Postal liberalisation set for delay

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Members of a key committee in the European Parliament are set to demand a delay in reforms as plans to subject Europe’s postal sector to full liberalisation by 2009 sparks fury among postal workers across the continent.


Finding a compromise

The Parliament’s Transport committee will meet on 4 June 2007 to debate how a compromise can be reached on reforming the EU’s postal sector ahead of a decisive plenary vote in July.

The meeting comes after five other Parliament committees consulted in the procedure came out against core elements of the Commission’s proposal, including the 2009 deadline, the abolition of the reserved area as a mechanism for financing the universal service obligation (USO) and the lack of protection for the two million workers directly dependent on the postal sector.

Although Markus Ferber, the German liberal MEP appointed to steer the proposal through Parliament, was initially supportive of the Commission’s plan, he is now seeking common ground that would gather support from all MEPs in a plenary vote in July. 

“The proposal of the Commission was a serious one but, as we are learning now in Parliament and Council, there’s only a minority in favour,” Ferber said. (For full interview, click 
here

The compromises he will be presenting to his committee next week include: 

  • 31 December 2010, rather than 1 January 2009, as the final deadline for complete market opening, with possibilities of extending the deadline for an additional two years for:  

    • new member states, and; 
    • countries with topographical difficulties, such as Greece.  
  • The scope of the USO will remain largely the same as in the Commission’s proposal in an attempt to bridge the gap between those calling for it to be widened and those that say it should be narrowed. 
  • Introduction of provisions aimed at harmonising minimum social standards for postal workers across Europe, similar to what was done in the Services Directive, to avoid a “race to the bottom” as companies compete in the market. 
  • The obligation for the Commission to issue detailed guidance on how to calculate the net cost of the universal service to ensure a level playing field among operators and avoid violations of competition law.  


Union anger
 

Postal workers across Europe will carry out a mass strike action on 6 June in what they say is an attempt to “save the universal postal service in Europe”, amid fears that rapid liberalisation will destroy public operators, resulting in a weaker customer service and big job cuts. 

Postal unions have also called for the resignation of Commissioner McCreevy, accusing him of “failing to ensure funding for a universal postal service to citizens in his rush to de-regulate Europe’s post”. 

European Commissioner for Internal Market and Services Charlie McCreevy has accused opponents to his proposal of using “scare tactics”, saying: “A closer look at the arguments they put forward to avoid or delay market opening shows that ultimately they add up to nothing more than protectionism…2009 is not going to bring the chaos and tragedy that some would like to make us believe.” 

He stressed that a “communications revolution” is taking place and said that postal operators were wrong to believe other operators were their main threat. “The real threat facing postal operators that fail to adapt are the new means of communication. No reserved area can protect them from this. The only option is to reform and to adapt, to turn the threat into an opportunity and to reinvent postal services, not only to maintain the current levels of service and quality, but to far exceed them.” 

Valérie Fagone, secretary-general of the Free and Fair Post Initiative, which represents users and competitors of the public postal operators, agreed that the opponents of the plan had done “pretty well in spreading messages inspired by fear” and that the USO was often “used as an excuse to protect monopolies”. 

“Everyone has had time to prepare and the Commission has provided lots of options,” she added, arguing that full market opening “would offer considerable opportunities for dynamism and growth”. 

Rolf Büttner, president of UNI Postal, which represents trade unions in the postal sector, accused the Commission of “lying” in claiming that the moves will create new jobs, pointing out that up to 80% of postal costs are the workers and that liberalisation will automatically result in the loss of thousands of jobs as well as in more precarious work and wage dumping as operators try to undercut each other. “There will be fewer postal services, fewer post offices, fewer letter boxes - and a worse service for those living outside the major conurbations,” he said, adding: “The fight is on.” 

Derek Holt, author of a study on funding universal service obligations, told EURACTIV he thought it would be a challenge to introduce a reliable mechanism for financing the universal service in time for 2009. 

He added that retaining flexibility for member states in deciding which funding mechanism they wish to apply is essential as each system has its specific advantages and disadvantages. "You can’t just choose one mechanism that works everywhere. There needs to be an awareness of the considerations of each country – their priorities and the characteristics unique to their postal markets. For some member states, the most important consideration might be focusing on stimulating more innovation and efficiency...Whereas in others, the importance of preserving a universal service and avoiding a complicated financing mechanism might be the most important criteria – in which case, they are more likely to want to preserve their existing approach." (
For full interview with Mr. Holt, click here.)

Professor Paul R. Kleindorfer, an expert on postal liberalisation who participated in a study for the Commission, agreed that some countries – mostly the new member states, but also some others with specific problems – "will definitely need additional time" and should have the option of applying for a three year transition period. 

He nevertheless stressed the urgency of eliminating the reserved area, which he said results in “a total lack of pressure on postal incumbents to innovate and be productive”, adding that "the fate of the postal sector depends on its ability to integrate and be efficient in today’s much broader, much more dynamic communications market." 

According to him, postal operators will be able to finance the burden of providing a universal service without this reserved area, notably by leveraging on economies of scale and scope in the postal network or by restructuring overly onerous public missions. Nevertheless, he concedes that subsidies for specific public missions are acceptable, so long as they are completely transparent. (
For full interview with Mr. Kleindorfer, click here.)

Plans, presented by EU Internal Market Commissioner Charlie McCreevy in October 2006, to open up Europe’s €88 billion mail sector to full competition, had intimated a near end to the already nearly 20 year long battle to break the stranglehold of Europe’s powerful national postal monopolies. But opposition to the proposal is gaining territory. 

The Commission first published a White Paper on postal services in 1988, but it was another nine years before the first Postal Services Directive (97/67/EC), aimed at gradually opening up the market to competition from private firms in order to make postal services cheaper, faster and more efficient – similar to what was done in telecoms – was adopted. 

While the directive, and a second one adopted in 2002, succeeded in opening up a number of postal services, they stopped short of allowing competition for the delivery of letters weighing less than 50 grammes, creating a lucrative ‘reserved area’ for incumbents in return for them providing citizens with a universal service and, de facto, making it difficult for new operators to enter the market. 

The Commission's most recent proposal aimed to put an end to this situation in all member states by 2009, but a campaign to delay liberalisation, spearheaded by monopolistic postal operators in France, Belgium and Luxembourg, has won backing from operators in Italy, Spain, Greece, Poland, Hungary and a number of other new member states, as well as from many members of the European Parliament. 

Nevertheless, operators in Germany, Sweden, the Netherlands and the UK, where liberalisation has already begun or been finalised, remain adamant that other EU countries respect the 2009 deadline. 

  • 4 June 2007: Debate in Parliament’s Transport Committee on a draft report by German MEP Marcus Ferber (EPP-ED). 
  • 18 June 2007: Expected first-reading vote in the EP's Transport Committee. 
  • 6-8 June 2007: Ministers to discuss the proposal in the Telecommunications Council. Possible political agreement, although France and its allies are enough to create a blocking minority. 
  • 9-12 July 2007: EP first reading vote in plenary. 

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