Released by the Bureau of International Organization Affairs
November 26, 2001

A public briefing for organizations and individuals interested in issues relating to the Universal Postal Union was convened in Room 1105 of the Department of State at 2 p.m. on Tuesday, November 6, 2001. Ambassador E. Michael Southwick, Deputy Assistant Secretary of State for International Organization Affairs, chaired the meeting. Neil A. Boyer, Deputy Director of the Office of Technical and Specialized Agencies in the Bureau of International Organization Affairs, assisted.

The primary purpose of the meeting was to provide a briefing on the status of reform initiatives in the UPU. Also discussed was a study of remail activities in relation to Article 43 of the UPU Convention, an emerging issue regarding extraterritorial offices of exchange, and U.S. Postal Service collaboration with UPU regarding terrorist uses of the mail. Representatives of the private sector and U.S. government agencies participated in the briefing. Attached to this report is a list of those present at the meeting, the agenda and a list of documents distributed to participants.

UPU Reform Process

Ambassador Southwick summarized developments at the annual meeting of the UPU Council of Administration (CA), held at UPU headquarters in Bern, Switzerland, on October 22-26. The primary development was that the Council had approved the recommendations for reform that had been proposed by the High Level Group on the Future Development of the UPU.

Southwick said that the Department of State had been given a mandate to achieve reform in the UPU and understood from the beginning that it would be difficult. U.S. policy had been to get the UPU to open up to the private sector, in line with the general trend within the United Nations system to ensure more transparency. The UPU Congress in Beijing in 1999 had been a bad start for reform, since private-sector agencies had been excluded from key sessions. The United States had recognized that reform would be an uphill struggle. Southwick said that, given the politics involved in an organization with 189 members, it would never be possible to begin with a clean sheet of paper, although some had argued for that approach.

Fortunately, Southwick said, over time, outright opposition to reform diminished, and more and more countries came to agree that reform was essential. By the time of the October 2001 meeting, it was clear that Japan remained a holdout, Canada appeared reluctant, and some developing countries, most notably Barbados, were still trying to determine what gains remained for them. However, Southwick said he believed that Japan's objections had been addressed and eased by the UPU secretariat, and that the secretariat was supportive of the desire of the majority of member states to proceed with reform, lest UPU be seen as out of step with other agencies of the UN system and with the dynamic changes in the postal market. In the end, a basic consensus emerged and was approved.

Southwick said that opening up the UPU to the private sector would be accomplished through the creation of a new third UPU body, roughly equivalent to the Council of Administration (CA) and the Postal Operations Council (POC). Members of this new body, to be called the Consultative Committee, would consist of national and international associations and umbrella groups of postal stakeholders plus a few governments. The CA would establish criteria for admission. Private-sector members would be able to attend plenary and committee meetings of the CA, the POC and the Congress. This regime would need to be formally approved by the next UPU Congress, in 2004. In the meantime, members of the existing private-sector Advisory Group could be invited to meetings of both the CA and POC. Ambassador Southwick noted that it is unlikely the establishment of this committee would backfire, since the UPU needs this type of openness in order to survive.

Neil Boyer noted that a key sticking point had been the financing of the new Consultative Committee. Many UPU member states believed that the private-sector agencies should cover the cost of interpretation and document production, but no one had been able to produce a formula that was considered equitable. However, at the October 11 meeting of the Advisory Group, Boyer said, Richard Miller of the International Mailer's Action Group, had broken the logjam with a specific proposal, and the Advisory Group had agreed on an annual "membership fee" for private-sector members of the Advisory Group. This would amount to 2,000 Swiss francs (about $1,200), and would cover the costs of two one-day meetings. It was understood that while this formula initially would apply to the existing Advisory Group, it would also apply to the new Consultative Committee when it was created in 2004, and then the Advisory Group would be phased out. At this briefing, Miller expressed his concern that the membership fees be kept at a sensible level.

Michael Regan of the U.S. Postal Service noted that progress on the establishment of the Consultative Committee would create excellent opportunities for dialogue among all countries. Achieving this would be especially important for African countries, since the next UPU Congress would be held in Abidjan, Cote d'Ivoire. He expressed optimism about this reform measure's success. Boyer noted that the next two years would test the interaction of the private and public sectors in this new forum. If the relationship was constructive, as was expected, then he anticipated no problem in having the overall reform proposal endorsed by the UPU Congress in 2004.

Ambassador Southwick noted the excellent support and advice he had received from the couriers, mailers and other parts of the private sector during the reform studies by the UPU High Level Group. He also thanked the Postal Rate Commission (PRC) and USPS for their contributions of expertise on the issues and on the UPU staff and membership.

