Canada Gazette

These proposed amendments to the Canada Post Corporation (Canada Post) regulations, effective January 15, 2007, will increase the rates of postage for letter-post items destined to the United States and to other international destinations.

— a $0.04 increase to $0.93 (4.5%) on the Standard Letter-post product (letters, cards and postcards) up to 30 g;

— a $0.05 increase to $1.10 (4.8%) on the Standard Letter-post product of 30 g up to 50 g;

— a $0.08 increase to $1.86 (4.5%) on the Other Letter-post product up to 100 g;

— a $0.11 increase to $3.10 (3.7%) on the Other Letter-post product from 100 g to 200 g; and

— a $0.22 increase to $6.20 (3.7%) on the Other Letter-post product from 200 g to 500 g.

International Letter-post (to foreign destinations other than the United States):

— a $0.06 increase to $1.55 (4.0%) on the Standard Letter-post product (letters, cards, and postcards) up to 30 g;

— a $0.10 increase to $2.20 (4.8%) on the Standard Letter-post product of 30 g up to 50 g;

— a $0.11 increase to $3.60 (3.2%) on the Other Letter-post product up to 100 g;

— a $0.22 increase to $6.20 (3.7%) on the Other Letter-post product from 100 g to 200 g; and

— a $0.42 increase to $12.40 (3.5%) on the Other Letter-post product from 200 g to 500 g.

Some of the above-described amendments were initially published in the Canada Gazette, Part I, on June 28, 2006. However, the initial publication contained errors and omissions; therefore, the proposed amendments are now being republished in order to correct the previous inaccuracies.

Canada Post is facing inflationary pressure from a number of sources. The proposed price adjustments take into consideration increased operating costs, which are expected to be in excess of the Consumer Price Index inflation forecast.

One such source of cost is terminal dues, which is a pricing mechanism that allows the postal administration receiving the mail for delivery to collect for the cost of delivery from the postal administration sending the mail (in this case, Canada Post). Terminal dues account for about 70% of U.S. mail costs and 60% of international mail costs. It is expected that terminal dues to the United States will increase by a minimum of 3% in 2006 while dues to other international destinations will increase by 5% to 8%, depending on the final country of destination.

It should be further noted that, from the beginning of 2002 to the present, gasoline prices have increased by 50%, adding significant costs to our collection and delivery operations. Many courier companies have implemented significant fuel price surcharges based upon price fluctuations. As Canada Post cannot implement a fuel surcharge for regulated letter-post products, it remains exposed to fluctuations in the price of fuel and must recover these expected increased costs.

Even with the proposed price increases, Canada Post's U.S. and International basic letter-post rates will continue to be one of the lowest rates among major industrialized nations' comparative rates for mail sent to Canada.

The Canada Post Corporation Act requires Canada Post to establish rates of postage that are fair, reasonable and sufficient to defray the costs incurred in the conduct of its operations. With regard to the proposed rate action, rate increases of lesser amounts were considered and rejected on the grounds that such rates would not cover the increased costs incurred by Canada Post in providing postal service. Consideration was also given to rates that are higher than those being proposed here, but these were also rejected on the basis that Canada Post's Letter-post products exist in a competitive market where viable electronic alternatives are abundant. Because of this competition, Canada Post must be careful to establish rates that can be supported in the marketplace and do not hasten erosion.

It is anticipated that the amendments will not have a serious impact on postal users or market share. The new rates will directly contribute to Canada Post's financial integrity and, consequently, its ability to make future investments to maintain an accessible, affordable and efficient service. Generally, consumers send only a very small number of U.S. and international mail items each year compared to domestic lettermail.

Depending on the products they use, the majority of customers will experience an overall weighted average price increase of 4.5% for U.S. Letter-post items and 4.2% for international Letter-post items.

As required by the Canada Post Corporation Act, these amendments are being published in the Canada Gazette, Part I, thereby initiating a formal 60-day period in which interested persons can make representations to the Minister of Transportation, Infrastructure and Communities, House of Commons, Ottawa, Ontario K1A 0A6. All such representations should cite the Canada Gazette, Part I, and the date of publication of this notice.

These Regulations are enforced by Canada Post under the Canada Post Corporation Act. No increase in the cost of enforcement is expected as a result of the proposed changes.

Mrs. Manon Tardif, General Manager, Regulatory Affairs, Canada Post Corporation, 2701 Riverside Drive, Suite N0940, Ottawa, Ontario K1A 0B1, 613-734-8440 (telephone), manon.tardif@canadapost.ca (email).

Notice is hereby given, pursuant to subsection 20(1) of the Canada Post Corporation Act, that the Canada Post Corporation, pursuant to subsection 19(1) (see footnote a) of that Act, proposes to make the annexed Regulations Amending the International Letter-post Items Regulations.

Interested persons may make representations concerning the proposed Regulations within 60 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to the Minister of Transport, House of Commons, Ottawa, Ontario K1A 0A6.

1. (1) The portion of subparagraphs 1(a)(i) and (ii) of Schedule IV to the International Letter-post Items Regulations (see footnote 1) in column II is replaced by the following:

(2) The portion of subparagraphs 1(b)(i) and (ii) of Schedule IV to the Regulations in column II is replaced by the following: