Split remains over plan for postal sector

With just one week to go before telecoms ministers discuss plans to open Europe's postal sector to competition, member states remain split over how far liberalisation should go.

But the Italian presidency is hoping one or two of the bloc's intransigent states will switch camps at the last minute.

'Clearly, the climate is changing, and we are hopeful that an agreement will be reached,' said an Italian diplomat this week.

Judging by the lack of progress in negotiations so far, however, this optimism may be misplaced. Italy's compromise proposal, which foresees a slower pace of liberalisation than that proposed by the European Commission, has thus far failed to win over any doubters.

It proposes postponing indefinitely the second stage of the liberalisation process envisaged by the Commission, an idea broadly supported by the Union's more protectionist members but shunned by the EU's liberalisers.

Germany, the Netherlands and the Nordic countries remain committed to wider market opening and insist the draft directive must include a concrete timetable. Unless one big member state or two smaller ones can be persuaded to switch allegiances, ministers are unlikely to reach an agreement on the postal dossier this time around.

Ironically, the UK could end up playing a pivotal role at the meeting on 27 June. Its position on the compromise proposal is not yet clear, which means London could swing the vote should the draft directive be put to the test.

Privatisation of the UK Post Office proved highly controversial when first proposed two years ago, and the government was forced to retreat at the last minute. Since then, British negotiators have adopted an ambivalent stance towards EU-wide liberalisation, leaving would-be allies guessing.

According to some industry sources, domestic privatisation plans have been retrieved from the rubbish heap and could be back on the agenda within months - although that has been emphatically denied by UK Post Office officials. If that is the case, however, a policy shift in Europe might also be on the cards.

The Commission has proposed a step-by-step plan which would immediately liberalise all mail weighing more than 350 grams or costing five times more to post than a standard letter and add 'direct' (junk) and incoming cross-border mail from 2001.

The European Parliament, siding with the EU's protectionists, voted earlier this year to keep direct mail and incoming cross-border mail on the list of services to be 'reserved' for state companies.

British Socialist rapporteur Brian Simpson argued that the two would have to be kept under monopoly control if post offices were to bear the cost of universal service - the principle that every address, be it in the Alps or in Paris, should be reachable by post.

'If you take away both of these areas from the reserved sector, you immediately put some 20% of the income generated by national postal administrations at the mercy of private operators, the majority of whom are American', Simpson told the assembly before the vote. 'At a stroke, the ability to finance a universal service is put seriously at risk'.

But private couriers argue that if they are not included, the proposal will not be worth the paper it is written on.

Without those sectors, less than 3% of the market would be opened up to competition.

Reluctance to break with inherited sytems has been particularly marked in the postal sector. With 1.34 million people employed by state post offices, which generate 1.3% of the Union's total GDP, member states have tackled the issue with kid gloves from the start.

A separate proposal on the protection of privacy in the telecoms sector is also running into trouble, with member states again divided over the scope of the new rules.

Under the Commission proposal, all operators would be subject to privacy laws. But some member states, who believe strict rules would straightjacket small 'call centres' unnecessarily, are opposed to such a broad definition.

Italy hopes to get an agreement by next week, but that is by no means guaranteed.