Federal Advisory Committee on International Postal and Delivery Services

(2:00 – 5:00 p.m., 4 June 2009, The American Institute of Architects, 1735 New York Ave., NW, Washington, D.C.)

Committee members in attendance

• Maynard Benjamin, Global Envelope Alliance
• Jody Berenblatt, Bank of America
• Charles Bravo, Postal Consultant
• Michael Coughlin, Accenture
• Gene Del Polito, Association for Postal Commerce
• Lea Emerson, U.S. Postal Service
• Ann Fisher, Postal Regulatory Commission
• Bruce Harsh, Department of Commerce
• Steven Lopez, Experian Marketing Services
• Gregory Olsavsky, Department of Homeland Security (Customs and Border Protection)
• Sue Presti, Consultant
• Robert Reisner, Transformation Strategy
• Brad Smith, American Council of Life Insurers
• Don Soifer, Lexington Institute
• Daniel Watson, Office of the United States Trade Representative

U.S. Department of State officials in attendance

• Jim Huskey, Deputy Director, Bureau of International Organization Affairs, Acting Chairman of the Advisory Committee
• Dennis Delehanty, Designated Federal Official for the Advisory Committee
• Chris Wood, Coordinator for the Advisory Committee

This meeting was open to the public. Members of the public who spoke at this meeting are identified as such in the text below.

I. Welcoming remarks and introductions

1. Opening the meeting, Jim Huskey welcomed everyone and introduced himself as the acting Chair of the Advisory Committee. After introductions of the committee members and members of the public, he introduced the agenda.

2. Dennis Delehanty invited those attending today’s meeting who are not on the Advisory Committee’s emailing list to provide their contact information to Chris Wood, the Coordinator for the Committee.

II. Results of the March-April 2009 UPU Postal Operations Council

3. Mr. Delehanty summarized the results and major decisions taken by the March-April 2009 UPU Postal Operations Council (POC), referring to a Powerpoint presentation distributed to Advisory Group members prior to the meeting and posted on the State Department website at 2009-2017.state.gov/p/io/ipp. The global economic crisis overshadowed this POC session, which was attended by fewer and smaller delegations. At this POC session, Chairman Andreas Taprantzis and the International Bureau organized an innovative conference on the impact of the global economic crisis on the postal sector in which the CEOs of several national postal operators took part, including Postmaster General John Potter, who addressed participants via a transatlantic video link. Other postal CEOs who spoke at the event were those of France, Hong Kong, Italy, Morocco, Netherlands (TNT Post), and Russia. Members also heard the perspectives of representatives from the Bank of Greece, the International Monetary Fund, eBay International, the U.S. Direct Marketing Association, and the International Telecommunication Union. Philip Dobbenberg, formerly of TNT, chaired the conference. Common themes among the speakers were the need to reduce costs, improving efficiencies, and diversifying product portfolios by entering new business areas, such as financial services, e-Commerce and logistics. Parcels also offer promising opportunities for growth. More information on the results of the conference is posted on the UPU website.

4. The POC made a number of decisions of importance. These concerned the targets for the 2010 quality link to terminal dues for several countries; an innovative method for electing the nine members of the Board of Trustees of the Quality of Service Fund; the election of a new Management Board Chairman of the Telematics Cooperative (Georgio Pomponi of Poste Italiane); deferral of consideration of draft revised rules of procedure for the Standards Board; the addition of seven new members to the Direct Mail Advisory Board; and election of the U.S. Postal Service as Vice Chair of the latter body. In recent months, the U.S. delegation has observed efforts by the International Bureau to tinker unnecessarily with the rules of procedures of various POC groups. The EMS Cooperative is attempting to reconcile its intention to make adherence to the EMS Pay-for-performance Plan mandatory for Cooperative membership, a step that many Cooperative members are not yet ready to make.

5. Participants attending the POC heard updates on progress in implementing the major long-term project launched by the UPU to measure the quality of performance of postal operators in delivering letter post items known as the Global Monitoring System (GMS). A pilot of the project will commence the second half of 2009 and run for 21 months. Quality of Service Fund resources of about $2.3 million will cover start-up costs for the pilot. Following the POC session, the firm Aida of Spain was chosen to provide the equipment and test pieces, while a German firm, Quotas GmbH, will provide external panelists on behalf of the UPU.

