Canada's courier wars: Canada Post's subsidies

Canada's courier wars: Canada Post's subsidies
From The Financial Post April 9th, 2001

By PHIL CAHLEY Two weeks ago, Linda McQuaig said the UPS lawsuit under NAFTA
against Canada Post represented a loss of Canadian sovereignty.
Under NAFTA, she said, Canadian policy is now subject to the
approval of others. Two courier industry executives respond. – – –
Canadian-owned courier companies support action to bring about
meaningful reform at Canada Post. If successful, the UPS NAFTA
action against the government of Canada would benefit all couriers
operating here by obliging Canada Post to compete on a level playing
field in the courier marketplace. Canada has 1,400 private sector
courier companies servicing the consumer. The suit is intended to
allow these 1,400 companies to compete against each other, not
against a government monopoly. Indeed, Canadian consumers of postal
and courier services stand to benefit from the outcome. The Canadian government allows Canada Post to use its lettermail
network to subsidize a business that competes with private sector
courier companies. That network, which consists of thousands of
mailboxes, countless vehicles, buildings and sorting machinery was
built, paid for and is maintained with the tax dollars and stamp
prices paid by Canadians. As a result, Canadians have every right to
insist that it be used to improve the delivery of letters, and not
to bestow upon Canada Post any advantages to promote its expansion
into courier, banking, electronic commerce or other competitive
businesses. Unlike Canada Post's courier products (Xpresspost and Priority
Courier), private sector couriers do not have access to the huge
sorting and transportation system financed by Canadian taxpayers.
And, the Crown corporation — established for the purpose of
delivering the mail – now controls about 50% of the domestic courier
market and uses its lettermail revenues and networks to support its
courier operations. How can any courier compete against such a
power? The European Commission recently ruled that Deutsche Post, the
German postal monopoly, should be broken up because it is abusing
its monopoly advantages in lettermail to compete unfairly against
private sector package delivery companies. This is, in effect, the
same claim that UPS is making against Canada Post. Why should this issue matter to Canadians? If Canada Post focused
efforts on its core business of lettermail, instead of expanding
into businesses that compete with the private sector, Canadians
could reasonably expect better service and prices. Additionally,
these unchecked actions have changed the competitive landscape and
created an unfair and distorted courier market that hinders the
ability of Canadian-owned companies to fairly compete. A few years ago, the government-appointed Radwanski Commission
expressly recommended "that the government direct Canada Post
Corporation to withdraw from all competition with the private sector
in areas of activity outside its core public policy responsibility
for providing postal services." The Jean Chretien government
appointed that commission only after loud complaints from different
sectors of the Canadian economy about the abusive manner in which
Canada Post was carrying on business outside of its monopoly. Unfortunately, the Canadian government has ignored most of the
recommendations of its own commission. And, despite the courier
industry's pleas for significant changes at Canada Post, the
Canadian government continues to refuse to make that Crown
corporation more accountable for its conduct. The NAFTA lawsuit
filed by UPS should ensure that, at the very least, the Canadian
government cannot continue to ignore the need for serious structural
reforms at Canada Post. Canadians have every right to understand the
issues and to hold this government accountable for failing to foster
a competitive business environment.
Copyright 2001 National Post.
Source: World Reporter (Trade Mark) – FT McCarthy.FINANCIAL POST, 09th April 2001