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E. Michael Southwick Deputy Assistant Secretary for International Organization Affairs U.S. Department of State Testimony before the House Government Reform and Oversight Committee, Subcommittee on the Postal Service Washington, DC, March 9, 2000

"International Postal Policy"

Thank you for the opportunity to speak with you today about the new and expanded responsibility assigned to the Department of State in relation to the Universal Postal Union (UPU). We in the State Department have taken this new assignment very seriously, and we believe that we are making progress on redefining and achieving U.S. objectives in the UPU. Our interpretation of the new GAO report on this subject is that the GAO generally concurs that State's work on this issue has been constructive, and we appreciate that analysis.

The GAO report also points out that there were some procedural shortcomings as we undertook these new responsibilities. We believe we have addressed them. We also are aware that there remains some concern about continuity of staffing in the handling of our new role, and I hope to reassure the committee on that score. The rotational personnel system at the Department of State should be seen as a positive factor. It provides a constant supply of talented officers who understand trade and other economic issues, know how to work toward consensus with counterparts in other countries, have access to a network of colleagues in U.S. embassies around the world, and know how to do business in the United Nations system. Their rotations also bring in fresh ideas and new perspectives. To help provide continuity and help assure effective coordination, we will also continue the current arrangement in which staffing includes a career civil servant.

The Reform Process

I come from the Bureau of International Organization Affairs in the Department of State -- the bureau that handles the United Nations and all of its affiliated agencies. For years in this Bureau, we have been promoting reform in multilateral agencies. Part of that reform is a quest for openness and transparency. Throughout the multilateral system, that means increasing interaction with the private sector -- with non-governmental organizations, with industry, with private citizens. We know that the major tasks that face the UN system agencies cannot be achieved with the limited resources and staffing that these agencies have available. The UN agencies must draw into their orbit the portions of the private sector that are relevant to their work, seeking both to stimulate new ideas and to learn from the broad experience of the private sector.

We approached the UPU from that perspective and from our legislative mandate -- one that we regard as a mandate to promote reform. Frankly, we were very disappointed in what we initially found a year ago. Not only was the UPU relatively closed to outside interests, especially the private-sector courier industry, but most of its member states seemed to support that private-club approach. Some countries that traditionally are allies of the United States in promoting reform in the United Nations system even seemed to be opposing reform in the UPU.

Nevertheless, we undertook our task with determination, with the goal of opening up the UPU to the private sector and stimulating an international postal delivery system that would provide the greatest benefits to the consumer. It is our hope that this reform process in time will result in a UPU that:

• is open and transparent in its work,
• fosters and encourages a more open and competitive system,
• provides maximum entry opportunities to all stakeholders,
• ensures fairness to all competitors,
• and above all provides postal consumers with valuable benefits, including lower costs, faster delivery times, and a greater choice of services.

We recognize that these may be seen as general objectives. It is our intention to build upon them, linking them in ever stronger fashion to our overall foreign economic policy objectives and to our legislative mandate. We will use our new role to reach out to other U.S. Government agencies, to the Congress, and to the private sector in this country, and to seek consensus on the specific attributes of a reformed UPU.

Results of the Beijing Congress

As you know, the UPU convenes a major Congress once every five years to establish new directions. We in the State Department took on our new responsibility only a few short months before the UPU Congress in Beijing, China, in August 1999. I must tell you that this was a major challenge for us. Nevertheless, I am certain we have made a difference. For the first time in UPU's 125-year history, the United States delegation was headed by a senior official of the Department of State representing a government-wide perspective. Also, for the first time, the U.S. delegation included representatives of the private sector -- both couriers and mailers.

Both of these changes were very much noticed by the UPU secretariat and by the other member states as well. To some, these were actually astonishing developments, and it was clear to others that the United States was going to take a new approach to the UPU. Over the last year, in UPU meetings and in other interactions with foreign governments, we have made many references to the legislation of October 1998 in making clear the interest of our Congress in ensuring that the private sector in the United States has more opportunity to be informed about the UPU and to participate in its activities.

