High-Level Group on the Future Development of the UPU, February 2001

March 8, 2001

UPU: High-Level Group Moves Toward Creation of a Third Council

Department of State Report on the Sixth Meeting of the High-Level Group on the Future Development of the Universal Postal Union (UPU), Bern, Switzerland, February 15-16, 2001

Released by the Bureau of International Organization Affairs
March 8, 2001


The special group to consider reform of the Universal Postal Union (UPU) held its sixth meeting in Bern, Switzerland, on February 15-16, 2001. The "High Level Group on the Future Development of the UPU" (HLG) is composed of 24 countries representing a broad cross-section of opinions on UPU reform. This extensive report is generated to provide full background on the deliberations over UPU reform.

The High Level Group, nearing its expiration date in October 2001, made progress toward a consensus that a new council should be created to focus on the needs and interests of private-sector stakeholders in international postal affairs. This "sector advisory council" would have two meetings a year, for one day each, to learn about and give advice on UPU issues. More importantly, its members would have observer status in the annual meetings of the UPU Council of Administration and the Postal Operations Council, as well as in the UPU Congress that meets every five years. Possible observer status in the small project teams and working groups was still under discussion. These reforms would have the effect of opening up UPU meetings beyond participation by the traditional public postal operators and making UPU activities more transparent. This has been the major goal of U.S. participation in the HLG.

Not all HLG members were fully supportive of this third council, but countries that previously had strongly opposed observer status for private-sector stakeholders, especially those from the express courier industry, seemed to shift ground somewhat, acknowledging the need for more openness but arguing that this proposal was "premature." The HLG will discuss the third council concept in more detail at its meetings in May and July, with the intention of making firm recommendations to the Council of Administration (CA) in October 2001. The CA then has the option of seeking to convene a plenipotentiary meeting of all UPU members in 2002, which could incorporate these reforms into the UPU convention and general regulations.

The HLG also discussed proposals that would revise the UPU Acts, with the aim of shortening and simplifying the UPU Congress that is held every five years. The idea of separating the functions of postal operators and regulators received extensive attention, but with differing perspectives on how this is to be achieved. Part of the debate focused on whether the world's public postal operators would be obliged to adhere to regulations that might be determined by only a small majority of the 40-member Postal Operations Council. Also discussed were steps to recast the Acts of UPU and simplify the work of the Congress that is held every five years, as well as the problem that individual UPU members increasingly seek to lower their share of the UPU regular budget, thus putting the overall budget in jeopardy.

The United States was represented at this HLG meeting by Ambassador E. Michael Southwick of the Department of State's Bureau of International Organization Affairs (IO), the chief delegate; Neil Boyer of the Department of State, IO Bureau); Mary Townswick (U.S. Mission in Geneva); Michael Regan, Lea Emerson and William Alvis (U.S. Postal Service); and, as private sector advisor, David Spence (Federal Express Corporation). As in the past, the United States was the only HLG member to include representation from the private sector in its delegation.

Revising the UPU Structure

The bulk of this two-day meeting concentrated on the proposal that a third council be created for private-sector stakeholders. The essence of this plan had been first put forward by the French delegation at the previous HLG session. Following extensive discussion in October, the chair of the HLG subgroup on structure, Jan Wright of the UK, assembled a discussion document that addressed the concept in more detail. Under this plan, the Council of Administration (CA) and the Postal Operations Council (POC) would remain largely as they are now, but a new sector advisory council would be created for private-sector stakeholders, and all three councils would have mutual observer-ship rights. This paper attracted written commentaries, distributed in advance of this HLG meeting, by delegations of Argentina, Japan, Portugal and others.

After these discussion papers were introduced, U.S. delegate Southwick said it was essential that the HLG achieve a positive outcome on reform. He said that the paper presented by the chair of the subgroup was a very good result. It might not satisfy everyone, but it provided a good basis for taking recommendations to the CA in October. He then warned that the HLG could not engage in debate and study for two years and end up doing nothing or making only marginal adjustments in UPU operations. Without putting undue pressure on UPU, he said, he wanted to make clear that maintaining the status quo would be "fatal" for the organization, that UPU would "simply drift into irrelevance." The key issues, he said, were how to make UPU more inclusive, and how to obtain an effective separation of the regulators and operators while taking into account the different approaches of the UPU's 189 member states.

