Cancún or bust: delivery firms keep close watch on trade talks

Date: 05/06/03

By Peter Chapman

As industry nervously awaits the outcome of WTO efforts to bring down trade barriers, express firms are taking a particularly keen interest

US TRADE Representative Bob Zoellick said last month that negotiators from across the world have a "once in a generation chance" to oil the wheels of commerce by pulling down the barriers to trade.

The express industry is in the front row at the World Trade Organization, cheering the WTO on as it bids to reverse the wave of protectionism and pull off a deal.

If it all ends in success, businesses from Rotterdam to Rangoon will have a chance to link up to global networks that guarantee quick delivery of their goods anywhere on the planet.

And the flagging dot.com economy will be given a much-needed shot in the arm.

If it all goes wrong, at best this will condemn business and customers to paying more for goods than they should.

At worst, jobs will be lost, or will fail to be created in the first place, especially in the regions and backwaters that need them most.

A host of barriers currently make it difficult for the express industry to do what it is set up to achieve.

There are two areas in which the sector is pushing, says Frank Wilrod Versprille, manager of international regulatory affairs at TPG, which runs the Dutch post operator and express giant TNT.

The first, he says, is known in WTO jargon as 'trade facilitation'.

Essentially, says Versprille, this covers mainly customs and documentation red tape that currently make up some 4-5 of the costs of all trade.

Cutting these costs in half, he adds, would save global industry more than €300 billion per year - with small firms and traders who lack the administrative back-up to cope with red tape gaining the most.

The other 'must' is progress on the General Agreement on Trade in Services - or GATS.

Here, the industry wants countries to commit to cutting burdensome licencing regimes and taxes - often favouring state-run post offices with eyes on a slice of the express market, - that can make it a nightmare to do business in a country.

Examples abound, from the postal tax levied on shipments in Colombia, Lebanon, Thailand and Egypt to licensing conditions in China, set by the local post office.

Even Japan, which has shrugged off its fortress-like image, is in on the act, with its local post offices enjoying a broader exemption from customs duties on low value items.

But, as with many other industries with massive interests at stake in the countdown to September's trade rendezvous in Cancún, Mexico, express delivery industry nerves are starting to jangle.

Aside from taking an unusual interest in agricultural issues (one of the trade talks' biggest sticking points) firms are afraid that their sector will become embroiled in the inevitable deal making and horse-trading.

For example, trade facilitation is linked with three so-called 'Singapore issues' - trade and investment, competition policy, and transparency in government procurement - drawn up in 1996.

If trade facilitation is joined at the hip to the other Singapore issues "it will be hard to gain ground because it will be difficult to get progress on the other areas", fears Versprille.

On GATS, companies admit concern over the way the EU deals with the express sector in its GATS negotiating 'offer'.

Trade Commissioner Pascal Lamy talks about the DHLs and TNTs of this world in the same breath as the monopoly post offices, under a general banner of 'postal and courier services'.

That contrasts with America, which includes the express area in a separate section, and doesn't mention anything at all that might lead to a cut in the US Postal Service's monopoly.

Versprille believes the fact that the world's two biggest trade blocs, the US and EU, cannot agree on what to offer, could dissuade other countries from taking the issue seriously.

And, although Lamy calls for a short-term cut in barriers to express delivery services, critics say the distinctions he makes between the express and the post sector are not explicit enough, as he goes on to callfor "gradual opening for basic postal services".

"The Commission's definition implies that express services are postal services," warns Mark van der Horst, EU affairs manager for United Parcel Service.

That may sound like hair-splitting. But, claims Van der Horst, this mix-up could have costly results.

It would encourage authorities, particularly in the developing world, to cling on to the view that the express industry is a threat to their state-owned post offices, with licensing regimes and taxes to match.

But that is nonsense, Commission officials insist.

"In fact, the current classification used by most WTO members, does not even recognize 'express' - it only recognizes [the terms] 'postal and courier'," said a senior aide to Commissioner Lamy.

"In 2001, the EU proposed a classification which better reflects the reality of the market, and which contains a sub-category dedicated to express delivery services. This will certainly not lead to the introduction or continuation of post regulations - in fact, in our services offer in the Doha Development Agenda negotiations, we [the Commission] offer to open up the express delivery sector without restrictions.

"So," said the aide, "if all our WTO partners shared the same position as the EU - and made the same offer - most of the trade and regulatory barriers which the express industry is facing would disappear."

The express industry and its customers hope he is right.