BETWEEN: NTRODUCDON N THE MA1TER OF A CLAM UNDER. CHAPTER 11, SECTON B of the NORTH AMERCAN PREE TRADE AGRlEMENT, and the UNCTRAL ARBTRATON RULES UNTED PARCEL SERVCE OF AMEUCA, NC. Clamat/lnvestor and the GOVEMMENT OF CANADA P.espoadent.Pa.91)" AlPUCATON FOR4!1CUS ClJR4ESTA]VS by the CANADAN UNON OF POST AL WORKERS ad the COUNCL OF CANADANS The Applcants frst pettoned ths Trbunal for standng to partcpate ht these proceedngs n May, 2001 and, pursuant to the Trbunars drecton of Aprl 2004, made further submssotls concernng the modaltes for su~h an nterventon.. Ths applr.aton s made further to the prevous onters of ths Trbunal (October 2001, Aprl 2004 and August 2005) and n accordance wth the statement of the Free Trade Commsson on non-dsputng party partcpaton n NA.FT A Chapter 11 arbtral l)roceedmgs {October 2003). THE APPLCANTS Canadan Unon of Postal Workers 1. The Canadan Unon of Postal Workers ("CUPW - STP") represents approxmately 46,000 operatonal employees of Canada Post who provde postal servces to Canadans throughout the country. Over half arc letter carrers and spend a porton of ther tme handlng, processng and delverjjg expedted and exj1ress courer products (Prorty Courer and Xpreupost servces). 2. Rural mal servce n Canada s also provded by appro~ately 6000 rural route and suburbm mal camm (RRSMC), who wce preveatcd, pursuant t0 the provsons of the Ca,,ada Post Corporaton Act, from formng a unon and engagng n collectve barganng. These workers are also nvolved n the delvery of parcel and express ~urer servces. u Mareh 1997, these workers formed The Olganzaton of Rural Route Mal Courers (ORR.MC) whch wotkcd closely wth CUPW..STTP.
N0.475 P.5. JUSTCE (613)952-8713. T~"" 41004 OCT.20.2005 1 ~ t0~~t 41D ~»l 7333 SACK GOJ>!LAt ll ~m:.1.o1.o 10,.....J.LllJJ * "" ~.-.2.. 3. Durng the most recent round of collectk-e bargmtn& CUPW.. srn was successful n negotatng a collectve agreerncnt wth Canada Post that fnally ac;corded RllSMC 5tatus as employees of Canada Post wth the rght to bargan collectvely for the terms.and condtons of ther employment. These workers, more "than two-thrds of wham a.re women, now fom: a sep31lte barganng unt, and ate re>resmted by CUPW-STP. As of January 2, 2004 they were covered by a collectve agreement between CUPW- SnP and Canada Post. j 4. CUPW-STfP also represents approxmately 40,000 unon members who are enttled to penson benefts as Canada Post employees. For many years these employees partcpated n the Canadan Publc Servce penson plan. However, n tonsequence of recent statutory amendments (Publc Sec.tor Penson.lnvutment Board Act - Bll c... 78), :Canada Post Corporaton uo longer partcpated n the publc servce penson plan as of October 1, 2000. ; 5. CUPW-STP has also boen actvely nvolved n the publc: polcy debate about postal servces and has made detaled representatons to govc.mm.ent concernng the :ole and mandate of Canada Post; the organzaton and delvery of p,o~ parcel, courer and electronc communcaton: servces; and the publc scfvce objectves of ths Crown Cotp0raton. : 6. Together wth the Councl of Canadans, on March 289 2001 CUPW-STP ssued an applcaton n the Ontaro Superor Court of Justce soek:ng, mter ala./ declaratory judgements concernng the valdty of the enforcement procedures set out n Secton B -of Chapter Eleven, n lght of Ca:oadan consttutonal requtements. Coudl of Caaadans ) 7. The Councl of Canadans (~ CouncP) s a non-govc:mro.mtal orgamzaton wth more than 100,000 members, many of whom partcpate n the actvtes of more than 60 chapters across the country. Strctly non-partsan, the Counel lobbes Members of Parlament, con.ducts research, md runs natonal cmlpgns.;~gned to rase publc awareness md to foster dem.ocmtc: ~bate about some of Canadas mast mportant ssues, ncludng: the future of Canada!s socal and cultwal programs; the need to renew ts democratc nstmtons; and protectng publc health and the envronment. 8. The Councl s strongly commtted to preservllg the ntezrty of C&Dadan postal servces as publc sr:rvces provdng hgh qualty, relable and affordable mal, parcel and. cower servces to all Canadans regardless of where they lve. Moreover, t beleves that f the v.tally of ths publc nsttuton s to be assured for the years. ahead, Cawua PC)St must respond to new challenges by expmd.ng the types and avalablty of the servces t provdes, not by reducng them. 9. The Councl also has a close workng relatonshp wth Rural Dgnty of Canada (llural Dgnty), a grassroots ctzeos group commtted to ~eang roral communtes and
N0.475 P.6 ~oos -3- mantanng and enhancng servces, ncludng postal servce& n rural areas Rural Dgoty 1 s Coordnator, Cynt.ba Pattorson, s a member of the Board of Dlec~ of the Councl. Both the Councl and Rural Dgnty made slbmssons to the Canda Post Mandate R.evew.! 10. The Councl also has a long standng commtment to the preservaton of Canadan culture and cultural programs, and Gary Nel, who s the Co-ontnator of the lntematonal Network on Cultural Dvemty, s a member of ts Borcl of Drectors. TRE NDEPENDENCE OF THE.f\PlLCANTS 11. The Applcants have no afflaton wth the dsputng partes, and have receved. no tnancal or other assstance from, any govemment, person or organzaton to assst wth the preparaton of these submssons. TlE APPLCANTS NTEREST N THESE PR.OCEEDJNCS 12. f ths Tnl>UDal fnds Canada to be D breach of ts oblgatons Under NAFTA concernng the actvtes of Canada Post, Canada would be under CQnsd.erable pmssurc to rcstnlcture the current framework of Canada. Post servce delvery. There s a hgh probablty that such a restructurng would have drea couscquences for CUPW -STTP members who now provde many of the servces at ssue n these proceedngs. 13. n the Short term, these consequences ~uld nclude revsed job classfcato(ls for those employees currently provdng the servces that Canada Post may be dregted by the CBDadan federal govemment to aba!ldon.. Such downszng of servce delvery may also nclude lay-offs and permanent job reductons. ~ postal servce ~ bas had serous mpacts on workers n the past. 1 Ovc:r the longer term, and to the d.egree that the fnancal vablty of Canada Post s compromsed by constrants that :preclude t ftom provdn& the full range of current servces, the job securty of all of ts employees rnay be adversely affected. 14. Furthermore, the securty of CUPW STTP members, pensons hu also been put at rsk by UPS allegatons that Canada s n breach of ts NA.FA oblpt:ons by, nter ala) havng acted as guarantor of the pcmaon pbms UDfmldcd lablty. Ths rases the possblty that the future fnancal securty of tens of thousands of Canada Post employ~ both past and present, may be at stake n these ~ng. ls. UPS has also rased ssues relat.dg to the collectve bargaung rghts of rural and subtt{ban mal cmm, ncludng ther rght& under Canada 1 s Consttuton as well as llllder nternatonal labour and human rghts law. Both partes refer to judcal and l 1 For example, ~en the govcm:rneut acr;q:n=d the recommendaton. af tbe Camda Pod Mandate.ReveVf that the c:ro-wn cmporaton pt out af most of ts admal b~ wfrhm a week of~evj:dg tl1at.drectoa Catlada Post fred 10,000 ad.mal workers. Ths ~resented. the largest laf offm Omld.bm bstary...
.N0.475 P.7 ll 006.4.. ntemat.onal legal proceedngs n whch CUPW STTP was the applcant or ntervener. These are also matters wth respect to whch the Ct,JPW-$TrP also hu a drect and demonstrable nterest.,! 16. Ths case also has foreseeable consequences for all Canadans who depend upon the mal~ parcel and courer servces ddycred by Canada Post, and threatcn.s to undermne the vablty of an nsttuton the Councl of Canadans, m partnershp Wth such groups as Rum Dgnty of Canada, has worked hard to defend. 17. For nstance, f Canada Post s requred to dvest tr.self of courer and paekage delvery servce functons, or otherwse devolve them to an a:rm&-length enterprse,. they may no longer be subject to the Utlversal servce oblgatons that are now part of Canada Posfs statutory mandate. The result may reduce the unve:rsal avalablty of these servces. or ncrease ther cost, or both. These mpacts ate lkely to be most acute for resdents of rural or remote communtes bocause of the ncreased costs assocated wth provdng servce to less populated areas. Moreover, f post offce closures also result, an mportant pan of the nsttutonal framework of Canadan socetj would be damaged because of the mportance of the post offce to many rural communtc:5~ 18. The UPS clam also puts at ssue the Publcatom Assstance Program, whch s an mportant Canadan cultmal program that & not only mportant to Canadan publshers and lbrares but also 10 those who beneft from havng greater access to lbraty servces and to a dversty of Canadan publcatons.,... M... SSUES OF FACT AND LAW ADDRESSED BY THE APPLCANTS SUBMSSONS. : 19. The Applcants submssons ad.dress, nter alo., the followng matters: (a) (b) The falure of UPS to ntroduce evdence OT makc legal srguments to SUppOrt ts clam that Canadan measures relatng to the collectve. barganng rghts of na:al md subl.llban mal carrers represent a brem;h of Canadas oblgaton to provde. Natonal Treatr.ucmt Lmder Artcle 1102 ofnafta. The falure of UPS to set out n ts stater.neat of clam., any clam that Canadan measures relatng to the collectve barganng rghts of rural and suburban mal carrers represent a breach of Canadas ohlpton to provde a Mnmum Standard of Treatment, under Artcle 11 OS. ; ( c) the reservaton from NAFTA dscplnes of measm. relatng to labour law md polcy, whch was made when the Partes agreed t0 and adopted the North Amercan A,grccment 011 Labour Cooperaton.. (d) The nature of the relatonabp betwecm Canadas oblpuons under NAFTA and those t has under nternatonal labour and human rghts ~eates~ and n pllttcular the breach of these latter oblgatons that wou l occur f fcregn nvestors are allowed to lel;over damages for volatons of nteratonal law where the oblgatons owed wder those treates are enrlfely to th4d partes, not to the nvestor. :
. 2PM JUSTCE (613)952-8713. T ""L.. OCT.20.200514-3.1... 18 l>w.l 1aaJ.,, SACltOOLDBLAlT K C.a... 10/ &.U/ UO».LlJ.l... u_ 1--..$. N0.475 P.8 lt 007-5- (e) () The mportance ofupectng the tr-parttc nature ofntematonal law concernng the rghts of workers to bargan collectvely, and.. pf beng guded by ths fundamental prncple when.nter]retng NAFT A., The extent and character of the cultural exempton allowed under NAFT A and FTArules. WHY THE TRBUNAL SHOULD ACCEPT THESE SU8MSSJONS 20.. The Applcants sub.mjssom would assst the Trbunal n the detemlnaton of f&qtual and legal s~ related to ths amtraton and brng a perspectve,, partr;ular krl:ow\edge and nsght that s dffe.rent from that of the dsputng partes. n ths re~ the Applcants are pa:rt.cnlaly qualfed to comment on ssues conc.en:un.g: the preservaton of publc polcy and program flm.blty wth respect to the ~ery of publc aerv.ces; labourmanagement relatons; the penson enttlement ofpostalworkers; Canadas ntematonal labour and human rghts oblgatons; the exempton Under;.NAFTA for measures n respect of o~ and the mportance accordng NAFf A n~cstmeo.t dscplnes a strct :rather than lbetal nrezpretaton. 21. The Applcants have a sgnfcant and drect nt=reat n.ths arbtraton that arses from the foreseeable consequences of an awatd made n favour of the dsputng nvestor ncludng: potental adverse affects on the job secmty,. penson enttlement and workng condtons of postal workas; and the potental declne n the avaj;w,lty and/or qualty of unversal postal, package and courer servces to Canadans. 22. There s also a ~nsderahle publc nterest n the subject matter cf thg arbtraton that arses from the potental of ths clam to mpugn the valdty of an mportant Cmadan cultural program.. and to expand the scope of nvestor-stat~ ltgaton n a manner that Wll encourage t\uute clams assalng Canadan polcy and law as t relates to other publc servces, ~h as those relatng to health care and lbre.r~- ; 23. Furth.ea:uore, the Applcants vews on several of the ssues that arse n th.esc proceedngs are lkely t0 be qute dstnct from those or Canada and Canada Post. Ths concluson s, we submt, demonstrated by the Am.cus Cfl.Tae ~mssons attached. Respectfully submtted ths 2oc11 day o!oc;tober, 2005. [ -. ~ SA.C1.GOLDB~ LL Stevea Shrybman 20 Dundas Street West, Sute 1130 Toronto, OJtaro MSG 2G8 Te1: 613-235-5327 Fax: 416-591-7333 Counsel for the Applcants