One participant asked if the United States intended to continue to include private sector members on its delegations to UPU meetings. Southwick said it would continue to follow this practice. The Department of State wanted to ensure that the private sector was kept informed of events at UPU, and for this reason reports of UPU meetings and of briefings such as this one were being published on the Department's website. It was pointed out that the CA had created two new project teams that would continue to focus on reform issues. These were expected to meet twice a year, coinciding with sessions of the CA and POC.

(For a full report on the October 2001 meeting of the UPU Council of Administration, see the section on "Reports on UPU Meetings" in the Department of State website.)

Study of the Implications of the Article 43 Study on Remail Activities

Allison Levy of the USPS reported on the study of the impact of the possible elimination of Article 43 of the UPU Convention on remail activities. The study, commissioned by USPS, the Postal Rate Commission, and the Department of State, was being carried out by Battelle Memorial Institute. Research for the study had been completed, and the contractor was preparing the final report. The study would then be available to the three sponsoring agencies for their review. Later, it would be presented to a governmental inter-agency group for its review, and then appropriate sections would be made available to the public. One participant asked about a report given to the Congress by the Postal Rate Commission on a similar subject. Regan explained that the two studies were on different tracks and presented different pieces of information.

Extraterritorial Offices of Exchange (ETOEs)

Lea Emerson of the USPS reported on the growing trend in which some countries are opening, outside of their national territories, offices for the international exchange of mail. About 50 to 60 of these "extraterritorial offices of exchange (ETOEs) had been opened in about 15 countries. About a dozen ETOEs operated in the United States, she said, picking up commercial mail. There is growing concern, for example, with an ETOE run by a developing country picking up mail in an industrialized country and sending it to a third country under the UPU's lower rates for developing countries. The mail would look as though it had originated in a developing country when it was actually coming from an industrialized country.

Emerson said the U.S. view, developed over the past year in consultations between USPS and the Department of State, is that ETOEs are strictly commercial entities. The operator of an ETOE sending mail to the United States should not be granted any preference over other private commercial operators that cannot access the U.S. network on the basis of UPU documentation and UPU terminal dues. USPS had announced to all member states, through the UPU, she said, that upon identifying such mail, the USPS would charge the regular U.S. domestic rates for delivery of the mail. She said the issue demanded UPU attention as developing countries continue to set up ETOEs in other nations for commercial gain. On the other hand, she also noted that if a developing country is the recipient of ETOE-generated mail that actually came from an industrialized country, the developing country would not benefit from the 7.5% terminal dues contribution that would be credited to the account of that country under the new UPU Quality of Service Fund. For that reason, a CA resolution had been adopted to address the negative impact on developing countries.

Following Emerson's presentation, there was a long discussion of the emerging ETOE phenomenon, with participants requesting examples and details of how an ETOE works. Regan of USPS said that UPU would be undertaking a study of the issue in order to develop more information and to determine if a UPU policy on this issue needed to be developed. He said one concern is that, if national postal administrations begin to cross freely over the lines of developing and industrialized countries, the UPU terminal dues system of exchange could be torn down.

USPS/UPU Action Relating to Use of the Mail for Terrorism

Don Hill of the U.S. Postal Inspection Service described some of the steps that had been taken by USPS to protect postal customers from anthrax. He said the issue needed to be seen in perspective. From September 11 up to the date of this briefing, USPS had delivered 24 billion pieces of mail to 135 million delivery points in the United States, while only a handful of letters containing anthrax had been identified. He said that aggressive intervention was underway, and that targeted screening of mail was occurring. USPS also had begun working with Titan Industries, which produces irradiation equipment. He said that the USPS was looking at all available means to address the problem. Of 1,900 postal inspectors, 1,400 had been assigned to the anthrax problem and a $1 million reward for information had been posted. Six command centers had been established across the country. USPS had established a website on the anthrax issue for the benefit of both postal customers and postal employees. Since 1978, only four deaths had been attributed to anthrax. USPS was in close collaboration with the Centers for Disease Control on means of addressing the issue.

In the UPU context, Hill said that the Postal Security Action Group (PSAG) had spent a full morning discussing the terrorism issue during the October session of the Council of Administration. The Council itself had adopted a resolution condemning the use of the mail for terrorist purposes, and the UPU had published on its own website the text of this resolution and a link to the USPS site. Hill said it was important to keep the posts in other countries fully informed of what USPS was doing in this regard. USPS was also collaborating with Federal Express, UPS and other private couriers in exchanging information on ways to protect the public. USPS will also work with the International Atomic Energy Agency (IAEA) to address the anthrax problem. In response to questions from participants in the briefing, Hill also discussed some of the strategies that USPS is employing in seeking to safeguard the mail.

