ST. JOHN'S, N.L. – Canada Post said Tuesday it has defeated a NAFTA challenge from United Parcel Service of America Inc. that alleged the Crown corporation engages in unfair competition.

UPS, the world's largest package delivery firm, launched a claim for $160 million (U.S.) against the Canadian government in April 2000 under the North American Free Trade Agreement.

UPS contended Canada Post has an unfair advantage because its services such as Express Post and Priority Courier draw on an infrastructure of sorting facilities, mailboxes and post offices that private companies must provide for themselves.

But Canada Post CEO Moya Greene told the company's annual meeting that the NAFTA tribunal hearing the challenge had dismissed it.

"So any thought that we were using the small little bit of the reserved market that we have in Canada to improperly subsidize our competitive businesses, that is now gone," Greene said.

Green said she had been made aware of the decision Monday evening.

Earlier at the meeting, Greene said Canadians can expect a postage rate increase for 2008 from the Crown corporation, which generated $7.3 billion in operating revenue last year, up 4.6 per cent from the previous year, and earned $119 million in net income, down 40 per cent from 2005.