JUSTCE (613)952-8713 T~ OCT.20.2005 _3:12PM 416 ~~ 1 7 ~a 3 SACK-GOl>BLAT Ht~~ 10/~vu~ ~AU 14.J~ taj. N0.475 P.9 141008 BETWEEN: N THE MA.Tr.ER. O.F A CLAM UNDER CHAPTER 11, SECfON B of the NORTH AMERCAN FREE TRA1JE AGREEMENT, and. the UNCTRAL ARBTRATON JlULES UNTED PARCEL SERVCE OP AMERCJ\lNC. ClaDl8lltlJDVeltOr and.the. : GOVERNMENT OF CANADA " P..espcndentlPa..w-ty, ) by the CANADAN UNON OF POST.AL WORURS and the COUNCJL OF CANADANS..., 1. These submssons are made n response to the plead;ngs fled by the dsputng nvestor and Canada. HoweVer, the only verson of these plea.dngs made avalable to these ntervenors has been extensvely redacted. n addton, much of the evdence Upon whch the partes an: relyng has also been excsed ftom the materals made avalable. We arc unable therefore to know the full nature of the argu1nents and evdence that have ether been presented by UPS to support ts clam, or rased by Canada m response to t. 2. Ths falur to fully dsclose the arguments and evd.,rlce n ths cue not only frustra~ the ntervenors ablty to be of assstmce to the 1)~unal, but also causes serous prejudce w the ntervenors by dcmyng them an oppormnty to properly respond. to s~ that are of both drect nterest to them, u well of broader publc nterest to many Canadans. The followng submssons :must be read n lght of tbs.mportant qualfcaton.. Poston of the lntuvenon 3. Wth the exceptons, and for the ad.cltonal reasons ~tcd below, we concur wth the submssons of Canada and submt that the UPS clan s entrely wthout mert am! should be dsmssed wth costs to Canada. Tle UPS Cla.hlJ. Seekl to Dramatealy Espod the Scope aj nvestor-state Lttlaton n a Muuer Entrely Unsupported by tbe NAFT A Test or the llent of the Partes 4. There have now been over 35 cl.ams brought under NAFTA mvest:men rules 11 but the present clam s unprecedented n several respects. To begn. Wtb, ttw; s the frst nvestor-state clam to challenge the manner m wbc;h. Canada has mplemented. m...,
= 3rn JUSTCE (613)952--:87.13... OCT.20.2005 14 }.)... 41s 591 7:133 SACK GOlJ>BUTl.TCBE~ 101~u1u~ ~AU ~6 4.. N0.475 P.10 fal 009 s. mponant cultural program. t s also the 1mt to so drectly put at ssue tbe nterests of non-partes, n ths case the jobs and pensons of tholsands. of entployees of a Crown CorpCJBton. t s also the 1tst to challenge measures. relatng to the deltvery of pualc senrces, and the frst as well to nvoke NAPT A dccpfules to. challenge long-establshed polces and practce-a that sgnfcantly predate the negotaton ofnafta. Fnally, t s the frst to nvoke nternatonal labour and human rghts treates n support of a NA.FT A nvestor clam. :. n ea~h of these respects, UPS urges ths Tnbu:nal to adopt a broad and expansve nterpretaton ofnaf!a dscplnes for whch there s no textual support, and e"en lees n the ancllary sources to whch ths Trbunal nay loqk to ascertan the ntentons of the Partes whme the text admts of more than one nterpretaton.,. Jhe Use of NAFTA Jvestment Ru.ls to Challenge the Delvey :of PuJ:>Uc Scrvces 6. As the :frst nvestor.state c:lam to ehallengc the provson of publc servces, ths case has broad mplcatons for. other socal or publc servces whch must smlarly be pro~ded on tm.versal terms to all members af Cana<lan socety. The underlyng conflct between free tnde polces that constran government actc>ds m fwour of market dscplnes. and socal polces that rejoqt such dscplnes. to ed.sur1 Unversal. access to postal, health Care, horary and other servces, s at the hcj1t of ths dspute. 7. Gven.~e ext:nlord:naty rghts of foregn servce provders under NAFTA, ncludng the rght to make clams under Chapter 11,, ths underlyng con:ftct? rfe wth the potental to nspre clams by foregn companes seelrtjlg to e.xja:a4 ther busnesses n Canada by contanng or reducng the operatons of publcly awdec ~ provders. Ths 8 partcularly true where publc servce provders opc:nte, as many do, wthn a mxed publc-p.r:vate system.. Thus Canada Post has the sole responsblty fo,:- =nsurng the delvery of certan unversal servces. n ths case letter-mal, but n other areas of servce delvery operates n a hghly compettve marketplace. 8. f the expansve nterpretaton ofnafta dscplnes urged by UPS s accept.eel, the result wll certattly be clams by others fo.regn nvestors operatng n the caurer and package delvery ndustry, but s lkely to also open the floodgates of ltgaton challengng the operatons of publc setvce provders that mo beneft from the use of establshed 9. nfrastructure, ncludng such dverse nst.mtons as publc hosptals and muncpal lbrares. The most fundamental ad.d dstngushng feature of Caxlaca Po~ and othec puhlc servce provders s ther respectve unversal smr.c;e ohlgatods~ n the case of Canada Post, these are mandated by both domestc and ~ntematonal law and 1nclude the oblgaton to provde unversal, permanent and qualty servce to all Canad.fans regardless of where they lve and at affordable prccs. 1 u the case or health care t s the requrement ~ Unversal Postal Ccmvent:on, Artcle. R.s:spondea.11 Authortes, Tab 4.
