1. W T I a d v i s o r s SADC Postal & Courier Services Sector Forum Supported by the SADC/GIZ Project on Trade in Services P OSTAL R EFORM, T RADE IN S ERVICES AND E FFECTIVE A CCESS : C ONSIDERING P OLICY OPTIONS FOR M UTUAL R EINFORCEMENT S ESSION 2: M APPING THE I SSUES Swakopmund, 19 April 2013 Hannes Schloemann, Director, WTI Advisors hannes.schloemann@wtiadvisors.com

2. W T I a d v i s o r s 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. W T I a d v i s o r s 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. W T I a d v i s o r s 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. W T I a d v i s o r s 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. W T I a d v i s o r s 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. W T I a d v i s o r s 7 Universal Service – Financing Mechanisms 4 main avenues: 1.Postal monopoly/reserved services (internal/external cross- subsidization from monopoly rents) 2.Universal Service Fund (external subsidization from within sector) 3.Direct subsidies/other support (external subsidization from taxes) 4.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. W T I a d v i s o r s 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. W T I a d v i s o r s 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. W T I a d v i s o r s 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. W T I a d v i s o r s 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. 12 Discussion Hannes.Schloemann@wtiadvisors.com