6. Mr. Delehanty further reported on the disappointing decision by the Chairman of the Customs Group, a manager employed by DHL/Deutsche Post, to limit the participation of private sector stakeholders to about one-sixth of the items on the agenda of the March 25 meeting of the Customs Group, which falls under POC Committee 2 on Parcels. Specifically, all private-sector members of the UPU Consultative Committee were excluded from the meeting hall during the discussion of the remaining agenda items because they were considered to be “confidential”. In practice, this meant that two of the four integrators, DHL and TNT (as represented by Netherlands), attended the full meeting, while Fedex and UPS, represented through the Global Express Association – a member of the Consultative Committee – could not (nor could any other private stakeholders). The U.S. delegation protested vigorously against this action (and raised this issue subsequently in Committee 2 and the POC Plenary). The U.S. insisted, and the Chairman agreed, that specific criteria should be developed if observers are to be excluded from the Customs Group meetings. The work performed by the Customs Group is of keen interest to the U.S. members of the Consultative Committee and the U.S. Government.

7. Mr. Delehanty also reviewed the work accomplished at the POC session by several Council of Administration groups, including the Reform of the Union Project Group, Committee 2 on Development Cooperation and Committee 4 on the UPU Strategy. The Reform of the Union Project Group, led by Belgium, formed an ad hoc group to study “impact of new market players on the UPU mission and activities”, which the U.S. delegation joined. Changes to the UPU mission are a highly sensitive subject for the U.S. Government, especially to the extent that the mission may overlap with trade negotiations and WTO deliberations. The Project Group will also study the legal and financial status of UPU cooperatives and extra-budgetary user groups, such as the Direct Mail Advisory Board.

8. In Committee 2 on Development Cooperation, Flori McClung of USPS was named to lead an ad hoc group to research and review best practices worldwide in the drafting and implementing of Integrated Postal Reform and Development Plans. In Committee 2, the U.S. delegation also stressed the importance for UPU member countries to be consulted in the drafting of regional development plans. The International Bureau presented a report on these plans at this meeting, but the involvement of the member countries concerned in the drafting of these plans, and the setting of priorities within these plans, was not clear. Participants also heard that seven UPU Regional Coordinators had been appointed. The Regional Coordinator appointed for Latin America was Jimmy Ortiz of USPS, who becomes the third U.S. citizen employed at a professional level at the UPU. The other two Americans, one of whom is a high-level official who will retire in 2010, work at the International Bureau in Bern.

9. At meetings of the three groups under Committee 4 on the UPU Strategy, which is chaired by Canada, the U.S. delegation expressed a strong interest in building on work achieved during last Congress period to produce report cards on the attainment, by individual member countries and operators, of UPU strategic goals as well as methodologies for setting UPU priorities, both strategic and budgetary. The U.S. delegation suggested that member countries be consulted about the themes to be discussed at September 2010 UPU Strategy Conference in Nairobi.

10. At the meeting of the Consultative Committee, members heard updates on the Committee’s work on revenue protection and addressing.

11. Of great concern to delegations attending the POC session was the tardiness in which meeting documents were produced. For a meeting on terminal dues, for example, the bulk of the meeting documents appeared on the UPU website late in the evening the day before the meeting was held.

12. Jim Huskey confirmed that he witnessed serious problems with the production of POC documents at this session in Bern, an unacceptable performance by the secretariat, which pointed to the delays caused by translation of the documents.

13. Gene Del Polito stressed that the exclusion of Consultative Committee members from the meeting of the Customs Group was a major faux pas by the UPU. The private sector courier firms, he continued, have a strong interest in the work performed by the UPU in the field of customs.

14. In reply to a question by Steve Lopez regarding the rules of procedure applied within the UPU, and whether the IB will attempt to revise the rules of other groups, Dennis Delehanty stated that this was hard to know, but that each group can draft its own rules. What we saw in Bern was unnecessary attempts by the IB to redraft rules of procedure, for example, those of the Standards Board, which is one of the more important groups within the UPU and has operated efficiently and effectively under its current practices. This is clearly a case of “if it ain’t broke, don’t fix it”. In this context, Charles Bravo, a former Chairman of the Standards Board, described the work methods of the Standards Board during his tenure, which operated effectively.

15. Sue Presti expressed appreciation for the strong stance taken by the U.S. delegation regarding the exclusion of Consultative Committee members from most of the meeting of the Customs Group, and asked about discussion on this issue in POC Committee 2, to which the Customs Group reports. Dennis Delehanty replied that there was no significant discussion of the issue in Committee 2. Sue Presti stressed that in some cases private sector members travelled to Bern at considerable expense only to be locked out of the meeting they had come so far to attend. She recommended that the State Department raise this issue with appropriate POC Chairs and the IB in September 2009 so that this situation does not repeat itself in Bern in October at the CA. She also asked whether a working group would be formed to draft criteria to define which items on the agenda of Customs Group meetings could be considered confidential. Dennis Delehanty stated that no such working group is planned, nor was such a group needed to set the criteria. However, the State Department could contact the Chair of the Customs Group and stress the message of openness and transparency made by the U.S. delegation in Bern in March.

16. Gene Del Polito remarked that the members of the Consultative Committee present in Bern at this POC session have grown increasingly discouraged and disheartened by POC deliberations. Many in the private sector are beginning to wonder about the continued relevance of the organization. Private-sector representatives are not seeing change or movement by the UPU, and are beginning to wonder whether their trips to Bern to attend UPU meetings are worth the time, trouble and expense.

17. Attending this meeting as an observer, Mike Mullen of the Express Association of America offered to engage in the drafting of criteria for “confidential” agenda items handled by the Customs Group. He also expressed an interest in knowing the specific agenda items discussed in the closed portion of the Customs meeting. Phil Warker of Customs and Border Protection, who attended the Customs Group meeting as a member of the U.S. delegation, said that the agenda items discussed at the March 30 meeting were basically the same as those discussed at the meeting of the “Customs Support Group” of the 2005-2008 Congress cycle. These items concerned Electronic Data Interchange transmissions of customs information, technical standards for the clearance of mail through customs, training of postal and customs staff, production of an Export Guide, combating the use of international mail to transport counterfeit articles and cooperation with the World Customs Organization.

III. Reform of the UPU

18. Jim Huskey introduced the subject of possible reform of the UPU, referring to a document prepared for this meeting prepared by the State Department posing six sets of questions to stimulate discussion.

19. Steve Lopez, speaking as a private sector representative who has frequently attended UPU meetings, stated the view that the members of the Consultative Committee try to participate actively in UPU deliberations, but find themselves excluded from meetings. The private sector has reason to be frustrated. It is hard for the widely disparate members of the Consultative Committee to speak with one voice. The Consultative Committee does not receive the attention within the UPU that it needs, and is really now not a relevant part of the overall UPU organization.

20. Gene Del Polito noted that competitive levers must be applied to reach productive outcomes. Most Americans active in international postal and delivery services emphasize relationships with major trade partners for which bilateral agreements can be negotiated outside the framework of the UPU. It is difficult for the USPS to offer competitive pricing if it is constrained by the terminal dues rates in the UPU Convention.

21. Dan Watson suggested that it would be best to go through the questions in the discussion document prepared by the State Department. He stressed the view that the continued effort to seek reform of the UPU is important. In this process, we should seek a better balance between the roles of designated operators and regulators and a better balance between the major market players – that is, the designated operators and private companies active in the markets. This would imply a greater role and more active participation within the UPU by both regulators and the private sector. The role of the private sector in the UPU needs to be clarified.

22. Lea Emerson noted that opening the UPU to greater private sector participation has been a major U.S. policy goal and priority for more than 10 years, since the 1999 UPU Congress in Beijing which created an Advisory Group for the private sector. In creating the Consultative Committee, the intention of the 2004 Bucharest Congress was to open up the UPU to such participation. The recent POC session included more than 55 meetings of various POC groups, many of which were restricted to members only—whether these members are designated operators, government representatives of member countries, or private sector members of the Consultative Committee. It would be helpful to compile a list or more examples of meetings that have been closed or restricted to private stakeholders and other member delegation representatives, as this incident involving the Customs Group was clearly a fiasco. To advance UPU reform, one idea would be to strengthen the UPU’s Cooperatives and encourage more cooperative type groups in the future that allow for greater inclusion. In this context, Steve Lopez reiterated the view he expressed earlier that the private sector representatives are frustrated with the obstacles to their participation at UPU meetings, and are beginning to ask themselves why they come to the meetings. The barriers to private sector participation should be lessened.

23. Brad Smith raised the suggestion made at an earlier Advisory Committee meeting that the goals in the U.S. Strategic Plan for the UPU should be measured against benchmarks and queried whether this exercise had been carried out. Dennis Delehanty replied that carrying out such an analysis, which is a good idea, would depend on sufficient staffing at the State Department.