JUSTCE (613)952-8713,,,-. OCT. 20. 2005 l".:j,:.~1~.. ~ US 59 11 T33J sac GOLDBLAlT KTCHELL 10/~U/UO HL u6 AA. N0.475 P.11 2 Mondev1 A:WQ1d (UPS Autbortc::s at Tab 37): Erhyl ColJOraltm. 1111tl ~ (UPS Book of A.ubmdes at Tab SO); Loewer& ""t Unzet.Strres (UPS autboruos at Tab Sl) S.D. Myen tduj. CalUllltz. {UPS Autborl:tcs at Tab 4); Metalt:lad Co1]Joraton and Mat:r;, A.wan/ (UPS Autboztc:s at Tab 86): Re.~.Aztlttm and Maao (2000) 39 LM 537 (UPS author1es TAB 40);ADFv. US. (lcsld Cue No. All(AFY00/1~ ("A.DF) (UPS Autb.mtes at Tab 95~ta1010 3.. provde servces re~s of the ndvduals ablty to p.a:y. t s the oblgaton to provde Wlve:rsal se:mces, however that oblgaton s ronnulted, that s key. 10. Canadas oblgaton. \Dlde.r Art~lc 1102 only requtes tbat t a~ foregn nvestors no less fa.voumble treatment than t accords, ~ lke:crcum.stances 7, to ts OVln. t s the oblgaton to provde unversal servce that makes the cm-umstauces of Can8da Post :and other publc sector sem.ces provders entrely unlke those of commercal enterprses. As Canad.a argues; ths TnOunal has no jursdcton to conduct an nqury nto or substtute ts own judgment about the actvtes and practces of a Crown COporaton whch Canada s enttled to establsh and mantan under NAFTA mles and whch ooerates n crcumstances entrely mlllce those of ~mmercal" corporatons wth Vlh:;h t may compete n certan servce areas., Usng NAFTA,lnvestment Dscpjp.es as a $wptd Rather Mn a Shel~ 11. Unlke other nvestor-state clams, ths s not a case where UPS s assertng that some acton by a Canadan government has entrely deprved t of the rght to carry on ts busness (see the Ethyl, S..D. Myers~ Meta/clad and o.ewbn cut$) or has nt eted wth an exstng contractual oblgaton or concesson agretlnent (the Mondev, AlJF Group, and Robert Aznan cases). 2 1.2. Rather, the UPS elam relates to future and speculatve growth and proft. No other foregn nvestor clam bas sought to llvoke Chapter 11; p?oceclures for such opportun st.c reasons. n every otba Chapter 11 case, ds>ute ptocech.xrcs havecbeen.nvoked as a sheld to defend aganst measures whch are alleged to have rnaterally djnn~ed the ongong operatons of the foregn nvestor, or nterfered wth contractual relatons. n contrast, the UPS clam nvokes Chapter 11 dspute procedures u a rnorvl. not to preserve ts b1wness n the face Ol govemmmt ntatves that threaten to reduce t, but rarher to assal long establshed polces, law and practces for the pmposes af expsndng an already growng busness empre by dmnshng the actv1tcs and.flexblty of a publcly owned compettor...,, l 13. t s not the case that Canadan measures or the actvtes of cadada Post have prevented UPS and compane1 lke t from establshng and growng proftable busness operatons n Canada. n fact, when the Unted States ntcmatonal T~ Commsson (USTC) studed major U.S. tradng pa:(tnets~ commtments mu\= the WTO General Agceement on Trade and Servces, and. after ~anductng extensve U~cws "Wjth U.S. expms courer ndustry reprcsentatves, the Commsson reported that: :
N0.475 P.12 141011-4-.,.. Among rhe subject tradng partnm, Canada, r.ep1esf!l.18 the most open marlast for U.S. dmrler servces. Canada. nfjjo$es few rotrctons and provdes for, among other 1hllgs.. nter-provncal and nt-a-provndal l11ll:1d.ng prvueges. 14. 15. The USTC went on to comment favourably that, unlke other major US tradng partners, Canada also provdes for the temporary entry and stay of ntra<o?poratc transferees, and allows busness vstors to stay for 90 da). 4.. ; NevetT.heless. despte ts commma! success ~nn supportve Can"d;an gove..?lment regulatons, UPS lw nvoked NAPTA dspute procedures for the strate~ purpose of forcng Canada Post out of express delvery and other compettve servces. To succeed,, t must persuade ths Trbunal to adopt a broad and expansve ntetptctaton ofnafta l1vestment dscplnes that t was.never the ntenton aftle P~es they should be gv~.,1 ~ 16. f ths strategy succeeds, the ablty of Canada Post.o, ~~lver ~ore letter-mal ser.rces s lkely to be serously compromsed.. For, as documented py the TD Sectlrtcs smdy cted extensvely by both partes, to be fnancally vable Canada Post must be actve, m provdng servces that complement ts prmal) focus on lcttcmn.al, whch s expected to dmnsh over tme -wth the growth of electronc communcaton~ The TD study omphaszes the potental synerges avalable f Canada; Post s oblged.to.k=p abreast of :a teclmqlogcal developments and to develop new procluctb and servces n emergng areas such as electronc commun~ons and commerce. Advances m customer servce wll requre constant updates and captal nvestment n sophstcated technologes. 17. Conversely, f Canada Post s dened the ablty to grow nto new;_ areas, ts long-term prospecte for fdancal sustanablty arc pooro and t wll be forced tb rely on ncreases; n basc postage rates to mglllent dwndlng revenues. A vable strategy that seeks to take advantage of Canadans consderable nvestment n ~e po~ nfrastructure t0 lever economc effcences aud to p.tov.de new, erba%~c.d scrvc:es f.or Canadans 1tll nevtably brng Canada Post nto competton wth ptva.te companes n certan areu. 18. bs nt~ton of monopoly and non-mcmopoly. servcest and the ~omm:nglng.of commercal, publcly funded, and subsdzed. servce6, delcrb~ the dynamcs at play for su~ dverse nsttutons as Canada Post, publc ho~tas and muncpal hbrares, all of whch have, n one form or another, an oblgaton to provde servces on a unversal bass. t s the partcular or amque ctrcumstan~ of such wttu.tons that dstngush these publc enttes from, or n other words, makes them unlke punly commercal enterprses such as UPS. 3 U.S. nrermaonal Tra~ Commsson. ( 1995). ~"General Agtecmmt On Ttde n Serv=!: &:anrnatgn OfM.ajo~ Trad.ng Panners Schedule Of C.Ommtnumts (c.amda, Emapean Umon, JapaD., A.11d ~mco. luwcstgat.ou. No. 332-358. USlTC publtratan 2940. December 199S, seed>.. s. p.12. ~ l :
. JUSTCE (613)952-8713.... :\ " OCT. 20. C;?l05.3.;} 4 FPf1,. 14 41s S91 T33:J. SACK GOJ)BUT KTCHELL 10,~U/U~ ~~ -~ ~, N0.475 P.13-5- 19. The dstncton between publc and prvate enttes~ ~~ental to the future vablty of many Canadan publc and socal servc;cs, and s ane that NAFTA nvestm.ent rules requre ths Trbunal to take nto account as the un.lke crcumsra11aes of publc servce provders. For these and the reasons argued by Canada. UPS clams relatng to Artcle 1102 should be clearly and completely rejected tft dscourage smlar adventursm by other commercal servce provders seekng to cxpand:~he use otnapta nvestor-state procedures for pu?poses they were never ntended. to serve. The Barganng Rghts of Rural ud Snb11rbaa Mall Carren,. ~..- 20. UPS makes two argurnens relatng to Canadan measures that have untl recently dened rural and suburban mal carren (RSMC) the rght to jon a unon and engage n collectve barganng wth Canada Post. 5 These ar~cnts have also been extensvely n=dacted and the prncple evdmce upon wbch they re~y, the Rosen report, has not been provded at all. ~. ::~ ;:. " The Ealure gfljps to Provde any Support for These Cl@jms "Uuder Artcle 1 lq 21. n ts Rqysed.Amended Statement of Clam (Dec 20. 2002), UPS asserts that Canada was. n breach of ts oblgatons under Artcle 1102 of the NA.PTA by, nter ala: Eronptng Rural Ro&ae Contractors engaged vnder contract wth.canada. Post from the applcaton of the Canada. LahOD Code, ant dt!7jyng those ndwduals the rght to unonze.; {para 25(/)j Provson to Canada POJt of benefts apet:tf.ng the pmson plans made avalable a ts employees, ncludng by plovdng Can.ado. PoJr free, of charge wtth admnstratve flll.d oth servtcu~,b;)l provdng Canada Past employees wth ndexed pensoa boefts w.tht:nt ~eqf4rlng Canada Post to fand a11y actvaral de.fcency. by prahbtrng Canada Past employea unon from negotatnk mprovnents ta rte pwon pl~ll. and by makng ~stve paymtmt.r to Canada Post Upon Canada.,Post ralcng aver admnstraton of the penson pltm; [pq.1a 25{h)]. 11 ~ However, n the redac;tcd materals made avalable, there s no legal argument or other asserton made to support these clams. f, n fact, UPS has faled to advlllce these aspects of rs clam relaed to Natonal Treatment, they should be consdered to have been abandoned., r 1:. ~,). ; s P8ffon to thea.rhtral TrlbJ.DUJlbyb Councl ofc.nadam ad the Canadan Unoa of Postal Worbn, May 10, 2001. h.tm;llwww dfat-maecgc.cajtga-~an?c:aa.qp..
