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Cablegate: Ndrc Responds to U.S. Concerns On Postal Law

VZCZCXRO3316
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #4645/01 3581014
ZNR UUUUU ZZH
P 231014Z DEC 08
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 1560
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC

UNCLAS SECTION 01 OF 02 BEIJING 004645

DEPT OF STATE PASS TO USTR STRATFORD AND MAIN
DEPT OF COMMERCE PASS TO KASOFF, MELCHER, DYCUS

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON WTRO ETRD EAIR CH

SUBJECT: NDRC RESPONDS TO U.S. CONCERNS ON POSTAL LAW

THIS CABLE IS SENSITIVE BUT UNCLASSIFIED. NOT FOR INTERNET
DISTRIBUTION. PLEASE HANDLE ACCORDINGLY.

REF: (A) BEIJING 4293; (B) BEIJING 3509

1. (SBU) SUMMARY: The Embassy received on December 22 from the
National Reform and Development Commission (NDRC) a faxed statement,
dated December 18, responding to U.S. Government and private sector
comments on the Revised Draft of the Postal Law. NDRC's statement
avers that the exclusion of foreign firms from domestic express
delivery services is consistent with China's commitments to the
World Trade Organization (WTO). It also states that the draft law
excludes all express delivery companies (both domestic and foreign)
from those mail delivery business exclusively operated by postal
enterprises. As the National People's Congress' (NPC) second and
possibly third reading of the Postal Law, originally anticipated for
the NPC Standing Committee December 22-29 session, has been
postponed, Mission China will continue, in consult with industry, to
convey to policy makers at the national and regional level U.S.
concerns with the draft law and urge its revision. END SUMMARY.

2. (SBU) The attached text is an Embassy corrected version of NDRC's
courtesy translation, which more accurately reflects the original
Chinese text.

-----------------
BEGINNING OF TEXT
-----------------

The National Development and Reform Commission of the People's
Republic of China

Dec. 18, 2008

Written Statement on the Postal Law (Revised Draft) of the People's
Republic of China

The Postal Law (Revised Draft) of the People's Republic of China was
submitted to the Standing Committee of the National People's
Congress for review on Oct. 23, 2008, and then the Sub-Committee on
Legislative Affairs of the Standing Committee of the National
People's Congress invited comments on the Revised Draft from the
general public from Oct. 30 to Nov. 30, 2008. Relevant departments
of the federal government of the United States of America, the
U.S.-China Business Council and some American companies have paid
close attention to the Revised Draft of the Postal Law, and provided
comments on certain contents of the Revised Draft through the Fifth
U.S.-China Strategic Economic Dialogue (SED) and other channels,
particularly on Article 50 of the Revised Draft, which states
"Foreign companies are restricted from investing or operating in the
domestic mail (see definition below) express delivery service." The
National Development and Reform Commission of the People's Republic
of China, according to its knowledge, would like to provide
information as follows:

The Revised Draft of the Postal Law was drafted in line with the
Reform Plan on the Postal System, by widely soliciting opinions from
domestic government agencies, enterprises, experts and customers,
and borrowing ideas from useful experiences and practices of other
countries. The Revised Draft imposes no discrimination on foreign
companies, and will not affect the existing international delivery
business of foreign companies operating in China for reasons as
follows:

I. Article 50 of the Revised Draft states "Foreign companies are
restricted from investing or operating in the domestic mail express
delivery business. The domestic express delivery business herein
refers to a business in which the entire delivering process from the
acceptance of the mail piece to the delivery to the recipient occurs
within the borders of China."

This article does not violate China's commitment to the WTO, neither
will it affect activities such as acceptance, posting, transport,
delivery and etc., carried out by foreign express delivery companies
in China when they operate international mail express delivery
business (except for private mail).

II. Article 54 of the Revised Draft states "Express delivery
companies are excluded from those mail delivery businesses
exclusively operated by postal enterprises, and express delivery
companies are also restricted from posting and delivering official
documents of government agencies."

According to this article, the mail posting and delivery business is
the exclusive business of postal enterprises, and express delivery

BEIJING 00004645 002 OF 002


companies are restricted from delivering official documents of
government agencies. This is applicable to both domestic and
foreign express delivery companies. In this regard, the Revised
Draft treats domestic and foreign express delivery companies
equally, and imposes no discrimination against foreign enterprises.

The Chinese government holds an open and welcoming attitude towards
foreign companies carrying out express delivery business in China,
and has provided foreign companies with equal and fair treatment in
line with China's commitment to the WTO and relevant laws and
regulations. The Chinese government also has provided foreign
express delivery companies with maximum policy support. Under such
policy environment, foreign express delivery companies have seen
fast expansion in the Chinese market in recent years along with
China's steady and fast economic growth, and have dominated over 80
percent of the market share of China's international express
delivery business. One outstanding example showing China's support
to foreign express delivery companies is the recently built
transportation hub at the Guangzhou Baiyun International Airport,
which is the largest of its kind in the Asia-Pacific region, with
total investment of 2 billion RMB by the Chinese side, and will be
rented to Fedex Corp. to start operation shortly.

mail: refers to letters and postcards

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END OF TEXT
-----------

3. (SBU) Copies of the original NDRC statement in Chinese and
English are available via fax or as a scanned document from Daniel
Kachur (kachurd@state.gov) of the Embassy's Economic Section. The
statement was apparently simultaneously transmitted to industry via
the U.S.-China Business Council. Local United Parcel Service (UPS)
contacts do not view the NDRC letter as adding anything constructive
to the dialogue underway. The contents of NDRC's statement are
essentially the same as NDRC Vice Chairman Zhang Xiaoqiang's
delivered remarks at the U.S.-China Strategic Economic Dialogue
(SED) meeting in Beijing on December 4-5.

4. (SBU) The National People's Congress' (NPC) second and possibly
third and final reading of the Postal Law, originally anticipated
for the NPC Standing Committee December 22-29 session, has been
postponed. The reason for the delay was not made public, but NPC
Economic Committee members told Economic Minister Counselor Robert
Luke that they were aware of strenuous objections by U.S. and
European industry representatives, and they hoped this delay would
give time to address some of those concerns. Embassy Economic
Section, Foreign Commercial Service (FCS), and USTR offices will
continue to work closely with affected U.S. companies in China to
engage and educate local and central government officials of U.S.
concerns with the draft law and urge revision of the draft law prior
to passage.

RANDT

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