.