24. Michael Coughlin observed that he has been following the UPU for several decades, and the organization was actually an anachronism a long time ago. When discussing the UPU, we must maintain perspective about what that organization can genuinely accomplish. For the purposes of the Advisory Committee and U.S. stakeholders, it is important to know what interests are at stake. The UPU is necessary for certain aspects of international postal service, but more generally the UPU has little impact on postal services. We would not be serving the interests of postal customers by “putting everything in the UPU”. Following up on this statement, Gene Del Polito added that the functions of the UPU should be reduced to the absolute minimum, and that they should be those conducted between the governmental agencies of member countries. If the UPU is not going to produce value, then why should we get involved in the organization?

25. Expressing a personal view, and stressing that these views did not necessarily represent U.S. policy, Dennis Delehanty posited that one could conduct a mental exercise to test the value of the UPU by simply working out what would happen if the United States left that organization. If the United States were to leave the UPU, the U.S. Government would have to negotiate over 200 bilateral agreements to secure the legal basis for the exchange of international mail with that many postal administrations. One could place a dollar value on the cost of those negotiations, the outcome of which might also produce higher terminal dues rates as well. In other words, a price tag could be placed on the value of the membership in the UPU. This also means that the most important function of the UPU is to manage the provisions of the UPU Convention. Michael Coughlin stressed that his earlier remarks were not meant to suggest that the United States should leave the UPU. Dennis Delehanty asked Advisory Committee members for their thoughts and recommendations for an ideal model for the UPU based on the questions in the discussion document.

26. Gene Del Polito doubted that a major reorganization of the UPU would be realistically possible. It is a nice idea to imagine pulling out a blank piece of paper and designing a new UPU from scratch, but this would be a dream that no one would really have the power to bring about. Perhaps the IPC structure should be considered as a model for the UPU, even though the IPC is often shut out of UPU deliberations. We must keep in mind the European way of thinking towards the postal sector – that is, the trend towards liberalization of postal markets – is becoming more and more accepted among U.S. policy makers and lawmakers. A greater concern about environmental issues, and the carbon footprint of the postal sector, is also taking root in this country. We may not have much time to adjust to these developments.

27. “What do private sector firms operating in postal markets want?” asked Steve Lopez rhetorically. His employer, Experian, and other companies whose representatives are involved in UPU work want the UPU to focus on addressing, technical standards and other core postal function – not banking services. The private sector wants more mail and fewer barriers.

28. Sue Presti echoed the view that the United States should be vigilant of efforts to expand the UPU’s mission into new areas, and should seek to limit the functions and role of the UPU to those that are truly necessary such as regulations governing the exchange of international mail.

29. Jody Barenblatt raised the issue of addressing in this context, asking how can the costs for mailers be managed? Maybe in the short term postal administrations could submit address information voluntarily to economize on costs. Noting that addressing, particularly at the international level, is a complex subject, Lea Emerson observed that USPS has made considerable advances to eliminate addressing problems in the domestic postal service. Solving international addressing issues is a large-scale effort that will take time. The current Chair of the UPU group that handles addressing issues is from Morocco, and the U.S. delegation could help facilitate the dialogue with representatives of Morocco to advance the work of this group.

30. Thanking the members for their views, Jim Huskey conveyed the anticipation that some of these issues could be handled in the work groups to be created within the Advisory Committee.

IV. Update on Addressing

31. Jim Huskey asked the Advisory Committee members to comment on addressing issues, the possible use of Global Positioning Systems (GPS) in postal addressing, and the work being done by the UPU Consultative Committee in this field.

32. Steve Lopez observed that postal addressing is a subject that requires high-level attention, and for this reason the members of the Consultative Committee seek to hold a “summit” on addressing issues at the UPU, hopefully in the fall of 2009. Since its creation, the Consultative Committee has pursued cross-border change of address systems, and the proposed summit will be an important step in this direction. Expressing a note of caution, Mr. Lopez raised doubts about the usefulness of GPS in countries like China, where many people live in apartment buildings at the same GPS location. Mailing firms need addressing data, and we in the mailing industry need to know the structure of addresses in each country to which we send mail. Solid addressing structures are critical for this purpose. We need to explain the economic advantages of good addresses to UPU members and stakeholders.

33. Gene Del Polito brought up the examples of Saudi Arabia and the United Arab Emirates, whose addressing regimes are based on GPS. Then there is the case of Kenya, where one wonders what would be the real cost of a Western-style postal addressing system. In that country, 60% of the population has cell phones. Wouldn’t it be wiser for the postal administration of that country to use GPS coordinates to tie cell phone numbers to the physical addresses expressed by GPS locations? In this way, the cell phone number could be tied to the physical location – or more specifically, the physical address.

