UPU: Postal Operations Council 2003 Annual Meeting

April 30, 2003

Plans Developed for 2004 Congress in Bucharest, Romania

Department of State Report on the Meeting of the Postal Operations Council of the Universal Postal Union (UPU), Bern, Switzerland, March 31-April 11, 2003

Released by the Bureau of International Organization Affairs
April 30, 2003


        This document summarizes reporting by Department of State officers on the annual meeting of the 40-member Postal Operations Council (POC) of the Universal Postal Union (UPU), chaired by Carlos Da Silva of Portugal.  The meeting was held in Bern, Switzerland, from March 31 to April 11, 2003. 

        In the course of this meeting:

         POC delegates discussed plans for the 23rd UPU Congress, to be held in Bucharest, Romania, in the fall of 2004 (this is a new site, replacing Abidjan, Cote d'Ivoire).

         Several candidacies for Director General and Deputy Director General were made public for elections to be held at the Bucharest Congress. 

         Delegates spent substantial time considering options for a revised system of "terminal dues," the fees paid by one postal administration to another for delivery of the mail, intended to be approved in 2004 to take effect in 2006. 

         Delegates expressed concern about the growing practice of creating "extra-territorial offices of exchange," in which a postal administration of one country establishes an office in another country.  

         Agreement was reached between UPU and the World Customs Organization (WCO) on revisions to two customs declaration forms used by the posts. 

         Legal experts discussed confusion created by the process by which UPU member countries submit "reservations" and "counter-reservations" to the UPU convention.

         Private-sector members of the UPU "Advisory Group" participated in a number of the POC meetings, and the Advisory group held its own one-day session to make clear its interests in UPU issues, including licensing, WTO services classifications, and the UPU Quality of Service Fund.  They also expressed concern about ensuring their right to participate in the Bucharest Congress.

        During the period of this session, the POC and subsidiary groups held more than 70 meetings in which more than 660 delegates participated.  Delegates represented 87 countries and 41 associations and companies.  U.S. delegates participated in 57 of these action groups, cooperatives, industry groups, and project teams.  Nine officers of the United States Postal Service (USPS) chaired meetings. 

        The U.S. delegation to the POC was led by Neil Boyer of the Department of State's Bureau of International Organization Affairs (IO).  Michael Regan, director of the office of International Postal Affairs at USPS, was deputy delegation chief.  The delegation included James Wade, USPS Vice President for International Business, a number of other USPS experts, Commissioner Ruth Goldway of the U.S. Postal Rate Commission, and officers of the U.S. Mission to the United Nations Offices in Geneva.  

Bucharest Congress Plan

        The 23rd UPU Congress is scheduled to start on Wednesday, September 15, 2004 and end on Tuesday, October 5, 2004, in Bucharest, Romania.  The Congress had been planned for Abidjan, Cote d'Ivoire, but the government withdrew the invitation in light of on-going political strife.  UPU staff and Romanian officials were expected to sign a contract a few weeks after the close of the POC meeting to confirm details of the Congress operations.

        The UPU staff and POC delegates gave considerable attention to opportunities to reduce the length and cost of the Congress, which has been held every five years since UPU was founded in 1874.  The POC gave tentative approval to a plan to cut the length of the Congress by three days, from 17.5 working days in Beijing to 14.5 working days.

        On April 11, delegates from Romania gave a presentation on their plans for the 2004 Congress.  The meetings will be held in the Palace of Parliament, which they said would have more than enough space to accommodate all delegates.  The POC approved a structure providing for nine main committees of the Congress as well as a list of countries that will be invited to designate chairmen and vice-chairmen for the committees, as well as vice chairmen for the Congress as a whole.  The United States was invited to chair Committee 4 on Economic and Regulatory Issues, including terminal dues and customs issues, and planned to nominate Michael Regan of USPS as chairman.  The POC also approved a list of documents that would be prepared for submission to the Congress, as well as a draft timetable.