The Netherlands delegate agreed with the United States that keeping the status quo would be fatal for UPU. It of course would be easy to criticize the new proposal and to ask questions, he said, but the questions could be answered and the HLG should move on. Brazil also agreed with the U.S. points, and said it thought there was a consensus on creation of a third council. Tanzania said it agreed that the new structure was acceptable as a compromise among different interests.

Private-Sector Observers

Wright said her intention was that private-sector stakeholders would request observer status in the POC and CA, and it would be granted, not debated or voted upon. However, in the project teams and other working groups, she thought more review of this issue was needed. Many of these teams had been created to allow small groups to work in detail, and it was not appropriate for private-sector observers, or even other government representatives, to be present. Nevertheless, there might be appropriate circumstances when outsiders could participate, or even be invited.

Australia said it was already the practice to invite specific private observers to meetings of project teams where the observer could bring in specific expertise, and scope should be left for continuation and expansion of that practice. Canada said it was becoming easier to define when observer-ship in project teams is appropriate, adding that the third council could provide a useful resource for consultation.

UPU Director General Thomas Leavey (U.S.) said it was essential that the private agencies be allowed to come in to UPU meetings. We have an obligation to listen to their concerns, he said.

Barbados said that note must be taken of the different interests in the private sector. Some organizations have legitimate reasons for coming into UPU meetings, and these include union, mailers and telecommunication experts. But Barbados feared the private express operators would come to UPU meetings to take advantage of the situation and better their own commercial positions. Much of what is discussed in UPU meetings is sensitive, and private operators should not be admitted to those meetings. They should have no rights above those of the regular members of the UPU.

Canada said it was not appropriate for private organizations in general to have a right to participate. That would mean that only the largest companies would participate, and it was not consistent with UPU aims to exclude the small and the poor. The only proper way to involve the private sector was through associations of companies. Brazil, Portugal and Japan said these should be international and not national associations. Russia said that it was important to agree on this issue, that the UPU must be up to date, but then it added that "openness should not be an end in itself."

A New Private-Sector Council

HLG members debated whether the new private sector body should be called a "council," or a "commission," a "stakeholders group," or an "advisory group." Some said this body was not equivalent to the POC and CA and should not be treated as though it were an equal. The chair's summary at the end of the meeting called it a "sector advisory council." Switzerland, in a later session, said it made no sense for governments in the HLG to be making recommendations about inclusion of the private sector without formally asking the private agencies whether this was of interest to them.

Ambassador Southwick said the aim of the HLG should be to get all of the key players in the room at one time, so they can see and hear each other. To Barbados, he said that opening up the UPU should not be looked on as a threat. Openness could make the UPU more flexible, give it more synergy. There should not be a worry about whether private operators would "take advantage" of the posts in UPU meetings, since this was not a question of winning or losing.

Ambassador Southwick said the private sector council would not take decisions or vote, and it was not the equal of the other two councils. The HLG does not need to determine all of the details of the new council's operations, he said, since the council itself can make those determinations later. As the United States sees the issue, Southwick said, there needs to be openness. Participation by the private sector should be expected. Inclusiveness should be the rule and not the exception. The bias should be toward inclusion.

Chairman Wright summarized the debate by saying she had heard a generally positive response to her proposed sector advisory council, and she thought there was a fair degree of consensus. She thanked the members for raising important questions in this freewheeling debate, including the membership of the new council, its name, its method of financial support, the degrees of observer-ship in other councils, and the body to which it would report. She offered to refine the proposal in a new version that would put more flesh on the bones, and she would consider this to be a "near-final" document to be discussed at the next HLG meeting on May 1 and 2.

Who Makes Operational Decisions?

There was extensive debate on whether the 40-member Postal Operations Council should have authority to take decisions on UPU postal regulations that would be binding on all 189 UPU member states. UPU staff provided a discussion document on the legal status of the regulations. A representative of Belgium gave an extensive legal discourse that appeared at odds with the UPU legal counsel's conclusions, and promised to distribute his text to all HLG members.

