diff --git a/gluon/compileapp.py b/gluon/compileapp.py
index 679732c3..7c28fcbb 100644
--- a/gluon/compileapp.py
+++ b/gluon/compileapp.py
@@ -18,7 +18,7 @@ import fnmatch
 import os
 import copy
 import random
-from gluon._compat import builtin, PY2
+from gluon._compat import builtin, PY2, unicodeT, to_native
 from gluon.storage import Storage, List
 from gluon.template import parse_template
 from gluon.restricted import restricted, compile2
@@ -650,8 +650,8 @@ def run_controller_in(controller, function, environment):
     vars = response._vars
     if response.postprocessing:
         vars = reduce(lambda vars, p: p(vars), response.postprocessing, vars)
-    if isinstance(vars, unicode):
-        vars = vars.encode('utf8')
+    if isinstance(vars, unicodeT):
+        vars = to_native(vars)
     elif hasattr(vars, 'xml') and callable(vars.xml):
         vars = vars.xml()
     return vars
diff --git a/gluon/custom_import.py b/gluon/custom_import.py
index 4bd3ab5f..ad055153 100644
--- a/gluon/custom_import.py
+++ b/gluon/custom_import.py
@@ -8,7 +8,7 @@
 Support for smart import syntax for web2py applications
 -------------------------------------------------------
 """
-from gluon._compat import builtin, unicodeT, PY2
+from gluon._compat import builtin, unicodeT, PY2, to_native
 import os
 import sys
 import threading
@@ -47,8 +47,8 @@ def custom_importer(name, globals=None, locals=None, fromlist=None, level=-1):
     If the import fails, it falls back on naive_importer
     """
 
-    if isinstance(name, unicodeT) and PY2:
-        name = name.encode('utf8')
+    if isinstance(name, unicodeT):
+        name = to_native(name)
 
     globals = globals or {}
     locals = locals or {}
diff --git a/gluon/fileutils.py b/gluon/fileutils.py
index 84e65365..e9d869b3 100644
--- a/gluon/fileutils.py
+++ b/gluon/fileutils.py
@@ -21,6 +21,7 @@ import logging
 from gluon.http import HTTP
 from gzip import open as gzopen
 from gluon.recfile import generate
+from gluon._compat import PY2
 
 __all__ = [
     'parse_version',
@@ -100,7 +101,10 @@ def read_file(filename, mode='r'):
     """Returns content from filename, making sure to close the file explicitly
     on exit.
     """
-    f = open(filename, mode)
+    if PY2 or 'b' in mode:
+        f = open(filename, mode)
+    else:
+        f = open(filename, mode, encoding="utf8")
     try:
         return f.read()
     finally:
diff --git a/gluon/globals.py b/gluon/globals.py
index 43079593..717d923b 100644
--- a/gluon/globals.py
+++ b/gluon/globals.py
@@ -13,7 +13,7 @@ Contains the classes for the global used variables:
 - Session
 
 """
-from gluon._compat import pickle, StringIO, copyreg, Cookie, urlparse, PY2, iteritems, to_unicode, to_native
+from gluon._compat import pickle, StringIO, copyreg, Cookie, urlparse, PY2, iteritems, to_unicode, to_native, unicodeT
 from gluon.storage import Storage, List
 from gluon.streamer import streamer, stream_file_or_304_or_206, DEFAULT_CHUNK_SIZE
 from gluon.contenttype import contenttype
@@ -569,7 +569,7 @@ class Response(Storage):
 
         if not request:
             request = current.request
-        if isinstance(stream, (str, unicode)):
+        if isinstance(stream, (str, unicodeT)):
             stream_file_or_304_or_206(stream,
                                       chunk_size=chunk_size,
                                       request=request,
diff --git a/gluon/template.py b/gluon/template.py
index 7d79c573..2afc29ab 100644
--- a/gluon/template.py
+++ b/gluon/template.py
@@ -263,7 +263,6 @@ class TemplateParser(object):
         # This will end up as
         # "%s(%s, escape=False)" % (self.writer, value)
         self.writer = writer
-
         # Dictionary of custom name lexers to use.
         if isinstance(lexers, dict):
             self.lexers = lexers
@@ -448,7 +447,7 @@ class TemplateParser(object):
             fileobj.close()
         except IOError:
             self._raise_error('Unable to open included view file: ' + filepath)
-
+        text = to_native(text)
         return text
 
     def include(self, content, filename):
@@ -788,7 +787,7 @@ def parse_template(filename,
             raise RestrictedError(filename, '', 'Unable to find the file')
     else:
         text = filename.read()
-
+    text = to_native(text)
     # Use the file contents to get a parsed template and return it.
     return str(TemplateParser(text, context=context, path=path, lexers=lexers, delimiters=delimiters))
 
@@ -885,7 +884,7 @@ def render(content="hello world",
     """
     # here to avoid circular Imports
     try:
-        from globals import Response
+        from gluon.globals import Response
     except ImportError:
         # Working standalone. Build a mock Response object.
         Response = DummyResponse
diff --git a/gluon/tests/__init__.py b/gluon/tests/__init__.py
index 5db0c683..8a43f01c 100644
--- a/gluon/tests/__init__.py
+++ b/gluon/tests/__init__.py
@@ -18,9 +18,9 @@ from .test_tools import *
 from .test_utils import *
 from .test_serializers import *
 from .test_languages import *
+from .test_compileapp import *
 
 if sys.version[:3] == '2.7':
-    from .test_compileapp import *
     from .test_is_url import *
     from .test_appadmin import *
     from .test_scheduler import *
diff --git a/gluon/tools.py b/gluon/tools.py
index 8736b814..7bfa4b7f 100644
--- a/gluon/tools.py
+++ b/gluon/tools.py
@@ -1457,7 +1457,7 @@ class AuthJWT(object):
             def f(*args, **kwargs):
                 try:
                     token = self.get_jwt_token_from_request(token_param=token_param)
-                except HTTP, e:
+                except HTTP as e:
                     if required:
                         raise e
                     token = None
@@ -4759,7 +4759,7 @@ class Auth(object):
             self._wiki.automenu()
 
 
-class Crud(object):
+class Crud(object): # pragma: no cover
 
     def url(self, f=None, args=None, vars=None):
         """