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Louis Century addresses the Standing Committee on International Trade

October 20, 2016

Louis Century appeared with CUPW representative Peter Denley before the House of Commons Standing Committee on International Trade.

Louis Century and Peter Denley prepare to speak to the Standing Committee

Louis Century and Peter Denley prepare to speak to the Standing Committee

They were there to address the Committee on the impact of the Trans-Pacific Partnership (TPP) on postal services. Peter Denley began by explaining how the TPP’s restrictive rules could expose Canada’s public post office to state-to-state and investor-state challenges, and could limit Canada Post options for responding to new marketplace opportunities. He noted that, while the rules do not constitute “a direct threat to the letter mail mandate of Canada Post, they impose significant constraints on its ability to maintain a business model that depends upon the integration of express package, courier and letter mail services.”

Louis expanded on the risks of the TPP to the postal service in his remarks:

Our view is that the TPP ought not to constrain the kinds of activities we’re talking about, both our current integrated service model as well as potential expansion into other lines of business.

There are those who take a different view. The private courier industry has been engaged in a long-running campaign to eliminate competition from postal monopoly providers, any involvement in the private sector courier market at all. That was manifested in the long-running UPS versus Canada dispute under NAFTA. Canada won that claim, but they won it by a margin. There was dissent.

There’s no doctrine of precedent in these trade regimes, and similar rules are now implemented in the TPP and expanded upon. The possibility of another UPS-type claim is real, in our view. UPS or other companies like that may well take the view that the TPP changes the rules. We think we ought to win such a claim, but there is that possibility. That possibility looms large when Canada Post is in the process of really re-envisioning its mandate and the ways in which it will be able to deliver on its mandate of providing universal service across a vast geography like Canada.

The current government is engaged in this review, looking at other opportunities and exploring options. Now we have the TPP, which adds to NAFTA, and not only in the rules affecting postal providers. It also opens up the possibility of complaints from a number of other countries as well as private industry in those countries.

Finally, the existence of this risk in our view is a real concern, because it can be used as an argument to freeze policy development.

If you happen to have the opportunity to look at the express delivery services annex of the TPP, I encourage you to do so. It’s very short, just eight bullets and under a page, but I think you may be surprised to see an annex of that kind in a general trade agreement. It’s quite clear that it serves industry’s interests. The efforts of the express delivery and courier industry to influence trade rules are well documented and, frankly, they have been quite successful. Our view is that an annex like this has no place in a general trade agreement. It poses risks of another lawsuit, and even if we’re successful, do we really want to go down that road again?

It is also highly relevant as Canada Post is considering all of these options entering into other areas, so it poses a risk to the current line of business. The way Canada Post currently gets by is by also delivering by courier. The view of companies like UPS is that this very involvement in those competitive markets is problematic. They call it cross-subsidization. Now, the jury is out on what exactly cross-subsidization means. It hasn’t fully been litigated. The NAFTA case didn’t go there, but it may well be litigated under the TPP, and the result could be highly problematic to the survival of Canada Post, which is not to mention lines of business besides courier.

You’re a member of the Canada Post review, and obviously Canada Post is looking at a number of other ways to revitalize its services drawing on international models. There are untold consequences throughout the TPP and potential for renewed challenges threatening Canada Post’s ability to really deliver on its mandate of universal service, which is particularly hard in a country like Canada.

We heard from some friends about the natural advantages that Canada has in a number of industries. In postal delivery, Canada is at a disadvantage. The geography is vast, there are underserved communities, and we’re concerned about new threats that the TPP poses.

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Louis Century

Practice Areas

Public Interest Litigation