DEMARCHE REQUEST: CHINA'S DRAFT POSTAL LAW

UNCLAS STATE 039698 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON ETRD WTRO CH SUBJECT: DEMARCHE REQUEST: CHINA'S DRAFT POSTAL LAW SENSITIVE BUT UNCLASSIFIED ENTIRE TEXT. PLEASE PROTECT ACCORDINGLY. ¶1. This is an urgent action request. See paragraph 2 below. Summary and Action Request -------------- ¶2. The National People's Congress (NPC) is proceeding to finalize the draft Postal Law in the April 20-24 meeting of its Standing Committee and all indications are that the final version of the Law would maintain discrimination against foreign companies. Post is requested to deliver the below points to the appropriate MFA official. Background -------------- ¶3. Although foreign express delivery companies have an estimated 80 percent of China's international express delivery market, they are also interested in establishing a greater presence in China's domestic market (pick-up and delivery within China). China's draft Postal Law would exclude foreign express delivery companies from Chinese domestic document delivery, placing them at a competitive disadvantage vis-a-vis Chinese companies that would be able to provide a full scope of services (i.e., both documents and packages). The Law would not hinder the ability of foreign companies to deliver domestic packages. Talking points -------------- ¶4. Begin points. - The United States is very concerned that China's draft Postal Law is slated to be approved in final form by the National People's Congress (NPC) this week. Article 50 of the draft Law would prohibit foreign express delivery companies from domestic express delivery (pick-up and delivery within China) of documents. Foreign express delivery companies will have a very difficult time competing commercially if, unlike their domestic competitors, they cannot supply a full scope of express delivery services. - The United States urges China to postpone a final vote on the draft Law until issues of concern have been addressed through dialogue. It also would be useful for China, in the final law, to provide for increased discretion at the regulatory level so that regulators have the flexibility to take account of changing circumstances as they regulate the express delivery industry. - Foreign express delivery companies have created thousands of jobs for Chinese citizens and provide logistics platforms that propel the growth of other Chinese business sectors. It would not be in China's best interest to place limits on their operations, especially now when China's domestic companies have lost export markets and foreign express delivery companies can provide essential services to help Chinese companies reach and serve new customers in the Chinese domestic market. If the MFA asks whether the U.S. believes that China is violating its WTO commitments, or states that China is not violating its WTO commitments: - The United States is continuing our analysis of China's WTO obligations relating to this issue. We would hope that in the meantime, China would focus on the merits of our trade concerns and the effect of any new restrictions on China's economic development. End talking points. End action requested. ¶5. Department appreciates post's assistance. CLINTON