Within the United States, we have opened up a special section of the Department of State's website to make available more information and documentation relating to the UPU. We have made key UPU documents available to interested U.S. "stakeholders." We have convened U.S. Government interagency meetings as well as public meetings to discuss UPU issues. And we have provided the UPU with a list of U.S. stakeholders in UPU issues so that they might be consulted regarding UPU policies.

Largely as a result of our initiatives, the UPU has convened what is called the "High Level Group on the Future Development of the UPU," a 24-member body that is studying reform and that has been asked to make recommendations for specific action by September 2001. We are playing a major role in this group.

I want to acknowledge that it is not easy to promote reform in an agency that has traditions going back 125 years, and I do not wish to paint too rosy a picture about what we might achieve. Nevertheless, there is a very significant difference between the outright defiance and resistance to reform that we encountered in Beijing seven months ago, and the attitudes that we now see in the new High Level Group.

The senior officers of the UPU are now speaking in terms that suggest reform of the UPU is inevitable, and the majority of the High Level Group is also demonstrating this attitude. There are some members that remain resistant, but there has been no back-tracking thus far, only progress, and I am convinced that we can convert this new atmosphere into reforms that will significantly change the UPU, and that will make it more relevant.

Thus far, the High Level Group has been primarily sorting out its workplan and developing information for consideration at a later stage. But two developments are very important:

First, the Group has brought in panels of experts on the postal sector and on reform to provide different perspectives on the issues before the group. At its next meeting, in May, the Group will hear from representatives of the private couriers, the mailers and the customers, to find out from them what improvements they believe can be made in UPU policy and operations.

Second, the High Level Group has decided to solicit the opinions of the major stakeholders in UPU affairs. The Group has created a questionnaire that has been sent out to both government and non-government agencies with concerns about the UPU. The responses will be collated and presented in a report to the Group when it next meets. We in the government sent the questionnaire to about 30 U.S.-based stakeholders, and we strongly encouraged them to respond frankly and fully, sending their replies directly to UPU.

In addition to the High Level Group, I want to point out that the Beijing Congress created another opportunity for participation by the private sector. This is the formation of a new Advisory Group to the UPU Council of Administration. About 30 international private-sector agencies and associations are being invited to meet with the UPU staff and representatives of about 20 governments to discuss their interests in UPU and their concerns about it. The first meeting will be held in May. This was a U.S. proposal in Beijing. The outcome was not as far-reaching as we preferred, but it was the best attainable at the time. We strongly recommend that the interested international agencies take advantage of this opportunity to make themselves heard in a UPU forum.

In more substantive terms, we were pleased that the Beijing Congress agreed to a transitional system for "terminal dues." These are the amounts that one country pays another for postal delivery services. This new plan provides for lower rates to be paid by developing countries and establishes a special fund to assist them in improving the quality of service. At the UPU Congress, we made clear our view that these terminal dues arrangements should eventually move to a non-discriminatory cost-based system.

With regard to customs issues, we have used our interagency group to stimulate discussion and to ensure that positions taken by the United States Government are fully coordinated.

Relations with Other "Stakeholders"

Overall, I want to emphasize that we in State are committed to a fair and open process for dealing with the UPU. We are attempting to carry out our new role in an even-handed manner, as set forth in the "sense of the Congress" portion of the 1998 legislation.

As the legislation made clear, we in State have primarily responsibility for relations with the UPU, and this encompasses the important role played by our Postal Service in a variety of detailed and technical areas. We have developed a good spirit of teamwork with the Postal Service. I can honestly say that we are working together well in the High Level Group and elsewhere to generate the reform that we all know is essential in the UPU. We also have an active interagency consultation process, with about half a dozen agencies sharing their views. This wider participation in the development of policy toward the UPU is a definite benefit to us in the Department of State.

We intend to continue our public meetings and other outreach to interested parties in the private sector. Reform of the UPU is not going to occur overnight, but we sincerely believe we are making good progress, and we pledge to keep you informed as that work goes forward.

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