United Parcel Services launched a NAFTA claim in January 2000, targeting Canada Posts underwriting of parcel and courier services. UPS is demanding $230 million in compensation from the Canadian government. UPS claims it faces unfair competition, complaining that Canada Post uses its monopoly on mail delivery to subsidize its costs for parcel delivery and courier services.
This Chapter 11 investor state dispute strikes at the heart of public services. If UPS is successful, not only will it cost the Canadian government millions of dollars, it could also force the federal government to break up the established public, postal system.
UPS tried unsuccessfully to bar Canada Post from the courier and parcel delivery business during the Mandate Review of Canada Post. Now UPS is using Chapter 11 of NAFTA to forcefully tip the scales in its favour.
Canadian public postal services are a national, integrated system of mail, courier and package delivery services. If UPS succeeds in dismantling this system, Canadians will see a diminished public service and an increase in cost, as well as the loss of thousands of good public sector jobs.
The six million Canadians who live in rural communities will be hit especially hard. Private courier companies like UPS dont offer speedy service to rural areas, preferring to focus on the lucrative urban markets. As a result, smaller communities are likely to see reduced mail services, higher costs, reduced job opportunities and a weakened support system to seniors living independently.
If UPS wins, other monopoly or integrated public services and state enterprises could be vulnerable to similar challenges. For example, public utilities like water and energy could be at risk, as could public health care, public auto insurance, municipal services and education.