In the ensuing and inconclusive debate, Australia said that governments would not delegate decision-making power to operators that were unconnected to governments. In time, he said, the POC must become a purely commercial operation and not serve as a representative body elected by governments. Germany argued that national posts represented in the POC don't consider themselves part of their governments. Germany believed a separate council for public operators was essential, and more important than creating a third council for private operators and other stakeholders.

France argued that the POC-generated regulations in fact were binding on all member states because the POC acted with authority delegated to it by the Congress. The regulations, he said, were not simply commercial agreements. They were binding on members, and any member state that disagreed with POC conclusions was free to introduce reservations.

Barbados said that, if the POC was to be empowered to make regulations, then all other UPU member states should be invited to POC meetings and to be allowed to vote. Canada said that if the POC members were no longer representing their governments, then no one would be bound by POC decisions. Portugal countered that it was better to have a postal "operations" council than an "operators" council, that it was best to leave the current POC structure unchanged. Brazil agreed that the POC should not be changed. Chairman Wright (UK) said that the proposed changes to the POC that she had put forward were very modest; they did not amount to change, only clarification.

Recasting the UPU Acts

The HLG subgroup on decision-making held an extensive discussion of progress toward "recasting" the UPU acts, essentially moving some provisions out of convention and into the general regulations. USPS Attorney William Alvis, who heads the working group on recasting, told the HLG that the recasting proposals put forward thus far did not result in any substantive change but would simplify and shorten the Congress held every five years while giving increased authority to the Postal Operations Council (POC).

The proposal on recasting received basic support, and Alvis concluded that there appeared to be a consensus that the working group should go forward in producing a formal proposal for recasting, and additional work would be submitted at future HLG meetings. However, there were several comments that the HLG should be less passive and give the working group more guidance on what is being drafted.

The working group was also requested -- at the end of the HLG session -- to develop concrete language for changes in the convention or the regulations that might be needed to put into effect the reform proposals that were being developed by the HLG at large. The U.S. delegation argued at the subsequent working group meeting that having specific language on hand for the next HLG meeting -- even if it were in the form of alternatives to match the different reform options before the HLG -- would be highly useful in facilitating the work of the HLG in coming to its conclusions. The working group also discussed the substantial majorities needed for both a quorum and for votes to change the convention and regulations, noting that such majorities at a special plenipotentiary session could be difficult to obtain.

Financial Reform

The HLG subgroup on financial issues held a brief session, primarily to consider a document that stressed that UPU member states seemed committed to continuation of no-growth regular budgets, and that other ways needed to be found to bring in necessary funds. The paper emphasized that some countries regularly sought to lower their contributory units to the regular budget, and this produced pressure either to reduce the budget overall or to increase the shares that were paid by other member countries.

U.S. delegate Boyer objected to a proposal in the paper that would have tied the number of contributory units paid by member states to specific economic conditions or indicators. He said the system of voluntary contributory units should be maintained. Germany agreed on this point, as did the UK. The UPU finance director noted these comments but lamented the problem caused when member states reduce their contributions.

Canada said UPU needed to study how to make its resources go farther. It needed to set priorities and employ zero based budgeting. The UPU staff said UPU does have priorities, but achievement of results-based budgeting is very difficult. The UPU budget has more than 100 "tactics," and it is very hard to create indicators for all of them, much less to measure the results that were being achieved.

Germany argued that the assessments on member countries should be split between operator and regulator, that the government share should go down and the operator should go up. Australia responded that its post now pays the entire share of the GOA contribution, the government nothing. If the responsibility for payment were shifted to the government, the government would want to cut the contribution units and pay less, and this could cause more trouble for the UPU. Director General Leavey said it was very hard for the UPU to try to define a formula for how national posts and governments split their payment of the assessed budget.

Several delegations argued for further study of the funding of the new third council, if that should be the ultimate recommendation of the HLG. This new council would require financial support, if only for interpretation, translation and the printing of documents.