        In a discussion of future UPU Congresses, the U.S. delegation said it was preferable for the meetings to be held in a UN city where conference space, interpretation facilities and other arrangements were easily accessible.  This would reduce the cost to both UPU and to a host country.  Delegates discussed other possible economies, including elimination of the customary excursion, charging for coffee and tea breaks, elimination of delegate office space, while others offered counter-arguments on all these issues.  One said that the Congress should be a showcase for the postal sector, that UPU should not try to cut costs but to maximize the substance of the meeting. 


        The incumbent UPU Director General, Thomas Leavey (U.S.) is serving his second five-year term and under the UPU General Regulations cannot be reelected.  He is currently the only U.S. citizen elected head of a UN system agency.  His successor, as well as a new Deputy Director General, will be elected by the Bucharest Congress.  The new term of office will be four years, renewable once, and future UPU Congresses will be held every four years to accommodate a new biennial budget schedule.

        Thus far, there are two candidates for DG: Edouard Dayan of France, who declared his candidacy in October 2002, and POC Chairman Da Silva, who announced his candidacy at a reception on April 9.  On April 10, Huang Guozhong of China announced his candidacy for Deputy Director-General, and is currently the only candidate for this position.

        Countries are expected to begin soon to declare their candidacies for the 41-member Council of Administration (CA) and the 40-member POC; the Bucharest Congress will elect the members of both.  The United States cannot seek reelection to the CA under UPU rules but will seek to renew its seat on the POC.  Under UPU practice, an official of Romania, host country to the Congress, will become chair of the CA for the next four years.  The POC chairmanship will be determined by a vote of its 40 members at the end of the Congress.

Private-sector Participation in UPU

        The Advisory Group (AG), created by the Beijing Congress in 1999, held its sixth one-day meeting on April 8.  Twelve private-sector member organizations participated, and several of them took the opportunity to sit in meetings of the POC and its subsidiary bodies, as authorized by both the CA and POC.  Private-sector members said they considered this was the most substantive of the sessions held thus far, as they discussed WTO actions relating to classification of services, the UPU Quality of Service Fund (QSF), progress on moving toward a new terminal dues system beginning in 2006, the European mail-order market, postal licensing systems, preparations for the World Summit on the Information Society, and methods by which the AG members could contribute to development of the next UPU global strategy document, now being prepared for the next Congress.

        In regard to the situation of express couriers in China, CA Chairman Huang told the AG that there had been a conflict over the past year, "but we have solved it."  Many in China did not understand the difference between post and courier services, he said, and there was debate over whether express letters were to be considered within or outside the postal monopoly.  The post and the couriers had taken different positions.  Now, he said, China would try to revise its postal law.  Private-sector representatives present expressed doubt as to whether the problem had been "solved."

        In regard to postal licensing systems, a representative of the International Express Carriers Conference said that this organization and the International Chamber of Commerce wanted to have a dialogue with member countries regarding reduction of uneconomic tariffs and improving parity of treatment between posts and express carriers on such subjects as customs, security, night flights and taxes.  Industry wanted less political intervention and better governance.  A clear separation of operational and regulatory functions in member countries was very important.  The presentation led to an extensive dialogue on these issues.

        AG members also discussed their determination that private-sector representatives be admitted to the Bucharest Congress and not barred from the discussions, as had occurred at the Beijing Congress.  Representatives of the United States and other countries, as well as the UPU secretariat, said this ejection in 1999 had been a major embarrassment for UPU and it was important that it not occur again.  One private-sector delegate said he had been among those kept out of the meeting halls in Beijing and he did not want to spend time studying the wall plates in Bucharest.  UPU must get into reality, he said.  Felix Muriel of Spain, chairman of the AG, said he promised UPU would not let that happen again.

