profit and loss

[calbert at tiac.net]

Judy:

> 
> The current suing of Canada Post by UPS is occurring under NAFTA.
> Obviously the negotiation of the structure of the treaty obligations
> left a lot to be desired and I have little confidence that such
> negotiations would occur in FTAA. The following are arguments that are
> being put forward by the Council of Canadians and CUPW regarding the
> current suing of Canada Post by UPS:

Since UPS is not in the "1st Class mail" delivery business, we can 
assume that this dispute is over the market for package and 
"document" delivery....it is entirely predictable that CUPW would 
sound all alarms from the relevant to the silly in their effort to 
maintain their market advantage and jobs......
 
> The investor-state dispute procedures of NAFTA establish a system of
> international commercial arbitration with sweeping powers, which the
> Council and CUPW will argue, supplant the core functions of our
> superior courts. They believe that when taken together, the breadth of
> the jurisdiction conferred on these tribunals, the secrecy that
> envelopes their proceedings, and the very limited scope for judicial
> oversight, represent a direct assault on the bedrock principles upon
> which the public administration of justice depends."


....and yet, the US and Canada have had issues, dating back at 
least to the mid 80s regarding the nature of Canadian Gov. 
subsidies for the forrest and paper industry, a considerable 
component of canadian GNP......though I expect these debates may 
still rage in some form somewhere, it would be difficult to deny that 
Canada remains a sovereign nation which continues to supply 
enormous quantities of forrest and paper products to the world, and 
that its business with the US has never been bigger.....

> "These disputes are resolved by private arbitrators, not judges; under
> international, not Canadian law; and, pursuant to rules that allow
> these Tribunals to ignore the judgement of our courts even on matters
> concerning the interpretation and application of NAFTA rules.

If the signatories to any treaty demand to retain the ability to 
unilaterally interpret conditions agreed upon by all parties to the 
negotiations the treaty is worthless.....

It is important to note however, that the debate over the merits of 
wholly subsidized mail and package delivery "sovereign" monopolies 
predates these treaties. I believe that the USPS functions as a 
regulated monopoly which does NOT receive subsidies from the 
feds - nations involved in trade negotiations may very well view this 
as a positive development.....

Further, I would also suggest that this dispute does not make a very 
good case......I had hoped that you might elaborate on the issue 
involving a pollutant declared illegal in one member nation, which 
was being sued by a corp for some reason or another......To 
suggest that nations which agree to basic common principles of 
trade, including conflict resolution mechanisms, are surrendering 
their rights to uphold "laws" as opposed to its ability to maintain 
favored national monopolies seems unsupported in the given 
example.

> Moreover, the extent to which judicial review of final awards may be
> possible depends upon the place of arbitration, which the investor and
> the country being sued are free to determine. Any one of more than 100
> countries that have adopted the New York Convention (which provides
> for the recognition and enforcement of foreign arbitral awards) may be
> chosen.
> 
> For the purposes of judicial review then, it will be the law of that
> jurisdiction that matters, and the courts of that place that will
> provide judicial oversight of the proceedings. In this way the
> supervisory role of Canadian courts may be entirely displaced even
> when Canadian law and policy is on trial."

This sounds a little like the cousin of the "stay out of our domestic 
policy matters" line usually employed by some international 
miscreant in response to UN sanctions.

> I think the above may address a similar type of comment that jbor made
> to me earlier in the week.

But taken in isolation, it reveals very little about the true dynamics of 
the issue. here is proof that such treaties are two edged swords:

(from the Hightower Lowdown, May 2001)

"...NAFTA case (strikes) down law protecting dolphins from being 
slaughtered by Mexico based tuna exporters"

This sounds and is bad on the surface, the solution? Advertising by 
concerned groups identifying the offending "brands" - consumer 
boycotts CAN be quite effective, and they are perfectly legal....even 
under GATT, NAFTA et al.

"Canadian Funeral Conglomerate sues Mississippi court system 
because the company was convicted there of anti-competitive 
practices......."

"Canadian steel fabricator says our "buy American" policy on 
federal highway projects violates NAFTA"

Good for the Canucks.....we hammered the Japanese for excluding 
US engineering concerns from large capital projects in Japan.....

and the really curious one:

"a canadian company that makes gasoline additive is demanding 
nearly $1 billion in payoff money from us because the additive has 
been banned in California for contaminating the state's drinking 
water...."

was this the case you referenced last week?

The evidence suggests that once the rules are formalized they can 
be applied by any party against another. The process is not immune 
to problems, and the jurisdictional one is perhaps one of the 
greatest, but I would rather the issue was worked out through trial 
and error (on the judicial rather than the practical level) than not 
attempted at all. That simply returns us all to the days of the "survival 
of the fittest free for all" which governed previously. Nothing stopped 
corps from bribing local officials who, in turn, would decline to 
prosecute any abuses resulting from the corps' activities. And the 
damage that such an unregulated market caused is still in evidence 
in nations of Eastern Europe (an environmental nightmare) as well 
as go-go nations like the Phillipines, Korea and Taiwan. By 
comparison, I would be hard pressed to level such an accusation 
against either the US or Canada.

love,
cfa