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China Post dispute draws in EU

Thursday, April 18th, 2002

European Union and United States government officials are negotiating with their mainland counterparts to resolve a simmering dispute after courier China Post declared a near-monopoly over the shipment of express documents.

The wrangle will come to a head on 30 April when express operators have to accept the new rules or face having their licences cancelled. Left unresolved, the row will cost big-name companies such as Federal Express (FedEx), DHL, TNT and United Parcel Service (UPS) billions of dollars in lost revenue.

The dispute flared in February after China Post told express cargo companies it was placing restrictions on consigments under 500 grams.

China Post said its Express Mail Services (EMS) subsidiary would be given near-monopoly on such shipments.

Foreign firms could still provide the service, but they would have to charge higher prices than EMS.

The move was intended to protect one of China Post’s more lucrative enterprises from growing foreign competition.

But the decision outraged express companies, especially as the move was introduced just weeks after China joined the World Trade Organization.

Attempts to resolve the row have so far proved fruitless.

“We are continuing to work with the European Union and the US government who are talking to the Chinese government” to settle the issue,” FedEx Asia Pacific president David Cunningham said yesterday.

“It has gone beyond individual companies to resolve.”

Cunningham is due to discuss the issue with officials in Beijing in the next three days.

The volume of international express documents shipped from China is still relatively small compared with the level of similar shipments in the US or Europe. But express operators want the issue settled as soon as possible to avoid similar problems later.

Cunningham said the wrangle “certainly has the potential to affect the express industry”.

The China International Freight Forwarders’ Association (Cifa) has already sent letters to the State Council and Ministry of Foreign Trade and Economic Cooperation (Moftec), accusing the State Postal Bureau of protecting China Post’s monopoly,

“The directive issued by the bureau makes it hard to survive for express-cargo operators,” Cifa vice-president Liu Zhanfang said.

“This is completely against the country’s policy to further open industries after World Trade Organization entry.”

Liu believed it was also against international practice to allow firms to operate private delivery services.

Cunningham was more sanguine. “There will be bumps along the road as membership of the WTO effects China. I am confident they will resolve it.”

Source: Hong Kong iMail

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