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The Canadian Union of Postal Workers and the Council of Canadians have launched a constitutional challenge to the North American Free Trade Agreement (NAFTA) rules that allow foreign corporations to sue Canada.

What brought CUPW and the Council to challenge the NAFTA?

The U.S. courier company, United Parcel Service (UPS) is suing the Canadian government for $230 million. They say that our postal network allows Canadian couriers to gain an advantage over UPS. Why? UPS argues that Canada Post has taken advantage of its monopoly to subsidize the costs of its parcel and courier delivery services. Under Chapter 11 of NAFTA, the Investment Chapter, they might have a case. So, CUPW and the Council are asking the courts to take a closer look at Chapter 11.

This legal challenge rests on the argument that the NAFTA deprives the Canadian courts of their authority under the Canadian Constitution; infringes and denies the rights and freedoms guaranteed by the Charter of Rights; exceeds the treaty making powers of government under Canadian and international law; and finally, that fundamental constitutional principles, such as the rule of law, are breached. Essentially, their case is that the federal government and the Parliament of Canada are acting beyond their lawful authority by establishing the Investor-State provisions of NAFTA.1

What are the Investor-State provisions of NAFTA?

NAFTA allows corporations to sue Canada, Mexico and the United States to enforce the rights they have been given under the agreement.

The most important rights given to corporations appear in Chapter 11, the

Investment Chapter. Chapter 11 is a chapter in a trade agreement, but it is much more than that. Chapter 11 changes the way governments in Canada, the United States and Mexico relate to their citizens.

For example, Chapter 11 requires governments to give foreign corporations national treatment. In other words, any advantage to a national company or service provider (including subsidies) must be given to a foreign investor as well.

Chapter 11 also prevents national governments from restricting trade by insisting corporations meet certain production requirements. Under NAFTA, governments are prohibited from engaging in so-called Trade Related Investment

Measures (TRIMS) that might direct investment towards an area of high unemployment, for example. This gives corporations the exclusive right to decide what is in their best interest, without regard for the needs of society.

As well, NAFTA requires governments to limit their environmental regulations to those that are the least trade restrictive of all possible options. This provision gives corporations the right to pollute and has the effect of lowering, rather than increasing environmental regulation.

According to CUPW and the Council of Canadians, the problem for a democratic country is that these so called investor-rights cannot be enforced in national courts. Furthermore, Canada is being sued in a secretive international tribunal operating outside the framework of Canadian law.2

The investor-state provisions of NAFTA give corporations the right to enforce an international treaty to which they are not a party. As CUPW and the Council of Canadians point out, foreign investors have rights, but no obligations. 3

Furthermore, North American governments could be subject to countless legal challenges by these corporations. This could have a chilling effect on government policy-making. As the CUPW and Council challenge makes clear, it is important to understand that foreign investors are attempting to use tribunal decisions made in secret to alter national public policy and national law. 4

Already corporations have challenged North American governments authority in the area of water export controls, fuel additive regulations, hazardous waste export controls, and now, public services.

Since many government agencies are now offering services in competition with the private sector, we should expect corporations to increase the number of cases brought before the NAFTA tribunal. The CUPW and Council of Canadians have declared that this is not an acceptable option. CUPE members should follow this case with interest. At risk are not only countless jobs, but the future of Canadian public services.

1. Council of Canadians and Canadian Union of Postal Workers, Backgrounder: Council of Canadians and the Canadian Union of Postal Workers Launch a Constitutional Challenge to NAFTA Investment Rules, March 28, 2001, p. 1

2.Backgrounder, p.1

3.Backgrounder, p.2

4. Backgrounder, p.2

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