France said it was agreement in principle on creation of a third circle, but that would certainly have impact on UPU finances. If the UPU is forced to continue with ZNG budgets, then it will need to finance the third circle out of existing activities. The UK agreed that the trend was toward creation of a third circle and said the financing issue must be addressed.

The United States noted that Japan's commentary on the third council idea has proposed subdividing the private-sector agencies into three groups, of which two would make financial contributions at a fixed rate but a third group, mostly smaller organizations, would pay nothing. The U.S. delegation suggested an options paper for the next meeting to flesh out possible solutions to the funding of the third council.

Convening a Plenipotentiary Meeting

The HLG is requested to present any reform recommendations to the CA at its meeting in October 2001. The CA, in turn, under a resolution of the Beijing Congress, to initiate a plenipotentiary meeting in 2002 so that the recommendations can be transformed into the UPU Acts, including the convention and the general regulations, if necessary. The Beijing Congress also authorized work toward a postal strategic conference and a postal forum in 2002. To deal with these three possible purposes for one global meeting in 2002, UPU convened a working group, which met February 14.

The conclusion of the working group was that a high level meeting should be convened at the Geneva International Conference Center, possibly on the dates of October 28-November 2, 2002, probably back-to-back with the 2002 annual meeting of the CA the preceding week. The sentiment was that if this meeting included a plenipotentiary session to consider revisions to the Acts, the total session would last five days. If the CA did not request a plenipotentiary meeting, or if an insufficient number of member states agreed to the request, then the high-level meeting would last only three days.

The working group was presented with a UPU document that listed a series of conditions or obstacles to the scheduling of a plenipotentiary meeting. These included (a) having the HLG make formal reform recommendations that require plenipotentiary action, (b) having the October 2001 CA endorse those recommendations, (c) getting 126 countries to agree that a plenipotentiary should be held, (d) announcing that meeting to the full UPU membership about a year in advance, (e) creation of a plenipotentiary credentials committee that would resolve disputes over voting capabilities of member states, and (f) achieving the required majorities in voting to change the Acts.

The U.S. observer in the working group expressed disappointment in the UPU document, which he said appeared to lay out obstacles without explaining how they could be overcome if member states are serious about implementing reform. The U.S. observer said it appeared from the tone of the document that UPU would be pleased if the reform issue simply went away.

UPU staff told the group that the document was not biased against reform, simply logistical. It was necessary to set dates now for the strategic conference, he said, so that the conference space and hotels would be available. Regarding a plenipotentiary component, he said UPU would do whatever is decided upon by the CA.

The delegation of Cote d'Ivoire, which is scheduled to host the next regular UPU Congress in Abidjan in 2004, expressed doubt about the wisdom of having an interim plenipotentiary meeting in 2002. This appeared to stem from concern that the 2002 meeting would detract from the work of the 2004 Congress and undercut the impact of the first UPU Congress to be held in sub-Saharan Africa in 125 years.

U.S. delegate Boyer argued that the reform proposals now in play in the HLG are very important but of limited scope and certainly will not detract from the substantive work to be done at the Abidjan meeting. The bulk of the reform proposals being considered by the HLG, the United States said, could have been resolved at Beijing in 1999 but they were not. The HLG had been created to deal with those issues. If the HLG proposals are not taken into account when it completes its work in 2001, he said, and if no plenipotentiary meeting is convened in 2002, then the HLG will simply have wasted three years for no purpose. Thus it was essential that UPU and its governing bodies block out the time to convene a plenipotentiary meeting in 2002. Ambassador Southwick later told Cote d'Ivoire's delegation that an added benefit of convening a 2002 plenipotentiary would be that the 2004 Congress would be more streamlined. The contentious reform issues would have been settled and would not clutter the Abidjan agenda. Also, it was likely that high-level private-sector officers would attend the Abidjan Congress if the participation issue has been resolved.

