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New Postal Law not new barrier for investment and trade
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17:23, June 15, 2009

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New Postal Law to take effect on October 1, 2009 states that foreign business can not invest in domestic express services. This rule is the subject of controversy among foreign express companies. Dawa, Director of the Department of Policies and Legal Affairs, State Post Bureau, and vice president of Association of China’s Express Services, thinks that the new Postal Law doesn’t set new investment and trade barriers.

"As early as shortly after China’s entry into the WTO, China allowed international express companies to operate cross-border mail express services by way of postal commission, which has gone beyond China’s commitments to the WTO,” said Dawa.

"In addition, China allows foreign-funded enterprises to run the domestic package express service. However, the US has only committed to open the land-based delivery while shares of foreign investment in the express service via air cannot exceed 25 percent. After implementation of the new Postal Law, China will abolish the exclusive operation of express services for articles with the nature of letters by postal enterprises. China’s openness of its express service market is quite high in the world.” He added.

The so-called domestic express delivery business refers to the whole process from acceptance to delivery which all occurs inside China.

The new Postal Law sets some requirements about applying for the establishment of express companies. A higher threshold is beneficial to protect the consumers’ interests effectively.

According to estimates, at least 50 percent of express delivery companies can not meet this requirement at present.

"In order to encourage competition, the new law also gives a certain amount of time to companies so that they can comply with the law. Details will be included on implementation rules to be issued by the State Council." Dawa said.

The Association of Express Industry of China is carrying out the assessment of the average costs of China's express industry. The result will be the basis of more efforts on preventing stronger enterprises from squeezing out smaller ones.

"The postal market is so huge that even if state-owned, private and foreign companies combine together, we still can not meet consumers’ demand. So in some ways the competition among enterprises is not the first issue. Instead, the core issue is the development of a quality service,” Dawa noted.

By People's Daily Online

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