Customs Issues

Philip Warker of the U.S. Customs Service reported on a joint study that was being undertaken by Customs and the USPS at the request of Congress. The study was aimed at two issues: the ability of Customs to inspect all incoming and outgoing mail, and parity in customs inspection for the post and private couriers. Warker said there had been good cooperation between the two agencies, even though not all of the issues had been solved. At the working level, Warker said, agreement had been achieved on the text of the report, but the Treasury Department had not agreed to the final document, and changes were to be made. Nevertheless, USPS had sent to the House of Representatives the draft of text as agreed at the working level in response to pending customs-related legislation being introduced as part of an anti-terrorism bill. Thus there were likely to be two different texts in circulation.

Elizabeth Martin of USPS agreed that there had been good progress between the two agencies. However, she said that USPS had not yet seen the report as it had been changed at the request of the Treasury. In the context of the recent terrorist attacks and Hill consideration of new anti-terrorist legislation related to customs, USPS had sent the report to the Hill to educate Congress on the issues. Martin said that Postmaster General Potter had approved the report for the USPS and had sent it to the House along with an explanation that this was not the final document.

Warker said that Customs did not anticipate that USPS would have major objections to the revisions that were being made in the text of the joint report, and he thought the study should be completed soon. He noted that Customs felt especially strongly about enforcement of customs policy and to some extent about the need for parity of treatment between public and private operators.

Postal Reform in the United States

Elizabeth Martin of USPS said that H.R. 22, which had been proposed in the last Congress, was no longer on the table since the new Congress had taken over. No replacement language on postal reform had been introduced, although one was currently circulating in draft. Since the draft was not official, USPS had taken no position on it.

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PUBLIC BRIEFING REGARDING
U.S. RELATIONS WITH
THE UNIVERSAL POSTAL UNION (UPU)

Tuesday, November 6, 2001
Department of State, Washington, D.C.
Room 1105

Host: Ambassador E. Michael Southwick, Deputy Assistant Secretary of
State for International Organization Affairs

AGENDA

1. Update on the process of reform in UPU
Amb. Southwick, Dept of State

2. Update on study of the implications of Article 43 of the UPU Convention on remail activities
John Alepa, USPS

3. Emerging issue of Extraterritorial Offices of Exchange (ETOEs)
Lea Emerson, USPS

4. USPS/UPU action relating to use of the mail for terrorism
Don Hill, USPIS

5. Status of joint USPS-Customs Study
Phil Warker, Customs
Lisa Martin, USPS

6. Status of postal reform in the United States
Lisa Martin, USPS

7. Other Matters

8. Upcoming intergovernmental postal meetings

• Postal Union of the Americas, Spain and Portugal (PUASP), Consultative and Executive Council, Montevideo, Uruguay, March 13-15, 2002
• UPU Private-sector Advisory Group, Bern, April 2002
• UPU Postal Operations Council, Bern, April 8-19, 2002
• UPU Private-sector Advisory Group, Bern or Geneva, October 2002
• UPU Strategic Conference, Geneva, October 29-31, 2002
• UPU Council of Administration, Bern, November 1-7, 2002
• 23rd Congress of the UPU, Abidjan, Cote d'Ivoire, September 22 - October 16, 2004

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Participants in Public Briefing on the Universal Postal Union
November 6, 2001
2:00 p.m. - 4:00 p.m.
Room 1105, Department of State

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DOCUMENTS MADE AVAILABLE
AT UPU PUBLIC BRIEFING
NOVEMBER 6, 2001

• Department of State report on the meeting of the UPU Council of Administration, October 22-26, 2001. Includes discussion of approval of the recommendations of the High-Level Group on the Future Development of the UPU.
• The Future Development of the UPU: Report by the High-Level Group (CA 2001-Doc 9). Excerpts from the final report, which was approved by the Council of Administration on October 25, 2001.
• UPU News Release: UPU Opens up to the Private Sector, October 25, 2001. Announcing decision of the Council of Administration to approve the report of the High-Level Group.
• Postal Security: Assuring the Safety of Employees and Citizens. UPU press statement and resolution on "Combating Terrorism" approved by the Council of Administration on October 25, 2001.
• Committee 1 "General Matters of Policy and Principle" (CA C 1 2001-Doc 6). Program of future UPU reform steps proposed for Committee 1 of the Council of Administration. The Council approved the proposals, including the creation of two new project teams, with some modifications in their scope of work.
• Extraterritorial Offices of Exchange (CA 2001-Doc 17c). Discussion paper prepared for the Council of Administration on September 9, 2001, on an emerging contentious issue in the postal community, including a resolution approved by the Council on October 26, 2001.
• Advisory Group: Update on Current UPU Issues (CA GC 2001.2-Doc 5), October 8, 2001. Information document prepared for the meeting of the private-sector Advisory Group on October 11, 2001.

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