1".:1 OCT 2 21":l05 3: 15PM. JUSTCE C613)952-8713. : " o1~~,u~~ ~~ 14 ~4 r~ 416 ~~ 1aaa SACK GOLDBLAlT.x;TCBELL. N0.475 P.14 The Falure ofups to Submt These Clams to Atbtralon unj.er Artcle 1105 j,, 23. Canadan measures relatng ta the collegtve bar~ rgb.ts.~frsmc, ncludng ther rghts to negotate for mprovements n ther penson ent.tlem"1t5 are now argued by U:Ps to consttute a breach of Canada. 1 s oblgatons under Artcle t f 05, not Artcle 1102. 24. No such clam rclatd.g to Artcle 1105 was set out n the UPS Notce of ntent to Submt a Clam to Arbtraton, nor n the Statamgnt of CJpm.md Amended Statement of C3m that ha\-e been fled subsequently. Therefn~ L"PS has faled to c.omply w.th the requmnmts of Artcle 1119 of NAFT A, and Artcle 18 of the UNCTRAL Atbtra.Ton rules. Moreover, because complance wth Artcle 1119 s mandatozy and a condton pree«ent to assertng a clam under Chapter 11, -we Sllbmt that ths partcular c;lam has not been properly submtted to mbtraton and therefo~.should not be consdered furtller. ~, ~ 25. However, f the Tn"bunalJ contrary to ths vc:w. s~ to cansder the merts of these clams, the followng argtmerlts are submtted n the attanatve~ Alleged Volatom of Artcle l los Concernng Lbow md H)lmm Rghts r.. 26. UPS argues that Canadan laws prohbtng R.SMC from exercsng the eolledve barganng rghts provded by Canadan law made t possble for Canada~Post to pay lower vmges and accord fewer benefts to these workers) thereby reducng ts opera~ng costs. We agree.. 27. UPS further argues that such mcasutes also represented a brca;h of Canada 7 S oblgatons under ntematonal law, most notably those set out n the Rght to Orgunztr Conventon 1948 (Co1111elfto11. No. 87) under the ntcmatonal:::labour Orlanzat~ whch reqme Canada to uphold the rght of workers to bargan coll~tvely. 28. We agree that Canada was n breach ofts oblgatons."under.. the LO jn ths regard,.not just those under Conventon No. 87 whch t has ratf~ but also those llllder Conventon 98: Rghr to Organze ~ Collectve Barganng Co~venten.,.J 949, whch t has.not ratfed but a, by vrtue of ts adhctence to the LO COnstmtfon, nevetthelcss oblgated ~~~6 l 6 Eght of tbe LO CO!:!..Venta:J.s have been dem6ed as bcm, ~l to the rghts o!llmzm:!. bengs at war~ Two ofthe5c: f.m.damelltal conveatcm.s relate drectly to the conc;ept Offtecdom of assocaton: the Fro,m,m of Aaoc&tan. lltld Protecton of dj.c lugh1 m Organze Convmt.on, 1.948 {ConVftton No. 87), and the Mcmber St~ 1 by v.nue of lber adberem:e.10 the n.o COJlldtul:cm, me oblgated to rcspect:lbe prncple of freedom of u;socatlon an:calated n the.freedom of AS!eeatcm Ccmvcntom. The ccmoept af fteadam of assek:atan s so fmda:meml that 1:n111pbms of non-compla;a.ce m :relaton to these Coll"elltans cm be.~ agatpst even non-ratfyng Member States. ncludng Canada. Smply by beng a LO Manlxr State, Omadahas commtted to uphold these mnmlnn standards. See Posson and Torobm, The.Rglst to Organze and C:olleet~ Botplttltg: Cmuul.o. mtl. Jntematonll labour OrgaP1zaton Co1WC1Jton 98 (1999), 2 Wolkplacc Guette 86. J j 1 1
N0.475 P.15 a!o14 1-29. That beng s~ NAFT A dspute procedures cannot! be ccmsden:d a proper forum: for -redressng these volatons of ntcrnat.onal law, ner: r.loes UPS have, as Canada argues, standng to make sneh a clam. Chapter 11 pro~ wer~ not ntended t0 become a vehcle for assertng opportunstc clams for dun~ t$at.e: essentally bellg ca.used to thrd partes. Even less so because those most clrectly."lfected: by such volatons have no rght to seek redress under these nvestment rules, nor. even to be accorded party standng 1 n such proceedngs.,, :! 30. t s entrely dsngenuous for UPS to be seekng redress for Canadan measures that have cl.scn rancbsed Canadan workers, whle at the same tme resstng the partcpaton of those sam.e workers n the proceectngs where ths clam wll be adjudcated. 7 As for :the sncerty of ts conce:m for the nterests of Canada Post workers, we note the UPS <=0mplant that Canada Posts polcy of stroetur:ag ts operatons n such a manner as to avod lay-offs and staff reductons s m.uauded and napproprate. 1 Allowng nvestor Clams to Recover Conseq ental Dul;- AUegedJy Cauaed by Canadas Falure to Comply wtb aternatonal Laboar aaba.man Rpts Treates Would R.epreteat a Further Breach of Those Obtgatou..,! 1 31. A.ccedDg to ths ~cct of the UPS clam would not only compoll11d tm njustce caused to Canadan workers, but would n and of tself represellt a breach of Canadas oblgatons under n..o conventons for the followng reasons. :. - 32. n effect, UPS argues that n negotatng NA.Fr~ Canada created a dspute procedve that allowed for the recovery of damages caused by ts falure tp comply wth oblgatom; under another treaty. However, the rght to recover such damages"would not be avalallle to those most drectly affected tmder those treates, but only to those who mght suffer nd±rect or consequental loss.... 1 ~..1.. 33. Creatng such au asymmetcal ea!or~c:nt regme~s ~Y ncompat"ble Wth both the sprt and the letter of these ccmvento.as, and would only operate to compoucd the njustce done to workers hy Canadas falure to respect core labour rghts. rms s so because the LO s fandamentally a trpartte stru.ctm:e whch recognzes as ts frst prl:t.qple the equal role that must be played by workers~ empo~ and govermnent.n achevng the objectves of the Organzaton and the COnveo.tons t admnsters. Thus representatves of governm.=ts, employers, and workers ser\e together on l.a) commttees, on the Exeeutve Comr.l. and n the General Assembly. : l D.vesto.rs R.espo.Dse ta the Pedto:a. f.1ed by de QmadD.D Unon of Poalal Wqmn and lhe Cou:Dc of Canadmu.,: May 28, 2001. lum:j/ww\lll.4fat:maecl E call.na-13cldsp/pgree} arebvsl..en.~p..! UPS mmm~ para. 205-06.
