SADC Postal & Courier Services Sector Forum Supported by the SADC/GIZ Project on Trade in Services

1. SADC Postal & Courier Services Sector ForumSupported by the SADC/GIZ Project on Trade in Services Postal Reform, Trade in Services and Effective Access: Considering Policy options for Mutual Reinforcement Session 2: Mapping the Issues Swakopmund, 19 April 2013 Hannes Schloemann, Director, WTI Advisors hannes.schloemann@wtiadvisors.com

2. “The Post”: Infrastructural Role(s) Recalled • Central element of societies’ communications infrastructure • Letters and parcels as physical means of communication • Central role of the National Post over the past 1-2 centuries • UPU system as extension of national “postal territory” • Traditionally state run, state owned (but not always, everywhere)  Postal service as responsibility of the state • Traditionally combining postal and telecoms • Multiple other infrastructural roles of “the Post (Office)” • Financial services (incl. social services) • Transportation • Supply/distribution Etc…

3. Postal Services and Courier Services • Traditional coexistience • In principle identical services ( courier part of infrastructure) • Traditional difference in roles • State/national post: Normal, comprehensive, universally available, secure, state-guaranteed, big (and international  UPU) • Private: Ad hoc, as and when needed, complementary, partial coverage, at user’s risk (and usually local) • Perhaps key difference: Overall responsibility • The private provider goes where/when he wants/can • The Post goes everywhere, all the time  Does this dichotomy still apply? How much?

4. “Postal Reform” – Why, what, how? • Differentiating two challenges – related but not identical: • Securing supply of & access to services which people & businesses need • Reforming the existing postal operator to make it “fit” for present and future challenges • Four avenues: • Re-organizing the DPO (e.g. corporatization, privatization, financing) • Re-organizing the postal/courier sector (e.g. competition, trade) • Re-organizing state administration (e.g. regulator & its activities) • Re-organizing wider infrastructural aspects (e.g. addressing, administration of social services)

5. Universal Service – Idea & Scope • Idea: Securing effective infrastructure with a pan-societal perspective – for people, economy, state • UPU definition of “universal postal service” : “[T]he permanent provision of quality basic postal services at all points in a member country’s territory, for all customers, at affordable prices.” (Art. 1 UPC)  Six Elements • Minimum services coverage (“basic postal services”) • Minimum quality (“quality”) • Minimum time coverage (“permanent”) • Ubiquity (“at all points in a member country’s territory”) • Maximum personal coverage (”all customers”) • Affordability (“at affordable prices”)

6. Universal Service – The Economic/Business Challenge • Ubiquity, time coverage and affordability for all may (but not always has to) make commercial service provision non-viable • Depending e.g. on • geography • population density • population structure (poverty) • economic structure • transportation infrastructure • Universal service may need additional financing to be viable (requires analysis of additional costs not covered by fees collected for)

7. Universal Service – Financing Mechanisms • 4 main avenues: • Postal monopoly/reserved services (internal/external cross-subsidization from monopoly rents) • Universal Service Fund (external subsidization from within sector) • Direct subsidies/other support (external subsidization from taxes) • Other business (internal cross-subsidization from profits elsewhere) • All four are subsidies: someone else pays(other than beneficiary) • In view of financing (1-3) it may be attractive to provide US • Sometimes no financing needed at all (e.g. UK) – universal service finances itself – how? • Original endowment of DPO with assets (arguably an initial subsidy) • Or geographical etc. factors simply make US good business

8. Postal Monopoly / Reserved Services • Coverage not to be confused with universal service scope • Financing mechanism for a societal cause (universal service), not natural attribute of The Post • Advantages – inter alia less risk of corruption • Disadvantages – i.a. costs hidden,risk of inefficiencies • Risk of a paradox outcome: If reserved services are within universal services, the inefficiencies may affect precisely those services which the monopoly is meant to promote

9. Competition & Trade • Main factor: The postal monopoly • Main dividing line: DOP v. other providers (competition) • (Apparently) less of an issue: Domestic v. foreign (trade) • Main technical challenge: Defining exactly the coverage of the monopoly • Differentiating clearly and explicitly reserved and non-reserved (competitive) services (ideally positive definition) • Related/overlapping: Differentiating categories of services  the “classification issue” (or “classification debate”) in GATS and elsewhere

10. Competition & Trade: The “Classification Issue” • Traditional distinction between postal & courier relies on who provides service (“postal administration” or other) • Outdated and technically odd (for purposes of trade regulation) • Effect: Excludes from coverage of “courier” everything the National Post does (even if not reserved or USO) • Also: Does not account for complexity of express delivery services • WTO debate about solutions – proposals: • Merge postal/courier, define services, exclude explicitly reserved services (EU, Switzerland, New Zealand) • Separate category “express delivery services” (US)

11. Trade in Postal/Courier Services: Other Issues • Main Trade Barriers include: • (Monopoly/ies) • Local incorporation requirements/nationality requirements • Customs regulations • Main Regulatory issues include: • Anti-competitive practices of powerful incumbents • Unclear and/or burdensome USOs • Independence of regulator from postal operator not complete/effective • Burdensome licensing • Taxes & fees

12. Discussion Hannes.Schloemann@wtiadvisors.com 12