Post offices set a fresh deadline for framework

EU post offices have given themselves an extra six months to settle their differences over a framework for a new payments system for cross-border mail.

They have suspended a cancellation clause and set a fresh deadline of June to find unanimous backing for a new system for sharing out cross-border postal revenues and linking price increases to efficiency improvements.

The proposed system, which is being scrutinised by European Commission competition watchdogs, was due to collapse at the end of 1996 if all post offices did not agree to join.

Spain is holding out against the change because it fears its struggling post office will be a big loser under the proposed new arrangement.

Its intransigence prompted threats from other European post offices last year that it would be left out in the cold if it did not relax its opposition.

Now others have declared themselves ready to continue talks with Madrid in order to get it on board.

'We are working on improving the system to have Spain in. We must find a compromise with Spain,' said Francis Migone, director of terminal dues for the International Post Corporation (IPC), the body handling implementation of the agreement on behalf of EU post offices.

Madrid hiked international charges for letters by 6.6% at the start of January as the government studied ways of cutting an annual deficit for Correos Y Telégrafos running at around 190 million ecu a year. Overall postal tariffs were increased by an average of 8%.

This will go a small way towards solving its biggest problem with the proposed cross-border payments system. In its original form, the new intra-post office compensation system would be calculated according to domestic postal charges, which are relatively low in Spain.

Consumer organisations have complained to the Commission about the suggested payments system, saying it appears to give post offices a free hand to increase their charges while failing to tie them down on promised improvements in efficiency.

Meanwhile, the Commission expects its delayed proposal to impose value added tax on postal services, which had been expected by the end of 1996, to be published during the first half of this year.

A scheme is needed to iron out anomalies between public post offices in the Union and between public and private express delivery companies.

In most EU countries, post offices are exempt from VAT, even though the majority of private delivery companies are subject to the tax.