OCT 20 2005 3: 16PM_ JUSTCE C613)952-8713... l01~u1u~. ~au 14:Jv tlt.1 416 ~91 7a~J SACK COLDBLAT KTCHELL N0.475 P.16 ll 015-8- ~ :! f ~ ;~ (,. 34. The dspute procedures provded for under the LO consttuton are smlarly and thoroughly trpartte. 0 The noton of allowng only employea or wolbrs the rght enforce or seek redress for bteaches of an llo con~en s tmdamentally mtthet.cl.l to ths foundng prncple of trparttsm. To allow ~ to a~ur entrely outsde the adjtt.dcatve framewotk of ths LO eonventon would only further undermne the ntegrty of the regme that UPS purports tn uphold. 35. 36. f ths Tn"bnnal concludes that co1: ntematonal labour standards are amenable to foregn nvestor clams, t would sancton the adjudcaton of ssues that fall entrely wthn the frameworlc of LO conventons n a forum that s not onlv extemal to those mandated bv those conventons, but that operates accordng to. prlcplcs 1bat are fandament8.uy ncom.patj"ble wth the modaltes of the llo. Suoh ~fndng w~uld clearly place Canadas ohlgatons under NA.FA and those under the LO no;eonm~t.. t Moreover) even puttng asde these contradctons, ~osng ~vcnmm.ts to sugh ~s mght actually encourage the Partes to adopt polces. that rec:u:e the protectons afforded by la.hour law to a lower common denomnator, th~by nfrngng the rghts of an even greater number of workers, but avertng potental clatm.s;. that t had dscrmn3.ted between nvestors. f foregn nvestors are gven recoune when Canada fals to coldply wth ts oblgatons under LO conventons but wmbrs are not, Canada would be ~er much greater pressure to accommodate the nterests ofomployers over employees. Ths s not a. consequence that Canada can be taken to have sanctoned whcn f negotated NAFTA. 37. We submt that ths Trbunal must seek an nte!pretaton of NAFTA nvestrent dscplnes that most readly ;u;c;ons wth Canadat $ oblgaton.s under LO and other treates. Canada must not be taken to have mgotate:l :~ ntc?:natonal treaty that would conflct Wth ts oblgatons under pre-exstn1 :nst:rummts. ; The North.Amercan Amement cm Lmour Cooperttgp (NAALC) : 38. n response to ths aspect of the UPS clam Canada further argues that n any CN~ Hla.bour ssues were specfcally left out ofnafta. and that by establsht\g the NAALC the Partes made ~lear the ntenton to address labour ssues n a fotum separate from 3-9 Once z. Member State ra:c:fes an LO Co11YC1.ron. olhe pldes cm teprearmt m:l amplan. to the Governng Bady allegng that the Mem.ber State bat faled to mplement or.:bde by that C~lltton.- Pu:suant!O Artcle 24 of b LO Coustttrton, cmployu or "amr QPDza.t9DS emt complan that~any ~.State,... bas faled to secure tn any respect the effectve obscnrance wdun b jurlldcton of aa.y ~!)11 of whch t s a patty." Under A;rl:fcle 26 of Cbe LO Consttuton. one Member State c:m fle a:a. ajeaaton of D.o~lWcc sgamt sn.otru:r Member State. Ths provson has ftt>w beel1 ex.te:jded to all Confereuc:o delegates, llm:ludn worker Dd employer rcprese!jlatvcs. A trpartte Commssou aflnqury apponted by the Gover.nl.la; Body nvcstlptcs 1he complam and malces :mr:ammendatom to the Gavcmmg Body. The govc:m:ncnt con9-4 :may ~thcr accept 1he recommendatons or appeal the dspute to tbc ntematanal Comt af Justce, whose,decsan a :fml, ~..,
OCT 20 2005 3: 17PM.. JUSTCE (613)952-8713. N0.475 P.17 101... -.u u......c.u 14;.Jo rat 416 _,u 1.J.J.a SACK GOLDBLATT MTCBEJ. t] 018.. 9 NAFTA. ulo We concur wth t.hs vew for the reaso~ Canada ~ and also for these \... foll l ll~ J, UJ.l.1,1, ow. :. The NAALC Bs;seryes LabQU Matters From NAFTA nvestment Dscplnes. 39. The NAALC was negotated. and mplemented n parallel to NAPTA 11 and was desrned. to facltate greater coepc:raton bel\veen Canada, the U.S. and Mex~ n the area of ndustral relatons, as well as to promote the effectve enforcement of caoh countrys laboll( laws and regulatons. 40. t s qute clear ftom the text of the NAALC tl:w ~ ram es ju.tended to preserve ther soveregnty wth respect to the establshment, as oposed to 1 ~e enforcement, of labour laws and regulatons. 41. Thus Artcle 2; Levels of ~ccton, provdes: Aftrm..ng 1b.U respect for each Partys const~an, ~. recognug the rgh~ of each Party to estabu.h t1 own domatc labor stad.ards, and to adopt or modfy accord:rb)y ts labor law aad replldoaa, each Party shall ensure that ts labor laws and regulatons provde for hgh labor standards, consstent Wth hgh qualty and productvty workplaces, aud shall contnue to strve: to mpovc =those standards n tba.t lght. [emphass added] -, - 42. Smlarly Allllex : Labor Prncples to the NAALC ptqv.des:. 1 : : The followng are gudng prncples that thd; Partes are cotmjldd. to promote, subject to each Patty domestc law, bat do not establdl colmon. manlum standards for ther domestc law. They nd~e broad areas of cou;c:m where the Partes have developed, ear:h. n ts own wl.y, laws,:rcgalatons, procedures and practc"5 that protect the rghts and ~ of tp.er respectve workfoees. [ em.phasb addedj.... " 43. The ntenton ta preserve natomd sovcngntyrth re~ to labour law and regulaton was also made clear n a letter from Ambassador Kant9r, the.u.s. Trade R.eptesentatve, dated September 29, 1993 to the Charman of the Commttee on Energy and Commcll-ce, n whch the AmbassadoT, speakng on behalf of the Admnstrato~ stated:... the fundamental premse of the supplem~tal. agreements s natonal enforc:ement of natonal laws, not ~opal e:d.forcement DOT one :l ; 10 Canada., Ceumor Momoral. pane. 977-78.,.. " 11 Nonh Amercan A.r;r=ment an Labor Coopcn.ton Bcrween the Go~~ o!~ Unted Sta~ of.amend.. tbe Gove!bmeut af Cmada m:d the Govc:zmne.a.t of the t.tmted Mt:ldcan Smtu, September 13, 1993
