Postal Privatization to Spark Debate

With jobs at stake and reform lagging, the European Commission expects resistance to its proposal to fully privatize postal services by 2009

The European Commission is set to propose a full liberalisation of postal services by 2009, which will force member states to stop protecting public operators from national or cross-border competition.

Brussels expects the move may spark "quite a polarised political debate" across Europe, according to one official, as a number of jobs in the public sector are at stake in several countries.

The EU triggered this reform in 1997, introduced some modifications in 2002 while the so-called "third postal services directive" - likely to get a go-ahead by the commission in early November - will prompt the full opening-up of the sector.

According to a draft proposal seen by EUobserver, the EU executive will suggest a scrapping of the concept of "reservable areas" to which member states can currently restrict access to certain operators.

But it will stick to the existing rule of "universal service obligation" which means that a certain list of services must be provided to citizens - like delivery of letters and parcels within a certain time, with a certain frequency and standard.

To achieve this, member states will be allowed to choose their own model of financing these services by supporting their public providers - either through state aid, compensation funds, cost sharing or other means.

Under the proposal, uniform tariffs will be allowed - irrespective of the location of the mail receiver - "for consumer or single-piece mail or for public policy reasons" but not in business correspondence.

MORE CHOICE AND MORE EXPENSIVE LETTERS. The commission believes that the postal reform may boost new technologies of delivery used by European consumers, such as sending an email to be delivered by mail.

It may also lead to a different infrastructure - with post offices getting replaced by less costly franchised postal agencies or other service points in shops or petrol stations, already suggested by some German companies.

Still, it will be up to member states and national regulators to ensure that the postal services are well accessible across their territories – through post offices, letter boxes or other points.

While the prices in business correspondence are likely to fall - with more competition foreseen in this commercially lucrative area - prices of individual letters may shoot up by up to 50 percent.

Different pace of reforms across EuropeAcross Europe, member states already differ greatly on the extent to which they have carried out postal services reform and so will also differ strongly in their views on the blueprint.

While the UK, Sweden and Finland have opted to drop restrictions on competition, they might call for a bolder initiative by the commission - with less protectionist regulations - mainly regarding the provision of universal service.

On the other hand, countries which are far behind in restructuring the sector are expected to oppose the proposed 2009 deadline and advocate a later date for full liberalisation.

Of the "old" EU member states, France and Italy are particularly likely to struggle because of their postal services' low productivity and the fact that most employees are civil servants, although Rome has already triggered a switch from public to contractual deals in the sector.

Several other west European countries and almost all new member states are performing quite poorly and will need to step up reforms - such as Ireland, Greece and Spain.

Germany, UK, Sweden, Finland, Denmark, Austria, Belgium are around or above the EU average.

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