        Delegates from Canada and the United States explained that the process leading to inclusion of private-sector representatives in UPU had been worked out over a three-year period.  They said that, despite some difficulty, a consensus had been reached, a careful compromise, ultimately endorsed by the CA, and now it should be embraced.  In this context, Gary Halpin of Canada, chairman of the Terminal Dues Action Group, told the AG members they would be "more than welcome" at the terminal dues workshop to be held in October.

        Nevertheless, France, which is presenting a candidate for Director General, continued in several meetings to raise questions about the process for inclusion of the private-sector members, and there was some feeling among AG members that "exclusion of the competition" from UPU sessions might be an election campaign promise to potential voters that could generate unnecessary problems at the Congress, even though compromise had been reached on all of the procedures.  Private-sector members of the AG privately argued that all candidates for election at the Congress should be required to commit themselves well in advance of the election to honoring the consensus that has developed regarding the Advisory Group and the new Consultative Committee, to urging UPU member country support of these proposals, and to avoiding that issue as a campaign tactic.  Otherwise, countries that had helped to craft the compromise would need to mobilize to oppose these candidacies, they said.

        UPU officials explained that in the plan for the 2004 Congress, the changes to the General Regulations that had been endorsed by the CA would be considered on the second day of the meeting.  If approved, as was expected, the new Consultative Committee, intended to replace the AG, would have the endorsement of the Congress and there should then be no problem about private-sector participation. 

        To ensure that this worked smoothly, the delegations of Spain (which chairs the AG) and the United States had developed two resolutions intended to ensure that members of the AG were admitted to the Bucharest Congress and able to participate in all meetings that are open to all member countries of the UPU.  One would invite the AG members to Bucharest.  The other would be approved by the Congress and would declare AG members present to be members of the new Consultative Committee for the purpose of this Congress.  At the end of the Congress, the AG would be terminated and as soon as possible the new Consultative Committee would have its first meeting.  The AG endorsed the resolutions and passed them to the CA project team on the Management of the Work of the Union, which also endorsed them.  They will be presented to the CA at its October 2003 meeting for approval. 

Terminal Dues Revisions

        The Terminal Dues Action Group (TDAG) and its six project teams spent many hours during the session debating the revised terminal dues system that will be presented to the Bucharest Congress for approval and implementation in 2006.  Major divisions remained.  Four proposals -- originating with Brazil, Japan, Russia and France -- were on the table when the meeting began, and two more were added, from Moldova and the Pan African Postal Union (PAPU). 

        The TDAG and the CA project team on terminal dues agreed upon a set of "principles" that should be met by the new system, including more cost coverage and a reduction of opportunities for arbitrage arising when countries have different terminal dues rates.  Under the current terminal dues system, sharply different rates applying to industrialized and developing countries have encouraged some postal administrations and mailers to take advantage of the differences and engage in remail, while some postal administrations have established extra-territorial offices of exchange in other countries to take advantage of the arbitrage.  The U.S. delegate said in one discussion that not all of the proposals put forth appeared compatible with the principles that had been approved, that the proposals and the principles seemed to be on different tracks, and he hoped member states would keep the principles in mind as they analyzed the proposals.

        In the coming months, all UPU member countries will have opportunity to compare the six proposals against the principles that have been approved and to judge for themselves the financial effect that these proposals would have on their postal services and postal customers.  Regional workshops will be held in the summer and fall of 2003 to assist countries to undertake this analysis and understand the issues.  Then a three-day terminal dues workshop will take place in Bern on October 13-15, at the time of the CA meeting.  The TDAG chairman expressed hope that the number of proposals on the table could be cut at least to two by that time.  The further timetable includes a world roundtable discussion on terminal dues in February 2004, at which time the POC is expected to endorse one plan for presentation to the Congress later that year.