34. Michael Coughlin questioned who would be the intended audience for these addressing initiatives. In Ireland, for example, the national postal operator, An Post, does not want the government to impose a national postcode because An Post does not want to help its competitors, who would benefit from the development of a postcode in that country. Jody Barenblatt noted that it was the private sector that started work on a postcode for Ireland and that it should be possible to conduct a pilot to test the code. Later, mailers could team up with selected partners to use the postcode. Michael Coughlin stressed that postal codes are not only for the benefit of postal administrations; postal codes have a wide applications across the functions of several government agencies.

35. Clayton Bonnell of USPS, the principal U.S. delegate on the UPU Standards Board and an observer to this meeting, informed the Advisory Committee that the UPU has already adopted a series of technical standards related to addressing. The POC currently maintains an Addressing Group, which is continuing the UPU’s work on addressing standards and databases. So work is going forward. It is estimated that half of the world’s population has a postal address, while two-thirds have access to cell phone. Would it be possible to take advantage of cell phones and GPS to create addresses for those who do not have physical addresses? Perhaps - and the UPU and its members could move more quickly in that direction. The tools needed are already in place.

36. Another observer to this meeting, consultant John Callan, referring to the customs treatment for private-sector and postal items, particularly parcels, commented on the structure and reform of the UPU and asked whether there are multinational models and standards that genuinely work, such as for customs administrations. Phil Warker of Customs and Border Protection summarized the role of the World Customs Organization-UPU Contact Committee and the broad cooperation between the two organizations, particularly in the field of technical standards. Mr. Warker cautioned that standards related to customs clearance are applied nationally. The World Customs Organization is not a United Nations body. To promote the use of technical standards for customs clearance of postal and private sector items, efforts are made to conduct outreach to customs administration and work through regional bodies. CPB is actively pursuing greater collection and transmission of customs data by postal operators, and wants more results in this regard.

37. Steve Lopez stressed the interest in working towards the creation of a central repository of postal data, possibly starting in North American through a licensing arrangement between the USPS and the postal administrations of Canada and Mexico.

38. Dennis Delehanty observed that at least three countries – Ireland, Saudi Arabia and the United Arab Emirates – had resorted to GPS to design their national addressing systems. The role of the UPU is to set standards, in this case for addressing. Perhaps one of the work groups that the Advisory Committee expects to create could take on work on addressing. GPS combined with the UPU’s technical standards offer enormous business opportunities for mailers and postal operators.

39. Closing the discussion on addressing, Jim Huskey thanked members and observers for their comments and ideas and confirmed that a record of the discussion would appear in the meeting minutes. Future meetings of the Advisory Committee could explore this subject of addressing in more depth.

V. Creation of Work Groups

40. Jim Huskey introduced the document prepared for this meeting (IPoDS 2009.2 – Doc 5c) that put forward a proposal, based on comments by Advisory Committee members at previous meetings, to create three work groups (that is, subcommittees) within the Advisory Committee. The three work groups would focus on the three following subject areas:

• The Postal Accountability and Enhancement Act (PAEA) and U.S. policies towards current and proposed UPU Acts;
• The UPU’s role in provision of international postal products and services; and
• The changing global market for international delivery services.

41. In response to members’ questions, Jim Huskey affirmed that each work group is responsible for setting out its methods of work, for organizing itself and for drafting its work plans. Dennis Delehanty remarked that the first work group would deal with high-level policy issues related to the PAEA and UPU, while the second group would address mainly operational issues and the third group would examine future trends in the market. The Assistant Secretary must approve the creation of the work groups, which can meet via telecon. A State Department official must be present, or in some way participate in, every meeting of each work group. In response to further questions by Gene Del Polito and Jody Barenblatt, Mr. Delehanty confirmed that the Chair of each work group issues communications and, where appropriate, documentation to his or her work group members. The members of the work group do not have to be members of the Advisory Committee; the work groups may invite outside members, for example experts in the field in question, to contribute to their work and join their work group.

42. In closing this agenda item, both Jim Huskey and Dennis Delehanty invited Advisory Committee members to communicate to Chris Wood their interest in joining or chairing one or more of the work groups.

VI. Next meeting of the Advisory Committee

43. Jim Huskey and Dennis Delehanty asked members to confirm whether the next meeting of the Advisory Committee should take place before the UPU Council of Administration, for example in early October. Steve Lopez suggested that the next meeting could take place on October 8, the day after the PostCom meets, when many Advisory Committee members will be in Washington.

Minutes prepared by Dennis Delehanty and Christopher Wood, Bureau of International Organization Affairs, U.S. Department of State.