NAFTA challenge against Ottawa and Canada Post to get public hearing

MISSISSAUGA, Ont. (July 24, 2002) — United Parcel Service and the Canadian government have agreed to open their NAFTA arbitration hearing in Washington next week to the public.

In April 2000, the package delivery giant launched a $230 million lawsuit against Ottawa, alleging that it breached the North American Free Trade Agreement by permitting Canada Post to subsidize its express-delivery operations with funds from its government-protected monopoly on first-class mail delivery. The arrangement allows Canada Post to undercut private-sector courier companies, UPS said.

The suit, filed in April 2000, also accuses Ottawa of making payments to Canada Post based on the number of international shipments the post office delivers in Canada, an arrangement that doesn’t apply to private-sector companies. UPS also contends that Canada Post often fails to collect proper taxes and duties on packages shipped to Canada.

The case will be decided by an independent arbitration panel set up to resolve NAFTA disputes. The proceedings will commence July 29 in Washington.

Canada Post, which in addition to its own Xpresspost and Priority Courier services controls a 96% stake in Purolator Courier Ltd., has weathered similar allegations before. In 1999, Canada’s Competition Bureau concluded that Canada Post was not improperly using its mail-delivery monopoly to subsidize courier services.

In the past, UPS has levied similar allegations against the U.S. Postal Service and Deutche Post of Germany.