        The one solid decision taken on terminal dues during this session was a POC endorsement of the details of the "quality of service link" that will apply to terminal dues between industrialized countries beginning in 2005.  With an electronic monitoring system to determine the speed of delivery of international mail, destination countries will receive a 2.5 per cent increase in terminal dues from sending countries if the recipients participate in the monitoring system and an additional 2.5 per cent if they meet established delivery targets.  If targets are not met, countries will receive less than the established terminal dues rates.  The United States supports and will participate in the monitoring system. 

Quality of Service Fund

        Under the terminal dues system established by the Beijing Congress in 2003, industrialized countries pay an additional 7.5 per cent in terminal dues on mail sent to developing countries.  However, this additional amount is placed into a "quality of service fund (QSF)" at UPU, and a board of trustees receives applications from developing countries for the funding of postal improvement projects with this money. 

        The director of the QSF told the Advisory Group that the fund was expected to amount to about 65 million dollars over the five-year period of its authorization.  Thus far, he said, the board had received 113 proposals from 85 countries, and 81 projects had been approved.  Some countries had not submitted any applications, but others had presented multiple projects (Argentina had had seven projects approved thus far).  Proposals had concentrated on improved information systems, transportation, postal reorganization, mail collection, and quality of service measurement.  Details of the operation of the fund are available on the UPU website.

        In a meeting of the board of trustees of the QSF during the POC session, Donna Peak, USPS Vice President for Finance and Controller, was elected chairman of the board for the next year.

Extraterritorial Offices of Exchange

        Concern about the growing establishment of extra-territorial offices of exchange (ETOEs) was presented in a number of project teams and committees, but extensively in the project team on the Management of the Work of the Union.  A summary of a management study indicated that about 100 ETOEs currently exist, and the advice to member countries was that UPU should adapt to the changing market and not try to oppose this development, that the arbitrage possible through different terminal dues rates would encourage customers to continue to take advantage of the system, including the use of remail and ETOEs. 

        In the project team discussion, the UK representative said he was concerned at the implication in UPU discussions that ETOEs were negative factors.  They provide the opportunity to mailers to save money through arbitrage, he said, and they can also be faster and more efficient than some posts.  The UK had prepared a draft resolution for possible consideration at a later UPU meeting, and the delegation said the text was indicative of a wide range of liberalization across Europe, especially in the UK.  Basically, the UK draft welcomed the existence of ETOEs provided that they were licensed by the host government and that there existed a watchdog agency to guard against abuses.

        In contrast, the Canadian delegation said it was discriminatory for a country to offer access to an ETOE operator on preferential UPU terms.  Canada argued that UPU terminal dues rates are intended to apply when a postal administration mails from its home territory, not when it establishes an office and mails from some other country.  ETOEs are really commercial operations, in competition with other commercial delivery firms, but operating with UPU rates that appear to be discriminatory under WTO rules.

        Brazil presented a document proposing that the UPU Convention be amended to provide that ETOE activities could be performed under the UPU Convention only when the ETOE in question had been designated an operator officially charged with carrying out the obligations of the Convention by the "host country."

        The project team chairman urged that members continue to consider the two conflicting views of ETOEs as well as Brazil's approach and work toward a consensus that might lead to a UPU approach that most parties could find satisfactory.  If a compromise resolution were possible, the U.S. delegation noted, then it should be prepared for presentation to the CA when it meets in October 2003. 

Reservations to the UPU Convention  

        The Acts of the Union Project Team, chaired by USPS attorney William Alvis, devoted most of its meeting to procedures for member countries to take formal reservations to the UPU convention.  At previous meetings, concerns had been raised that, under current practice, reservations were presented only at the very end of the Congress and there was no time for delegates to study and make decisions on them.  Also, the use of "counter-reservations" -- presented in relation to specific "reservations" -- had caused confusion about the actual meaning of the UPU convention.  In response to these concerns, other UN-system agencies had been queried about their practices in this area.  Also, a detailed study had been conducted, and it was presented to the project team. 

