Minister Proposes EU Postal Compromise Plan
Minister Proposes EU Postal Compromise Plan
September 25, 2001 — Matthew Newman, Dow Jones: "The Belgian presidency of the European Union is trying to bridge major differences over liberalizing the E.U.'s EUR80-billion-a-year postal market. In a compromise plan to be discussed Wednesday, Belgian Privatization Minister Rik Daems has proposed a three-step process to open the market, with certain exceptions to appease E.U. member states who adamantly oppose losing their monopoly on universal service. At stake is whether the E.U. will eventually force its national postal companies to give up their monopolies in standard and direct mail, and open the market for outward cross-border mail and express mail services. E.U. ministers will decide on the long-running and politically sensitive reform plan at an Oct. 15 meeting in Luxembourg. Ministers want to reach a deal, but it's too early to say what the final compromise will be."
Newman says: "At the moment, the express mail lobby is worried about the prospects of watering down the reform. The European Express Association, or EEA, which represents express delivery companies, wants a final date for full liberalization to give clarity to companies competing with state monopolies. The current compromise fudges the issue of a final date by calling for a 'decisive step' in 2009, following partial liberalization of the market in 2003 and 2006. Member states opposing liberalization, including France, Luxembourg, Greece, Portugal, Spain and Italy, don't want a final date for liberalization. The Belgian compromise thus includes a compromise to have the E.U. Commission, the E.U.'s executive branch, conduct a study in 2006 on whether liberalizing would hurt universal service coverage. If the study concludes universal service won't be hurt, full liberalization will automatically go forward in 2009. But if the study finds the opposite, then the Commission must come up with a new reform plan, which would be reviewed by the E.U. Parliament and the E.U. governments. The EEA says the proposed study opens the door to further delays in liberalizing the market. The debate on modernizing the postal sector started in 1988, and under a 1997 directive, 3% of the market was opened. 'The compromise doesn't propose an unconditional final date,' says Mark Van der Horst, chairman of the EEA's postal committee. 'It suggests a date for a decisive step but it's subject to the outcome of the E.U. Commission study. This means companies have to live with legal uncertainty.' In a statement, the EEA said if a blocking minority of member states have their way Oct. 15, 'the potential of the market will be kept in check for at least eight years to come.'"
The article states: "E.U. reform is key for overnight delivery firms such as United Parcel Service Inc. (UPS), FedEx Corp. (FDX), and DHL (X.DHL) which have complained that postal companies use funds they earn through monopolies to subsidize express mail and parcel service. Liberalization is also important for the two publicly listed European postal companies, state-owned Deutsche Post AG (G.DPW) and the Netherlands' TNT Post Groep NV (TP), which are eager to move into other E.U. markets. The Belgian plan calls for opening an additional 22% of the postal market by 2006 by lowering the threshold for reserved-letter post to 100 grams in 2003 and 50 grams in 2006. The current threshold is 350 grams. While these moves seem important – and they are politically very significant – they don't offer true liberalization because the majority of the postal market is below 20 grams. An E.U. Commission official said the compromise is a major step forward because it includes all elements of liberalization, even if some governments don't like it." (Source: Dow Jones, Matthew Newman reporting)
