NAFTA allows corporations to sue governments.

April 9, 2001 7:11 AM

NAFTA allows corporations to sue governments. UPS is suing the government of Canada for unfair competition alleging that Canada Post, a crown corporation, subsidizes its courier service, Purolator. This a revolting development, to say the least.
posted by xiffix (13 comments total)

Why "revolting"? The Canadian government approved NAFTA; NAFTA allows for legal action across the geographical range of the agreement. UPS believes Canada Post is witholding information with regard to how Purolator is, ultimately, funded so it sues to level the playing field. Seems pretty simple. Who is the target of your anger, UPS, or the Canadian government that approved NAFTA?
posted by m.polo at 7:28 AM on April 9, 2001

If I were angry, (which I'm not, BTW) it would be with the Canadian government or twelve or so years ago. Of course, that particular party, the Progressive Conservatives, aren't exactly a factor on the political scene any more.
posted by xiffix at 7:48 AM on April 9, 2001

I think suing governments is a great idea. Why not?
posted by rodii at 8:15 AM on April 9, 2001

I find it revolting if Canada Post is subsidizing Purolator. So what's the big deal if UPS can now hold them responsible under an agreement they entered into willingly?

Even without NAFTA, aren't there other means whereby governments can, in effect, sue each other over unfair trade policies? If a corporation wants to sue directly, that just seems more efficient than either going to an international trade tribunal or having a sanctions war between governments.

There are plenty of areas where I think governments can operate effectively, but trade isn't one of those areas.
posted by anapestic at 8:35 AM on April 9, 2001

But isn't this a case of UPS suing the government of a foreign country (still was, last I checked) specifically to run a part of that government out of business?

I don't think governments should be immune to lawsuits or anything, but this sure looks like a case of US corporate lawyers trying to dictate Canadian Government policy. The precedent this would set is a scary one.

(Just because they do it in other countries, in other ways, doesn't make it right, there or here.)
posted by chicobangs at 9:46 AM on April 9, 2001

The precedent was set a while ago, unfortunately. I wish I had a link to back it up, but the Canadian government banned an additive in gasoline, and a US-based company sued to overturn the ban. And won.

I'll return with more information if I can...
posted by sauril at 10:08 AM on April 9, 2001

I find it revolting if Canada Post is subsidizing Purolator.

Based on the Annual Report (PDF) for the Canada Post Corporation for 1999-2000 (p. 44-45), it doesn't seem that Canada Post is subsidizing Purolator; rather, they are run as seperate self supporting segments of the same corporation.
posted by iceberg273 at 10:09 AM on April 9, 2001

Found a source. And another

I had it backwards. A Canadian company sued the state of California...
posted by sauril at 10:13 AM on April 9, 2001

You can't take iceberg273's word on this, he's one of them .
posted by Octaviuz at 10:14 AM on April 9, 2001

iceberg, I read portions of the notes to the financial statements from the annual report you cited, and I don't see how you can draw your conclusion. The report does say that Canada Post and Purolator are distinct segments of the same corporation; however, it also discloses that there are intercompany transactions and obligations.

The notes also reveal that the corporation receives reimbursement from the government when it has to sell services below cost. I can't tell from the statements how much of these payments (which total ~$40 million) go to which segment.

In any case, when two companies are consolidated, it's pretty easy for one of them to subsidize the other in various ways, and that fact wouldn't necessarily be proclaimed in the financial statements.
posted by anapestic at 10:45 AM on April 9, 2001

You can't take iceberg273's word on this, he's one of them .
So is your sister, Octaviuz. :)

it also discloses that there are intercompany transactions and obligations.
However, these are supposedly at normal commercial prices (p. 44). In addition, the Bureau of Competition Policy and the National Transportation Agency have both rejected these claims (- Mr. John Harvard, MP from Winnipeg St. James).

Finally, we have to consider the possiblity that the subsidization works the other way around.
posted by iceberg273 at 10:54 AM on April 9, 2001

I resemble that comment about my sister! (even though it is facsimile)
posted by Octaviuz at 10:56 AM on April 9, 2001

CPC bought Purolator origanally as a technology acquisition, and have assiduously kept it separate for years now. You can't buy Purolator products at CPC outlets (whether Post Offices or franchises), and CPC offers a product which competes directly with Purolator (i.e., Priority Courier), although some portions of that (small portions - mostly Northern delivery) are lightly subsidized as far as I know. As well, CPC's special delivery product overlaps (in terms of service) with both Purolator and PC in major centers, where they offer next-day delivery on XPressPost.

This whole thing reeks of an information grab. UPS doesn't do well in the courier market (they're primarily a package delivery service - not about speed) so they're trying to download as much info from as many sources as they can.

Pretty much the only part of CPC that's really subsidized are lettermail products and some package services since they got out of the unaddressed admail business - which was ruled improper due to the implicit subsidy that access to the mailbox and the delivery crew (letter carriers) implied. As soon as UPS offers full service to the North and to rural areas, they can apply for subsidies as far as I'm concerned. But that will never happen.

OH - adding to the confusion - PC International is a totally different product/company than PC domestically, which is different (and unassociated with) Purolator. PC International is run by a company that is co-owned by about 6 or 7 National post offices in association with TNT worldwide. Different rates, standards, everything.
posted by mikel at 1:50 PM on April 9, 2001