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The State Department Statutory Responsibility to Ensure Fair Competition for U.S. Companies in the International Postal Product Market


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Submitted by Jim Conway
Executive Director of the Express Delivery and Logistics Association

 

When Congress passed into law the Postal Accountability and Enhancement Act in 2006, it clearly was their intention to set parameters that brought about the market for international mail products being open for competition. The business generated international mail industry has in fact been fully deregulated since 1987 -more than twenty years.

 

The Express Delivery and Logistics Association (XLA) includes within its membership United States companies engaged in international business mail. These companies are of great importance to publishers, direct marketing entities financial companies and other entities engaged in international commerce and information dissemination. Though competitors of the United States Postal Service (USPS), these companies are also significant customers of the USPS.

 

The XLA and its international postal members request that this Advisory Committee reflect on the following question: "Is the State Department fulfilling its statutory mandate under the PAEA to promote and, where direct jurisdiction applies, enforce, fair competition for U.S. companies engaged in the international postal market?".

 

Consider the State's jurisdictional authority under the PAEA found in Sec. 407 (4) (b) (1):

 

The Secretary of State shall be responsible for formulation, coordination, and oversight of foreign policy related to international postal services and other international delivery services.


 

Consider the specific congressional intent in the same paragraph on the issue of the USPS and fair competition within the international postal market:

 

...the Secretary may not conclude any treaty, convention, or other international agreement (including those regulating international postal services) if such treaty, convention or agreement would, with respect to any competitive product, grant an undue or unreasonable preference to the Postal Service...


 

Business international mail is a "competitive product" of the USPS as classified by the PAEA. Clearly the PAEA calls for fair competition for these products and for the State Department to exercise its jurisdictional responsibilities under the statute to ensure a level playing field.

 

In the time since the PAEA was written into law, State has signed onto UPU regulations that preserve the UPU system for only the USPS (proposal 23 at the 2008 UPU Congress as example), they maintain that Extra Territorial Offices of Exchange “must not use UPU documentation to export commercial cargo from the United States” on the State Department website, effectively promoting the UPU system for only the USPS’s Competitive products as well as other examples contrary to the PAEA’s mandate.

 

Three years after the enactment of the PAEA, there is still no level playing field for US companies engaged in international business mail products. The USPS continues to enjoy an unfair advantage that is the result of disparate treatment by other government agencies.

 

Let's look at the advantages that the USPS enjoys that are not available to the private sector within the international business mail market.

 

  • Customs - the PAEA calls for Customs to "apply the customs laws of the United States...in the same manner to both shipments by the Postal Service and similar shipments by private companies". This is not done. The USPS has its own customs facilities and therefore does not incur the same administrative clearance fees as private mailers and it is unknown from what ‘pocket’ the USPS’s inbound clearance costs are paid from.
  • TSA - the USPS does not have to follow the same security procedures scheme that covers private international mailers. Specifically, international mail cargo is subject to a 50% screening requirement (soon to be 100%) for all cargo on passenger planes. The USPS does not have to go through this process and its screening equipment, which is costly, is borne by the taxpayers.
  • Master Airway Bill Exit System - the USPS does not have to use this system and similarly does not have to negotiate terminal dues. Again, this puts private mailers at a distinct competitive disadvantage.

 

The international mailing market in the U.S. is not without a significant financial impact. Our estimate is that the annual US international mail market is $2.1 billion. We also note that the parcel market is growing at a fast clip. To open this market up, as intended by Congress under the PAEA, could help all competitors including the USPS. "Leveling the playing field" would encourage foreign postal authorities opening markets for U.S. companies and the USPS.

 

Ultimately, we see enforcing the statutory mandate for fair competition within the international postal marketplace as a "win/win" situation. It would grow the pie as the USPS and foreign entities would offer more competitive products and the business - especially in the parcel area would grow.

 

The XLA appreciates this opportunity to bring this issue before this Advisory Committee and we look forward to a vigorous and thoughtful discussion from its participants.



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