NAFTA tribunal to hear unfair-competition case against Canada Post

WASHINGTON (Nov. 25, 2002) — A NAFTA tribunal has ruled that it has the authority to consider allegations that Canada Post uses its lettermail monopoly to cross-subsidize its competitive courier operations.

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

“This is an important step forward for UPS and also for Canada’s 1,400 private sector courier companies that compete against Canada Post. It means that all of these Canadian owned courier companies stand to benefit if UPS is ultimately successful on the merits phase of its NAFTA lawsuit,” said Susan Webb, UPS Canada spokesperson. “UPS is encouraged by the decision because it means that under the NAFTA the Government of Canada is accountable for ensuring that Canada Post competes fairly.”

“It’s important to note that this action is about Canada Post’s competitive products and services, it is not about the universal lettermail monopoly,” stressed Webb.

Canada Post, which in addition to its own Xpresspost and Priority Courier services controls a 96 per cent 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.