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2009-04-25 | All chapters

Group says China's new postal law restricts market
Associated Press, 24th April 2009

Chinese legislators enacted a law Friday that bars foreign delivery companies from handling domestic shipments within China, prompting a business group to complain that it limits access to an important market.

The new postal law is a setback for global delivery services, which have been lobbying Beijing for wider access to the fast-growing domestic Chinese market.

FedEx Corp., United Parcel Service Inc., DHL Worldwide Express Inc. and others operate in China through partnerships or joint ventures with local companies, but can only deal with international shipments in or out of the country.

The official Xinhua News Agency reported that the new amendment bans foreign express delivery companies from handling letters mailed in China to other parts of the country for "security reasons."

The European Union Chamber of Commerce in China expressed disappointment and said the decision may raise questions about China's commitment to World Trade Organization free-trade principles.

"The Chamber is also concerned about the tendency towards protectionism reflected in this law, as protectionist measures would only exacerbate the current crisis and inhibit China's economic recovery," the group said in a statement.

The law also hurts foreign competitors by creating a new licensing system for express delivery, the group said. It did not provide any details.

"These measures will erode the competitiveness of foreign-invested firms against their domestic counterparts in the wider express market," it said.

A legislator cited by Xinhua insisted the measure is consistent with Beijing's promises when it joined the WTO in 2001.

Qiao Xiaoyang, a member of the National People's Congress law committee, said Beijing's commitment to open its express mail market does not apply to "services monopolized by China's postal department according to the law," Xinhua said.

China's post office, known as China Post, has a legal monopoly on delivering letters and competes with Chinese companies in the growing domestic market for express services.

Source: http://www.forbes.com/feeds/ap/2009/04/24/ap6334590.html

To view the European Chamber's press release on the new Postal Law, please click here.