When the working group sought the advice of the HLG on whether to plan for a plenipotentiary session in 2002, several countries noted that such a position could not be taken at this time because the HLG had not yet made any recommendation that would require a plenipotentiary session. UPU Director General Leavey said the UPU could not do anything until these decisions had been made. Subgroup chairman Wright said that the HLG certainly should not rule out a plenipotentiary meeting, and Netherlands and Argentina agreed. But Canada questioned whether such a session was needed, and Barbados said the HLG should not recommend a plenipotentiary session to the CA. Cuba, France, Cote d'Ivoire, Japan, China, and Morocco all said a recommendation at this time would be premature.

Enhancing the New Private-Sector Advisory Group

The private sector Advisory Group, created by the Beijing Congress at the same time the HLG was created, has had two meetings thus far, and neither proved very satisfactory to the participants. Although 27 organizations were invited to the second meeting, in fact only nine attended. As a result of this experience, the second meeting created a steering committee, which met on February 13 and then reported to the HLG.

Participants in the committee meeting included representatives of the International Express Carriers Conference (IECC), the Federation of European Direct Marketing (FEDMA), as well as Spain, Brazil and the United States (U.S. delegates Boyer and Regan). Through a long day of discussion, the group created a plan for the next meeting of the Advisory Group (AG) on April 30, 2001. The group believed that AG meetings should feature substance over process and engage in issues that were of serious interest and concern to the majority of the AG members. The steering committee representative of the IECC, which had been most critical of the first two AG meetings, played the dominant role in shaping recommendations for future meetings.

The next one-day session will feature presentations and discussion on the postal market over the near future, postal issues in the European Union (to be discussed over lunch), and postal-related issues being considered in the World Trade Organization under the General Agreement on Trade in Services (GATS). Shorter segments of time will be devoted to an update on UPU programs and activities and to resolving any "business" issues of the AG.

The Spanish delegation reported on these conclusions to the HLG, giving an optimistic outlook for an improved experience by the AG. The U.S. delegation confirmed this conclusion, noting that after a somewhat rocky start, the AG now had the potential for useful interaction with the UPU and urging that private-sector agencies take full advantage of this opportunity to learn more about UPU operations and to provide comments and advice based on their own experienced. Director General Leavey agreed that the AG had had trouble getting started, and said it was primarily because there was too much bureaucracy, too much emphasis on finance and process. He too thought the feedback should generate more substantive discussions.

U.S. delegate Boyer urged that UPU find a way to cover the expenses of these one-day meetings (about $24,000 each). He said he felt it embarrassing for the UPU to invite private agencies to a consultation and then ask them to pay the costs of interpretation, translation and documentation. Such a requirement would be counterproductive, scaring away potentially interested stakeholders rather than bringing them into the UPU. Different arrangements might be found for the new third council that was being discussed by the HLG, but the AG ought to have its minimal costs covered by the UPU budget.


There was contradiction in what some of the HLG members said on the issue of a third council, but little by little, all of them seemed to be buying into the idea that some reform and some openness were necessary. Thus, Jan Wright was probably correct in concluding that there appeared to be consensus that a third council should be created, with financing to be resolved in a later meeting. Nevertheless, there will undoubtedly be difficult discussions on the details of who gets to participate in the third council and whether its members get automatic observer-ship in other UPU fora. The foot-dragging on whether to convene a plenipotentiary meeting to put this proposal into concrete form was a clear indication that agreement has not yet been reached.

Some of the countries raising concern about moving forward were the same ones that opposed private-sector observership at the Beijing Congress in 1999, and it is not yet clear whether they are ready to move forward. The concerns expressed about the convening of a plenipotentiary session in 2002 suggested that some of them would use this procedural issue to stall on reform. It is the U.S. delegation view that, if the HLG and the October CA do not recommend the convening of a plenipotentiary session in 2002, the status quo will have been maintained and the time of the HLG will have been wasted.

Next Meetings

The next session of the HLG was set for May 1-2, 2001, in Bern, at the end of the spring session of the Postal Operations Council and following the third session of the private-sector Advisory Group, on April 30. The HLG tentatively would also meet on July 5-6 to finalize its proposals so that they could be distributed in advance to members of the Council of Administration before they convene in October. If absolutely necessary, the HLG would have a final meeting on October 22.