A few weeks after the Universal Postal Union (UPU) Extraordinary Congress, and while Donald Trump threatens to leave the UPU, Jean-Paul Forceville, Director of European and International Affairs, addresses the key issues in global postal negotiations.
What is currently the key challenge in international negotiation?
The most important factor at the Addis Ababa Congress in September was this major change in the separation between correspondence and goods. Imported small parcels (ISPs) were benefiting from letter-post traffic and were not being treated as parcels; for security reasons and due to flows from China and the desire of numerous countries – namely European – to tax them, shipping and handling methods will be changing.
However, ISPs retain one specific characteristic: they will not be considered parcels. We defended this position because they meet a low-end demand for e-commerce compared to parcels, which are closer to express shipping in terms of requirements (tracking, returns, etc.).
What about Donald Trump’s threat to leave the UPU?
We actually did receive formal notice from the White House, which claims that the US postal service (USPS) does not receive enough money from the Chinese postal service for small parcels coming from China. They have a major concern regarding opioids, namely painkillers, which are widely prescribed and causing cases of addiction. Our competitors have convinced US Congress that the majority of illegal products are entering the country by post…
The Istanbul cycle, which began two years ago, forecasts sharp increases in terminal dues over four years, but some feel this is not moving fast enough. Above all, this was buried in letter post, but postal companies that deal only with mail are becoming more and more dependent on ISPs, so we will be under this heavy pressure until the next Congress from the United States as well as some Nordic countries, Brazil and Canada.
What are the major challenges for Le Groupe La Poste abroad?
Everything associated with customs and security. An increasing number of countries are demanding pre-advice: that all goods (small packets or parcels), before leaving the country, be subject to the sending of information to the recipient country, so that it may prepare for customs clearance or even refuse the parcel if it deems there to be a security problem (dangerous substances, weapons, etc.).
It is connected to terrorism, of course, and it has spread. The United States has made laws and, via the Stop Act, opioids are the target. Europe is currently doing the same thing: in 2021, only objects that have been pre-advised by the rest of the world will be able to enter Europe.
This presents huge operational problems! With e-commerce merchants, the information will be easy to obtain, but for goods coming from private individuals, a system will need to be created in post offices in order to collect the information! The Stop Act requires that, in three years, 100% of objects be pre-advised… Terminals will have to be equipped with a new function, and customer service representatives will need to be trained to manually enter the necessary information.
Are we talking about the commoditisation of postal freight?
Absolutely. Until now, it has enjoyed exemptions, but it will increasingly have to comply with all the rules governing parcel shipping. It will cost a little more for senders, but given the market’s highly competitive nature, these price increases will be limited.
In particular, we will try to increase the remuneration we receive from third-party operators, as, with most of them being importers, we are delivering more and more ISPs. However, their boom will probably be curbed by the obligation to apply VAT to inbound objects from the first euro, whereas currently there are exemptions. And there, of course, Chinese products are the primary target.
Can we be optimistic about Le Groupe La Poste’s international turnover?
Yes! Firstly, European cross-border delivery, which will not be subject to these taxes, will continue to grow. Then, will what comes from China continue its growth at the current levels? Nobody knows, but given that they are low-value products, even taxed at 20% they will remain highly competitive compared to European products. And the Commission will provide simple means for e-commerce merchants to make this taxation easier.
The reform of the Universal Postal Union, one of the major issues addressed at the Addis Ababa Congress, has been adopted. It gives developing countries more power and thus seats on the Postal Operations Council (POC) – the body which handles all the technical, operational and commercial aspects. Immediately afterwards, a proposal initiated by small countries was accepted: at least 1/3 of the POC’s members will now be renewed for each Congress.
As a reminder, the UPU is an intergovernmental organisation created in 1874 and a specialised agency of the United Nations. With its headquarters in Berne (Switzerland), it constitutes the main forum for cooperation between governments, postal services and other players from the world postal sector.
It ensures a well-functioning global postal network, sets rules on international postal exchanges between its member countries and formulates recommendations aiming to stimulate growth in the volume of postal exchanges and to improve quality of service for customers. Held every four years, the Congress is the supreme authority of the UPU.