TUKTOYAKTUK, N.W.T. — A $130-million settlement with AbitibiBowater over Newfoundland and Labrador's expropriation of some of its assets is in the best interests of Canadian taxpayers, the prime minister said Thursday.

But Stephen Harper also said Ottawa won't pay up if a similar situation happens again.

"I have indicated that in the future, should provincial actions cause significant legal obligations for the government of Canada, the government of Canada will create a mechanism so that it can reclaim monies lost through international trade processes," said Harper, who is on a tour of the Arctic.

Premier Danny Williams said Wednesday that Newfoundland and Labrador won't reimburse the amount needed to settle claims that his government illegally seized some of the paper giant's assets. Harper didn't dispute that.

"No, I do not intend to get back the monies expended in this case from the government of Newfoundland and Labrador," he said.

AbitibiBowater filed a $500-million claim under the North American Free Trade Agreement after the Newfoundland government expropriated its paper mill, as well as its water and timber rights, in central Newfoundland in 2008.

With the settlement announced, the company will drop the NAFTA case.

Williams has defended the hasty expropriation, saying the government had to protect the assets for the people in the province as the company announced it would close its mill in Grand Falls-Windsor, N.L.

"Of the many things that I've done during the terms that I've been in government, this is probably one of the actions that I'm the most proud of," he said Wednesday.

The International Trade Department said it wanted to avoid a long legal battle by striking a deal with AbitibiBowater.

AbitibiBowater is headquartered in Montreal but incorporated in Delaware, allowing it to proceed under NAFTA.

It used the trade agreement to argue that the expropriation was unfair and demanded compensation for the fair market value of the lost assets.

The company is in the process of restructuring after seeking bankruptcy protection. Ottawa has said the $130-million payment will be made after the restructuring is complete.

The settlement is conditional on AbitibiBowater obtaining approval of its terms by courts in both Quebec and the United States. It will also require court approval of the restructuring.