OCT. 20. 2005. 3: 17PM_ JUSTCE (613)952-8713 :. 101 U/ UJ J.Al..1 H;.,)0.fAA 41& OtfJ. -,,J,JJ SACK GOLDJU..AT HlTCBELL : N0.475 P.18 017 44. -10- ". ~ ~ :~.:1 : ; ~ t " 1, counnys enforcement of ts law wthn another ~trys borders. The dspute settlement provsons provde a mechansm for dealng wth cases when natonal enforcement breaks down. We were always guded by our understandng that the Unted S~cs would have lv= wth anythng that we asked Canada and Mexco to accept. Consequctty, we had no ntenton of fashonng supplemental agreements that ntruded unacceptably on the U.S. soveregnty by; nappxopr.ate relance on supranatonal authorty. "" 12. n other words~ the soveregnty o the Partes wth raped to matters of abour and regulaton s explctly reserved to the partes under@s Agreement. Whle the falure of Partes to enforce ther domestc law may become~ ~bject ~fa complant and nqqzy under the NAALC reg.un~ no mnmum standard of la~ or regulaton ~ mandated by ths Agreement... -... 45. Ths fact was underscored wth respect to the collectve barganng rghts of RSMC when the Unted States" NAO ded.ned to pur&ue s&uos msed n a communcaton by the Organzaton of Rural Route Mal Caners and other labour 0rganzaons n the Unted States~ Mexco and Canada, ncludng the present ntervenor trade unon. That communcaton rased the ssue of whether legslaton denyng nual route mal earners employed by the Canada Post Cmporaton the rght to Unonze and bargan collectvely 1 was contrary to the NAALC. ; 46. The communcaton also alleged tbat Canadan law faled to provde mra1 route thal carrers wth access t0 compensaton for ndusttal aecdents and oc;~atonal dseases. n adclt~ t alleged that th1 treatment of rmal rou~e~ n;wl carrers volated the NAALC oblgaton to promote the elmnaton of employment dcrm~aton. 47. Deferrng to Canadan labour laws, the U.S. NAO,.n a decson ssued on FebruarY 1. 1999, declned to cmy out the revew requested by ths publc communcaton, on the bass that the rural route mal courers ar= mal contrac.torsj. not employees en.ttled to collectve barganng rghts under Canadan law. 13. -. 48. The tmng and substance of the NAALC not only. Uldcat~. the Partes nt=tj to preserve ther soveregnty wth regpect to labour.law, bm also represents a muttally agreed upon reservat~ or codcl to NAFTA, the effect ofwbc;h to s entrely reserve quemons relatng to labour law and regulaton from NA.FT A dscplnes. 12.. ~ ~ } " tem 45, Anne~ to letter dated September 29, 1993 1 from. Amhusador: K.mtm, Un.tee! Smtes Tade R.epresentatve TO Hon. John D. Dugdl. ~ Commttee an Energy~ CorDttletcc:., House of Represc:n?Jltves) reproduced m House Report 103.. ]61, Part3, House~rt on the North Amercan Free Trade. Agrcc:ment lrnplemenrat.on Act. u S~ letter from the NAO to the R:RMC, cln:d by Canada m foag10z 93S of ts eolmtc Memoral
OCT 20 2005 : 18Pl"L JUSTCE (613)952-8713 " : 10,...,....a..uu 1. r r-~ Uo :)Zf.1 trjj~ SAClt GOLDBLA.Tr KTCHELL N0.475 P.19 llj 018.. 11.. J \< \! \ 49. the requrement to regard these NAALC provso~ as de.tng the parameters of those matters addressed by NAFTA s mandated. by the.a:rtcle 31 of the Venna Corrventon, whch stpulates that: 1. A treaty shall be nterpreted n good fath n accordance wth 1he ordj;lary meanng to be gven to the terms of th~ treaty n ther context and n the lght of ts object and purpose. 2. The context for the purpose of the nterpretaton of a treaty shall comprse, n addton to the t~ lldudng ts preamble md annexes: (a) any agreemont relatng to the treaty whch Va$ mad~ between all the partes n connecton wth the concluson of the treaty; f,:., (b) any mtrument whch was ULde by one or *1~ p~es n corrnecton wth the concluson of the 1reaty md accepted by the other partes as an nstrument Telated to the treaty, so. 51. We submt that t s clear that ll lmtng the applcaton.of NAALC to matt.ers of enforcement, the Partes ntended other ssues relatng t.o labom law and regulaton to be exempt :frum the dscplnes of the NAALC am. NAFT A.. We submt tha t would also be fundamentally unjust. and contrmy to publc potc, to compensate- UPS for an njury that was frst and foremost caused to R.SMC whle lea"lng these wotkers wthout any c~ recourse or repled).. Moreover, and as noted, t s entrely dsngenuous for UPS to plead the unfa:mess of measures that dsenftanchlse workerst whle dong ts best to frustrate the partcpaton by: these same workers n ths proceedng. 14,..., 1. S:anadan Measures R.elatng to the Canada Post Penson Plan,do not Ether pjrectly or lnsqreetly Offend NAFT A Dsc:jplnes. S2. As set out n ts Revsed Amended Statcml!llt of cmm, ups alleges that eana1m measures relatng to the penson plan of Canada Post employees were n breach of Artcle 1102. These measures nc\uded Canada: s falure to cju:u.ge Ca.n.a.da. Pmt fo,. certan admnstratve and other servu:es tt fl"ovded. o~ Tef{Ure Canada Post to fund any actuaral deftdency assocated wth the tnde:zed pla14 rs,nd ma./c;7lg excesstve payments to Canada Post 11.pon Canada Posr takng t:nt!7 adndn.$trpton.. of thts pt!nson plt:1j1.. t Bl.so, 1 " nv:stcns Response to 1be Pcrltlou fled by the CaaadanUmou of POSbtl Workers atw the Councl ofomadahs, May 28, 2001. http://www.d.fat-nmr::.gc.ca/t:dl.-mc/gsplparcel_nchvo-ca..asp
