Implications of the GATS and the DohaRound Negotiations on the Provision of Postal Services: Prelimi

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Implications of the GATS and the Doha-Round
Negotiations on the Provision of Postal Services
Preliminary Findings

• Presentation to UPUs Project Group on Relations
  with the WTO
• Berne, 11 October 2006

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Implications of the GATS

• Structure of Presentation
• Introduction to the GATS
• Overview of General GATS Issues
• General GATS Obligations Relevant for the Supply
  of Postal Services
• Specific Commitments on Market Access and
  National Treatment
• Classification of Postal (and Courier) Services
• Domestic Regulation of Measures Affecting Trade
  in Postal Services
• Competition Policy for Postal Services
• Implications of the MFN principle and specific
  commitments

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Implications of the GATS

• Introduction to the GATS
• General GATS obligations
• MFN treatment
• Monopoly/ exclusive service suppliers
• Domestic regulation
• Specific Commitments by WTO Members
• Market access
• National treatment
• Integral part of the GATS
• Progressive liberalization
• Doha-Round Negotiations

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Implications of the GATS

• Overview of General GATS Issues
• Scope of Application of the GATS
• Services Sectors Covered by the GATS
• Meaning of services sectors
• WTO Services Sectoral Classification List
• Postal services as sub-sector of sector
  communication services
• Exception (Postal) Services Supplied in the
  Exercise of Governmental Authority if
• The supply of the (postal) service is not a mere
  matter of business and
• The supplier of the (postal) service is the sole
  supplier of that service

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Implications of the GATS

• Scope of Application Contd
• Measures by WTO Members Affecting Trade in
  (Postal) Services
• Any measure of a legally binding character taken
  by governmental and non-governmental bodies on
  the basis of powers delegated by governmental
  bodies
• Provided such measure affects (directly or
  indirectly) the supply/ consumption/ supplier of
  (postal) services
• Modes of Supply
• Four modes of supply
• Cross-border (mode 1) consumption abroad (mode
  2) commercial presence (mode 3) presence of
  natural persons (mode 4)
• Subject to specific commitments

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Implications of the GATS

• General Obligations under GATS Relevant for the
  Supply of Postal Services
• MFN Treatment
• Non-discriminatory treatment (in law and in fact)
  of like (postal) services/ service suppliers of
  any Other WTO Member
• Likeness of (postal) services/ service suppliers
• Relevant criteria classification nature
  quality end-uses consumers perception
  behaviour ? degree of competitive relationship in
  the market
• Measures inconsistent with the MFN principle

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Implications of the GATS

• General Obligations Contd
• Monopoly/ Exclusive Service Suppliers
• WTO Members must ensure GATS-consistent behaviour
  by monopoly/ exclusive service suppliers (e.g.
  through ? regulatory oversight)
• Supply of a Monopoly/ Exclusive Service
• Any conduct of monopoly/ exclusive service
  suppliers must comply with both the MFN principle
  and specific commitments (if any)
• Supply of Services Outside the Scope of Monopoly/
  Exclusive Rights
• Specific commitments (if any) must not be
  undermined by abuse of monopoly/ exclusive
  position ( unfair/ discriminatory practices)

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Implications of the GATS

• Specific Commitments
• Market Access (MA)
• Through any of the four modes of supply
• MA is subject to terms, limitations and
  conditions agreed and specified in a schedule (
  specific commitments)
• Terms, limitations and conditions on MA may
  differ from one sector/ sub- sector to another
• Terms, limitations and conditions on MA must not
  discriminate (in law or in fact) against
  services/ service suppliers of any other WTO
  Member ( equal opportunity of MA)
• Unlimited MA means no terms, limitations and
  conditions on MA (in that case the schedule
  concerned reads None the opposite entry being
  Unbound)

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Implications of the GATS

• Spec. Com. Contd
• National Treatment (NT)
• Clear distinction between MA and NT
• NT is subject to conditions and qualifications
  set out in a schedule ( specific commitments)
• Conditions and qualifications on NT may differ
  from one sector/ sub-sector to another
• Conditions and qualifications on NT determine the
  standard of treatment to be accorded to services/
  service suppliers of any other WTO Member
  compared to like domestic services/ service
  suppliers
• Full NT means no conditions and qualifications on
  NT ( level playing field in that case the
  schedule concerned reads None the opposite
  entry being Unbound)

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Implications of the GATS

• Classification of Postal (and Courier) Services
• Postal services is a sub-sector of the sector
  Communication Services
• WTO Services Sectoral Classification List does
  not specify the content of postal services but
  refers to corresponding CPC No. 7511
• Main content of postal services pick-up,
  transport and delivery services relating to
  letters, parcels and packages
• Provided these services are supplied by the
  national postal administration (NPA)
• Otherwise, these services are not postal services
  but courier services (mutual exclusivity of
  postal and courier services)

