Abuse of postal monopoly at centre of lawsuit

The Canadian Union of Postal Workers (CUPW) sent us an e-mail last week complaining about a lawsuit filed by United Parcel Service (UPS) Canada under the North American Free Trade Agreement.

The postal workers are obviously worried about their jobs, and the gist of their press release says that if UPS wins the lawsuit ÔÇô which asks the Government of Canada for a measly $230 million ÔÇô then rural post offices could be victimized by closure. The lede paragraph to the CUPW press release says, ÔÇ£Oops ÔÇô there goes your post office. Again.ÔÇØ

So itÔÇÖs a big, bad United States corporation using the hated NAFTA agreement – Brian MulroneyÔÇÖs proud legacy ÔÇô to pick on poor country bumpkins in Canada. Call out the army. Picket UPS. Call your Member of Parliament.

Sorry CUPW ÔÇô IÔÇÖm on the side of UPS. They have a legitimate complaint, no matter how strenuous and self-serving an argument the postal workers put forth.

Background: Canada Post has been given a monopoly to deliver first-class mail in Canada. ThatÔÇÖs fine.

However, there are rules to cover other aspects of their business, but itÔÇÖs UPS CanadaÔÇÖs claim that Canada Post is abusing its monopoly situation to do harm to companies that compete with the aspects of Canada PostÔÇÖs operations that are to be competitive.
NAFTA, love it or hate it ÔÇô and itÔÇÖs far too complicated in its entirety for the average person, me included, to understand exists to provide fair trade rules for companies from one NAFTA country that do business in another NAFTA country.

So a U.S.-based firm that feels itÔÇÖs getting a raw deal in its business operations in Canada has every right to file a complaint under NAFTA. UPS Canada has done that. Canada Post is 100 per cent owned by the Government of Canada. No one else in Canada can legally deliver first-class mail, because of the monopoly Canada Post has been granted in that field. But it does not hold a monopoly in either the courier or package delivery business.

Canada Post competes in that business with hundreds of other courier companies, one of which is UPS.

Canada Post offers courier and package products under the names Xpresspost, Priority Courier and the like.

Canada Post also owns 96 per cent of Purolator Courier, our countryÔÇÖs largest courier company.

UPS claims that this incestuous relationship has led to a variety of violations under the Free Trade Agreement.

Rules say that companies competing in a particular business sector must be treated equally.

Canada Post, however, is exempt from collecting and/or paying a host of taxes that UPS Canada is legally obliged to collect and/or pay.

The UPS lawsuit also says Canada Post receives a multi-million dollar annual payment from the Canada Customs and Revenue Agency on the basis of the volume of packages imported into Canada through the postal system. And, NAFTA regulations insist that any monopoly is not allowed to engage in anti-competitive practices, such as cross-subsidization in a non-monopolized market, such as the courier business, that adversely affect a competitor from another NAFTA country.

In other words, UPS is claiming that Canada PostÔÇÖs monopolistic lettermail infrastructure is being used illegally for its non-monopoly courier products. Xpresspost and Priority Courier packages can be dropped into any one of 900,000 mailboxes and will be picked up by Canada Post employees, transported on aircraft full of lettermail and delivered by Canada Post letter carriers or postal workers, whose salaries are paid for out of the revenues generated from the lettermail monopoly. In essence, Canada PostÔÇÖs courier products receive a ÔÇÿfree rideÔÇÖ on Canada PostÔÇÖs extensive lettermail monopoly network.

As well, a portion of the revenues generated by Canada Post from the sale of first-class stamps is used to pay Canada Post employees to do the pickup and delivery of cour