        Among the concerns in the project team was the meaning and impact of a "counter-reservation," in particular as opposed to an "objection" to a reservation.  The team reached no conclusions but determined to resume its discussions at the time of the Council of Administration meeting in October 2003.  The team said it would aim at improving reservations procedures at the Bucharest Congress in 2004, at least by permitting delegates more time to consider potential reservations and setting aside opportunity for votes to accept or reject them.

        The project team also considered arguments that decisions on operational matters, in particular changes in the regulations, should not be left to the POC.  Delegation of this task to the POC permits the Congress to focus on substantive issues, but there was a concern that all 189 UPU member states are bound by a decision of the POC that is taken by only a majority of its 40 members.  A proposed correction would have permitted other UPU members to go to Bern vote at the time that the POC was taking decisions on regulations; acceptance of a regulation would be decided by a majority of those who came to vote.

        The U.S. delegation opposed this change, arguing that it was standard procedure in international organizations for a large body, such as the UPU Congress, to elect and delegate responsibility to a subsidiary body, such as the POC, to take decisions for the entire organization.  If the election of POC members had been done carefully, the POC should be trusted.  Further, if countries that are not members of the POC were permitted to send delegates to UPU meetings to vote on specific issues, the voting would be tilted in favor of European countries that could easily send representatives to Bern, and against developing countries that would find attendance too costly.  A number of other speakers supported the United States, and the proposed change of procedures was withdrawn. 


        The UPU Customs Forms Working Group reported to the POC that agreement had been reached between the working group and a counterpart group in the World Customs Organization (WCO) regarding revision of the CN 22 and CN 23 customs declaration forms used by the post.  The UPU and WCO had been working together over the past year to resolve differences regarding previous proposals. 

        The WCO Permanent Technical Committee had approved the revised forms, and the working party recommended that the POC make a similar commitment for UPU.  The POC agreed, and the new forms are expected to go into use worldwide in January 2005.  The working group said that the agreed proposals reflected post and customer feedback and that the new forms should increase the amount of information available to customs inspectors and expedite the clearance process through customs.

Postal Security

        The Postal Security Action Group (PSAG), chaired by USPS Inspector Donald Hill, focused on money laundering and efforts to stem the financial support of terrorism.  The group also heard a presentation by a scientist from the World Health Organization on new model regulations on the transport of infectious substances.  The Global Mail Security Working Group reported the update of its MARIA computer system for monitoring mail loss and tracking mail.

Customer Day

        On Monday, April 7, the POC hosted its annual Customer Day event.  The forum allows customers and partners to voice their needs, expectations and experiences to a primarily postal audience.  Eleven speakers, including Charles Prescott from the U. S. Direct Marketing Association, made presentations on topics ranging from quality of service to management principles to steps to make operations more economically efficient. 

        A presentation made by Eva Hildrum of Norway Post addressed the problems caused by independent delivery contractors when parcels from the United States were not delivered to Norwegian customers in time for the Christmas season and unexpected "handling charges" were presented to addressees.  She said there had been a public outcry and that the situation had been politically unacceptable.

        POC officials said that, despite the informative nature of these and other presentations, the POC was rethinking the model of Customer Day for future meetings.

Next Meetings

         UPU Council of Administration and subsidiary bodies, October 13-24, 2003, Bern, Switzerland

         Three-day workshop on terminal dues, October 13-15, 2003, Bern, Switzerland, open to all UPU member countries and private-sector members of the Advisory Group

         Advisory Group of the UPU Council of Administration, October 20, 2003, Bern, Switzerland

         World Roundtable on Terminal Dues, February 2-4, 2004, Bern, Switzerland

         UPU Postal Operations Council, February 5-9, 2004, Bern, Switzerland

         Advisory Group of the UPU Council of Administration, February 10, 2004, Bern, Switzerland

         UPU Council of Administration, February 11-13, 2004, Bern, Switzerland

         23rd Congress of the UPU, September 15-October 5, 2004, Bucharest, Romania