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Implications of the GATS

• Classification Contd
• NPA refers to a public body
• If a WTO Member privatizes its NPA, services
  supplied by the privatized (private) entity
  cannot be considered postal services any more
  (within the meaning of the WTO/ CPC
  classification system)
• Regardless of whether the WTO Member concerned
  confers a monopoly/ exclusive right on or
  delegates certain (public) powers to the
  privatized (private) entity with respect to the
  supply of postal (read courier) services
• ? Such services must be considered courier
  services

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Implications of the GATS

• Classification Contd
• Current classification system disregards the
  development of the market in question (in
  particular, the emergence of express delivery
  services)
• WTO Members are discussing modifications to that
  system (Doha-Round negotiations)
• Two different approaches are being proposed
• Separative classification approach (proposed by
  the USA) add a new sub-sector express delivery
  services (as defined by the US proposal) to the
  sector communication services but retain the
  distinction between postal and courier services
• Integrative classification approach (proposed by
  the EC and others) merge the two sub-sectors of
  postal and courier services and include express
  delivery services in that new sub-sector

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Implications of the GATS

• Classification Contd
• Comparison of the two classification approaches
  the integrative classification approach is
  preferable because of the (partial) overlap
  between postal, courier and express delivery
  services and the (increasing) competitive
  relationship between the suppliers of such
  services
• Classifying postal services in the same
  sub-sector as courier and express delivery
  services does not prevent WTO Members from either
  imposing universal service obligations on all
  service suppliers in that sub-sector or reserving
  certain service activities to one particular
  (domestic) supplier (? monopoly/ exclusive
  service supplier)
• Compromise proposal scheduling guidelines
  regarding specific commitments on postal, courier
  and express delivery services (irrespective of
  their future classification) according to
  these guidelines, schedules should list all
  sub-sectors that are open to competition

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Implications of the GATS

• Domestic Regulation of Measures Affecting Trade
  in Postal Services
• Disciplines on Administrative Practices
• Measures of general application affecting trade
  in (postal) services must be applied in a
  reasonable, objective and impartial manner (
  minimum standard of due process treatment
  provided specific commitments pertain to the
  sector/ sub-sector concerned)
• Any application of such measures by national
  authorities must not discriminate against
  (postal) services/ service suppliers of any other
  WTO Member (compared to like foreign or domestic
  (postal) services/ service suppliers)

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Implications of the GATS

• Domestic Reg. Contd
• Minimum standard of procedural fairness regarding
  an authorization required for the supply of a
  (postal) service on which specific commitments
  are undertaken
• Competent authority must provide, at the request
  of the applicant, information on the status of an
  application in a pertinent and timely manner
• Competent authority must provide, proprio motu,
  information on the decision concerning an
  application in a pertinent and timely manner

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Implications of the GATS

• Domestic Reg. Contd
• Review of administrative decisions affecting
  trade in (postal) services
• Adm. Dec. must be open to review by judicial,
  arbitral or administrative tribunals or
  procedures, at the request of an affected
  (postal) service supplier (irrespective of
  specific commitments but subject to
  constitutional carve-out)
• Review must be prompt, objective (based solely
  on relevant domestic laws and the facts of the
  case) and impartial (unbiased by the interests
  of the competent authority)
• Review must result in appropriate remedies where
  justified (at a minimum, where the adm. dec.
  has no legal basis and/ or does not correspond to
  the facts of the case)
• Adm. Dec. denying MA/ NT in breach of specific
  commitments must be overturned so as to enable
  MA/ NT in line with specific commitments

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Implications of the GATS

• Domestic Reg. Contd
• Disciplines on Licensing Requirements
  Procedures (LRPs)
• Pending the entry into force of (new) horizontal
  disciplines, the application of LRPs is subject
  to the following disciplines (in those sectors/
  sub-sectors where specific commitments exist)
• LRPs must be applied in a predictable, neutral,
  and horizontal manner that is economic in nature
  and does not favour certain (domestic) (postal)
  services/ service suppliers
• LRPs must not be applied in a manner that would
  transform the application process for a requisite
  license in and of itself into an obstacle to
  trade in (postal) services
• Application of LRPs must meet the necessity-test,
  i.e. it has to be determined whether there is no
  reasonably available alternative measure ( LRPs)
  that is less trade restrictive

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Implications of the GATS

• Disciplines on LRPs Contd
• Application of LRPs must not nullify and impair
  specific commitments in the sector/ sub-sector
  concerned, based on
• Reasonable (legitimate) expectations of other WTO
  Members as to the competitive opportunities
  arising from the specific commitments concerned
  and
• In light of the existing measures ( LRPs) at the
  point in time when the specific commitments were
  undertaken ( stand-still obligation)

