Wednesday, March 28, 2001

Postal Union Takes NAFTA to Court

By JEFF GRAY
Globe and Mail Update

The country's largest postal union and an anti-free-trade group are taking the North American free-trade agreement to court, saying provisions in the deal that allow foreign firms to sue Ottawa violate Canada's constitution.

The Canadian Union of Postal Workers and the Council of Canadians have been waging a campaign against NAFTA's Chapter 11 rules since last year, when U.S. courier giant United Parcel Service Inc. began seeking$230-million in compensation from Ottawa for what it says is unfair competition from Canada Post.

In a press release Wednesday, CUPW and the council said they would challenge Chapter 11 in court, saying it was unconstitutional because it delegates the authority of Canadian courts to an international tribunal.

"UPS is using NAFTA to try to grab a bigger piece of the lucrative urban courier market. This could undermine Canada's public mail-delivery service," CUPW vice-president Deborah Bourque said in a statement Wednesday. "If it succeeds, our public post office will be left with less business and less money to provide service, especially in rural areas."

UPS says it is simply trying to ensure a level playing field for competition in Canada's courier business. It has alleged that Canada Post receives a host of privileges from Ottawa, such as exemptions from certain tax and labour laws, and favourable treatment in customs and other areas.

It has also said that Canada Post uses its monopoly position in basic home delivery to subsidize unfairly its courier arms - Purolator, Priority Courier and Xpresspost - crowding competitors out of the market.

NAFTA's "national treatment" principle obligates Ottawa to treat foreign companies exactly the same as domestic ones, and the deal's Chapter 11 provision allows firms that feel they are not being treated fairly toseek redress before a tribunal.

UPS recently won $21.7-million (U.S.) in compensation from the German postal service after winning a similar case before the European Commission. A company spokesman said last week that the ruling should be seen as a clear message to Ottawa.

Proponents say clauses like Chapter 11 in trade deals are meant to protect businesses from arbitrary governments, making investment less risky and thus attracting more of it. But antiglobalization activists say the provisions are an unacceptable surrender of a democratic government's ability to do what its citizensask of it.

Maude Barlow, chairwoman of the Council of Canadians, says Chapter 11 puts Canada's health-care and education systems at risk, opening them to similar challenges from big U.S. companies. "The UPS challenge is significant because it contends that the very existence of our postal system constitutes unfair competition," Ms. Barlow in a statement. "By this logic, every public service from health care to education to the CBC could be threatened by lawsuits costing Canadians billions of dollars - decided not in public or by Canadian courts but in secret and by a tribunal of international trade lawyers," she said.

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