005 3 18PM JUSTCE (613)952-8713. 109~J;~9 2.1. 1111.1 h; ~ r ra:x Uo H,1 7J;JJ SACK GOLl>BLAT :lltcrell N0.475 P.20 -;, J: - 12 - f clams that prohbttng CUPW-SrrJ from negotatrlg t11l[jrovtments to the penson plan also represented a breach of Artcle l 02. 15 : -, 53. A:a noted., clams concernng such measures relatng to!artcl~.. 1102 appear to have been abandoned. nstead, measures relatng to the bargammg rghts of Canada Post employees s now presented as offc:ndng Artcle 11 OS. Other elemonts of the UPS clam. relatng to the Canada Post penson plan appear to have been erttely abandoned. n other words,, the only aspect of the UPS clam relatng to the Can~ Post pens011 plan that rem.rm concerns the removal of penson ssues from those: ~th respect ta whch CUPW -s±tp and other Canada Post employees mght bargan V.Th Canada Post.. 54.. Thus lmted, the UPS clam relatng to the Canada Post penson plan reles entrely upon the same arguments and nternatonal nstrummts th.a:f mldld. ts clams relatng to : the collectve barganng ghts of RSMC. t should accodngly be rejected for the reasons we ha.vc set out above. : : ; Other Human :Rghts nstruments SS. 56. S7. UPS buttresses ts c~ relatmg to the rghts of Cmada Post employees by nvokmg other nternatonal human rghts nstruments, ncludml:. The Unversal Declaraton of Human Rghts, ~ "~ The ntematonal Covenant on Poltcal and C\Pl Rghts The ntematonal Covenant on Economc, Soeal and Cultural Rghts :,; UPS ctes provsons of these m.tematonal ~en.ts that concern freedom: of assocaton, and the rght& of everyone to fonn. and jon ttade unons. ta argwne.nt s vrtually the same as the one made wth respect to Canadas oblgatod!.under the LO and should fal for the sam.e reasons..., \", To renforce the ponts we have prevously made, we note that Artcle 26 of the nternatonal CoYenant of Cvl and Poltcal Rgh:a stpulates..:tbat; ~ A.U persons are llljull 6eftm t«law olul, ~ e.jtdetl wtllout MJ tlucrmbltltlr to tll~ lf/ tll prtltet:lo11 of t&~,,,,.._ n ths 7Upect. the law shall prohbt any d.scr.mnarton and guara1,ttee all persons equal and ejjecrtve protecton agamt dscrlmnaron o" any vound. such f.18 race, colour, Se%, language..,6/tgon, poltrcal 01 ~orhe opnon, natonal or socal ong:n.jrojlelfyj blfth or othr status. [~hass:added].,.. : ( 11 J. 15 Revsed Amended State!l.nent ofoam. pa1"..25(.b).
20 2005 3: 19PM JUSTCE C613)952-8713 " lo~~j; v~.uu.. h: JO.r A. 418 591 7lll S.ACX COLDBLATr.XTCBELL N0.475 P.21 lll 020 13-,, 58. UPS arsues that t s enttled to be compensated. for the ndrect consequencd of Canada., s falure to comply wth ntematom.l human rghts law, and the rght as well to use.rt such a clam n forum that t argues should be closed to the partcpaton af the very persons most drectly affected.. ts argument offends ~t 1 only the sprt, but also the letter of the very human rghts nstruments t seeks to rcly.u>on. PUBLCATONS ASSSTANCE PROGRAM 59. The pleadngs of the partes wth respect to ths ssue ae also heavly ~ted; however, to the extent that they have been reveal~ we concur wth. Canadas response to ths aspect of the UPS clam but subject to the followjng comments. ; 60. The cultural exempton set out by Artcle 2106 and A1mex 2106 ofna.fta and ~cle 2005 of the FT A does not, as Canada has clamed_, ensure that NAFT A leaves ~ unmpared Canada~s ablty to ~ cultural objectves." m. truth, and as Canada acknowledges elsewhere, ths so-<>alled exempt~ actually allows for unlateral retahaton where a Canadan cultural measure:. s... regarded as offendng NA.tr A dscplnes. n other words, rather than safeguard.nt Canadan cultural measures, tb.ese cultural provsons actually expose them to retalatbn that may be meted out more swftly and wth less accountablty than. would have been,the case. had these treates ncluded no 5uch exempton., 61. Gven the prce that Canada s lkely to pay for rel~g up~n these provsons, t s reasonable to gve effect to the broad wordng of these provsons. n the present ease, ths meam that Canada has consderable lattude to both desgn and mplement the Publcatom Assstance Program. A more consmvat.ve,read.jjb mght be warranted m the case of an exempton or reservaton that truly removed a ~ from the threat of retalatory sancto~ but has no place where a sgnfcant dsncen.t\e.already exsts to constran the use ofths exempton. t s ths hult p gove~ devce that support& the -vew that the Partes otherwse ntended the scope oft.bs safeguard to be broadly appled..,. r :;, -! 62. UPS also argues that Canada s oblged to tender fo~~the delvery of servces reqund to support the Publcatons Assstanee Program, whatever the admnstratve burden of dong so. t argues that t should "declare ts arrangement wth Canada Post to be! procurement and be prepared to defend the deal n NAFTA Chapter 10 proceedngs.~ Of course UPS would have no standng to brng such a pt!lccedng, but mere mportantfy, f r., ~. " r!
~021-14-.,\.;.. ths s n fact th~ COlect cbatacterzaton Of the m~ n 91e8tOD.. then t s exempt from ths nvestor state clam under Artcle l 008 whch prov"8 that: - A:ncles J 102, 1103 and 107 do nor apply to: (a) procunnnent by 1.J Party. or state tmterpr.se,.. 1! 63. The UPS clam represents an unprecedented use of NAFTA nvestment dscplne6 to further a strategc corporate offensve ntcdded. to expand UPS Canadan operatons by dmjnjshng the scope: of Canada: Pat operatom and comfran:ng ts abjlty to tlost effectvely meet ts u:ovcrsal servjce oblgatons under both urtematonal and Canadan law. To succeed t must persuade ths Trbunal to adopt a broad and expansve nterpretaton of NAFrA that would allow nvest~stae ~edures to be used to a!sal publc polces and laws that are ;well beyond the ~h of such dscplnes f properly nterpreted. f acceded to~ the UPS clam wll no doubt spawn nth~ not only clams by courer companes, but by nvesto:rs wbo may regard other publc servce provders as beng w.lnerablc to smlar ehallen.gea. Por tho ~DS advaneed by c~ and those we have added, the UPS clam should be dsmsse ; wth co~ to the Respondent Parfy. Respectfully submtted ths 20" da.y of ~bet, 2.005 ~Q-~ sackgoldm;tf MT LL Steven Shrybman,. 20 Dund&S Street West, Sute 1130 Toronto, Ontaro.MSG 2G8 Tel: 613~235--5321 Pax; 416 591-7J3~. Counsel!Or the Applcants,.