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Implications of the GATS

• Competition Policy Conditions Relating to
  Monopoly/ Exclusive Service Suppliers and Beyond
• Consequences for the liberalization of postal
  services
• Reserving certain postal services to one
  (domestic) postal service supplier makes that
  supplier the sole supplier of the services
  concerned ( monopoly/ exclusive right for the
  supply of the services concerned)
• WTO Member concerned must then ensure that that
  service supplier acts in conformity with
• MFN principle and/ or specific commitments when
  supplying the reserved (monopoly/ exclusive)
  services
• Specific commitments when supplying (other)
  services outside the scope of the monopoly/
  exclusive position

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Implications of the GATS

• Competition Policy Contd
• In the framework of the Doha-Round, WTO Members
  are discussing the introduction of pro
  competitive regulatory principles (in addition
  to those set out in Article VIII of the GATS)
• Telecoms reference paper serves as a template
  for such principles
• Such principles would be inscribed in WTO
  Members schedules as additional commitments

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Implications of the GATS

• Competition Policy Contd
• EC proposal on postal and courier services
  reference paper
• Regulatory framework for postal, courier and
  express delivery services ( one common
  sub-sector, based on integrative classification
  approach proposed by the EC), consisting of the
  following elements
• Prevention of anti-competitive practices (abuse
  of dominant position in the market but no list of
  pertinent examples of such behaviour)
• Universal service obligation must be administered
  in a transparent, non-discriminatory and
  competitively neutral manner that is consistent
  with necessity-test
• Individual license may be required only for
  services within the scope of the universal
  service obligation, such licensing is subject to
  principle of transparency and susceptible to
  transparent, non-discriminatory and objective
  appeal procedure through independent review body
• Independent regulatory body whose procedures and
  decisions are impartial

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Implications of the GATS

• Implications of the MFN Principle and Specific
  Commitments on MA and NT on Postal Services
• Implications for NPAs
• NPAs are governmental bodies
• Any measure by NPA affecting trade in postal
  services must comply with the general obligations
  under the GATS and the specific commitments of
  the WTO Member concerned (if any) in the postal
  services sub-sector ( direct effect of GATS on
  NPAs)

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Implications of the GATS

• Implications Contd
• Implications for Cross-Border Supply of Postal
  Services
• Observance of the MFN principle as regards like
  postal services/ service suppliers of any other
  WTO Member ( non-discriminatory treatment)
  unless MFN exemption listed for postal services
• Granting MA to postal services/ service suppliers
  of any other WTO Member in conformity with terms,
  limitations and conditions on MA (if any) if no
  specific commitments are undertaken, there is no
  obligation to grant MA
• Granting NT to postal services/ service suppliers
  of any other WTO Member in conformity with
  conditions and qualifications on NT (if any) if
  no specific commitments are undertaken, there is
  no obligation to grant NT

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Implications of the GATS

• Implications Contd
• Implications for Measures Against Remailing
• Measures against ABA Remailing
• Denial of MA in case of non-delivery depending on
  the scope of specific commitments on MA (if any)
• Denial of MFN treatment in case of non-delivery
  or claim of payment of internal rates
• Denial of MFN treatment if measures against ABA
  remailing differentiate between the countries of
  posting
• Measures against ABC Remailing
• Denial of MA in case of non-delivery depending on
  the scope of specific commitments (if any)
• Denial of MFN treatment in case of non-delivery
• Denial of MFN treatment in case of claim of
  payment of higher terminal dues?
• Denial of MFN treatment if measures against ABC
  remailing differentiate between the countries of
  posting

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Implications of the GATS

• Implications Contd
• Implications for ETOEs
• Nature of ETOEs under the GATS
• commercial presence ( any type of business or
  professional establishment within the territory
  of a WTO Member for the purpose of supplying a
  service ? private body)
• MFN treatment of ETOEs
• Likeness of services supplied by ETOEs compared
  to services supplied by NPAs
• Likeness of services supplied by ETOEs compared
  to services supplied by private postal (read
  courier) service suppliers

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Implications of the GATS

• Implications Contd
• Implications for the system of terminal dues
• System of terminal dues draws a distinction based
  on whether incoming mail originates in a
  developed or developing country
• Inconsistency with the MFN principle
• Measure by a WTO Member affecting trade in postal
  services v
• Treatment relating to like postal services v
• Treatment less favourable v
• Exceptions?
• MFN exemption?
• Any other exception?
• Waiver?

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Implications of the GATS

• Thank your for your attention
• christian.pitschas_at_wtiadvisors.com