There is no obligation under the WTO agreements or NAFTA that requires us to extract resources. Where free trade comes in is that once a resource has been commoditized it cannot be blocked from export to other countries party to the free trade agreement unless there is a specific reservation in the agreement.
The Nestle problem is a bit of a grey area. My best guess (and it is only a guess) is that in the Nestle example, free trade would not be relevant, for IMHO the issue is not whether Canadian bottled water drawers should be preferred over foreign bottled water drawers, but rather which industry (bottled water or agriculture) should be given preference over the other. The weak point in this analysis is that a water bottler could argue that the drawing of the water is the trigger for commoditization, making free trade applicable, and that preferring local agricultural purposes over bottled water extraction for export violates free trade.
That does not mean that it all is well, for Nestle, Monsanto, Royal Dutch Shell, and a Texan by the name of T. Boone Pickins (you can’t make this shit up) are big on purchasing water rights and then selling back the water to those who have enough money. For those who believe that the “market” will find the best use for a limited resource, this is a good thing. For those, such as myself, who believe that people should have access to water, this is a very bad thing. The Ontario government screwed up by permitting Nestle to draw too much water. Let’s do our best to discourage the Ontario government from considering taking the free market approach to watershed management.
The Great Plains are going dry as they deplete their aquifers, so there will be one hell of a water shortage. Note that they do not manage their aquifers on a sustainable basis, but instead consider underground water to be something to be extracted until it runs out. This has scared the Great Lakes provinces and states, for there have been a number of proposals to draw down the Great Lakes to supply the Great Plains, so they have made an agreement between themselves ( the Great Lakes–Saint Lawrence River Basin Sustainable Water Resources Agreement) that prohibits water to be moved out of basin. On the American side, this led to the Great Lakes Compact between the American Great Lakes states, which was then made into a USA federal law.
To allow for bottled water, there is an exemption in the Great Lakes–Saint Lawrence River Basin Sustainable Water Resources Agreement the permits out-of-basin withdrawals of water in containers of 2.7 gallons/20 litres or less. That leads us to the question of whether or not GATT, NAFTA and, should EU free trade take place, EEC law would find that bottled water, or bulk water shipped by pipeline or tanker, is a good subject to these free trade laws. I’d say “yes” just as oil and nickel are goods subject to such laws. My opinion is that if something is the object of a commercial transaction, then it would fall under free trade laws unless there was a specific reservation in the agreements. I don’t know if Nestle exports water from Guelph to the USA, by I doubt if they do, for southern Ontario is a big market, whereas Michigan and upper New York State are not, and they already draw water in Michigan and quite a few other places in the north-east quadrant of the USA. But even if they do export, there is no prohibition against it under NAFTA, and no prohibition against it under the Great Lakes–Saint Lawrence River Basin Sustainable Water Resources Agreement, so I expect that GATT and NAFTA apply.
In short, international trade agreements do not protect against the drawing of water, and ensure that there is no preference granted between water drawers based on country of export, but there is a regional prohibition of bulk out-of –Great-Lakes-basin transfer of water through a the Great Lakes–Saint Lawrence River Basin Sustainable Water Resources Agreement.
Now we get to the issue of bulk water export. One of the pressures that helped lead to the Great Lakes–Saint Lawrence River Basin Sustainable Water Resources Agreement was a close call back in 1995, when the Ontario government granted a permit to a Canadian company (Nova Group) to draw 600 billion litres a year of Lake Superior water for shipping to Asia (that’s a bit less than one percent of the annual outflow). That opened a big can of worms concerning bulk water and free trade. Fortunately, the permit was pulled by the Ontario government once environmentalists brought it to the public’s attention, such that no water was ever actually drawn. Since Nova Group was an Ontario company, and since they were exporting to Asia, NAFTA would not have applied, but GATT probably would have. The fire was put out, but it drew attention to the issue of whether or not we should permit bulk water export, or should keep our water for ourselves, for once bulk water export begins, then we will have to compete on a dollar for dollar basis to purchase our own water for our own use, for unless a free trade agreement specifically sets out otherwise, we will no longer able to pick and choose where our goods go vis a vis parties to the agreement, and instead must be willing to compete on the open market between the countries who are party to the free trade agreement.