VZCZCXRO5412
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #3052/01 2200947
ZNR UUUUU ZZH
P 070947Z AUG 08
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 9042
INFO RUCPDOC/USDOC WASHDC
RUEHOO/CHINA POSTS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 03 BEIJING 003052 
 
SIPDIS 
SENSITIVE 
 
FOR EAP/CM JHABJAN/PPARK 
FOR EEB JBYERLY/TROBL/VLIMAYEDAVIS 
USDOC FOR ITA/MAC/IKASOFF/NMELCHER/RKARNAK/TDYCUS 
STATE PASS USTR 
USTR FOR TSTRATFORD/TWINELAND/AMAIN 
TRANSPORTATION FOR SMCDERMOTT/JSZABAT/BALLEN/NPORTER 
TREASURY FOR MANAGING DIRECTOR DWRIGHT 
 
E.O. 12958: N/A 
TAGS: ECON EFIN CH
SUBJECT: AUSTR STRATFORD RAISES CONCERNS ABOUT CHINA'S 
DRAFT POSTAL LAW 
 
THIS CABLE IS SENSITIVE BUT UNCLASSIFIED.  NOT FOR 
INTERNET DISTRIBUTION. 
 
¶1. (SBU) Summary: On July 14, Assistant USTR (AUSTR) 
for Asia Tim Stratford told State Postal Bureau (SPB) 
Deputy Administrator Wang Yuci that a provision in 
China's latest draft postal law is of great concern to 
the United States as it would seem to exclude foreign 
firms, but not domestic firms, from the domestic 
document delivery business.  He cautioned that USTR 
lawyers were reviewing the draft law to determine 
whether it is inconsistent with China's WTO 
commitments.  Although Wang claimed that the draft 
law, now in its 10th revision, was WTO-consistent, he 
accepted AUSTR Stratford's offer to have USTR 
technical experts meet with SPB experts to discuss WTO 
compliance.  AUSTR Stratford also discussed the Second 
U.S.-China Symposium on Postal Reform and Express 
Delivery Services (EDS).  After the meeting, Commerce 
Deputy Assistant Secretary for Asia Ira Kasoff joined 
AUSTR Stratford to continue discussion of these issues 
over dinner with Wang and other SPB officials. End 
Summary. 
 
10th Draft of Postal Law Raises WTO Concerns 
-------------------------------------------- 
 
¶2. (SBU) On July 14, Assistant USTR for Asia Tim 
Stratford raised United States concerns over the draft 
postal law to State Postal Bureau (SPB) Deputy 
Administrator Wang Yuci.  He informed Wang that a 
provision in the so-called 10th draft postal law is of 
great concern to the United States as it would seem to 
exclude foreign firms from the domestic document 
delivery business.  AUSTR Stratford stressed that this 
provision would put United States companies at a 
tremendous competitive disadvantage to Chinese 
competitors. 
 
¶3. (SBU) AUSTR Stratford noted that the U.S. 
Government was not aware of any countries that have 
such restrictions on foreign companies in place.  He 
also said that such a limitation was not the best 
policy for growing the express delivery service (EDS) 
business in China and serving Chinese customers. 
AUSTR Stratford reminded Wang that the U.S. companies 
in this sector have made major investments in China 
and noted the UPS hub in East China and the 
forthcoming FedEx hub in southern China. 
 
¶4. (SBU) In addition to the above-mentioned economic 
reasons, AUSTR Stratford said SPB should reconsider 
the problematic provision in the 10th draft because of 
China's WTO commitments.  He also noted that in 
previous JCCT's, former Vice Premier Wu Yi said that 
the Chinese Government would not take actions that 
would have a negative impact on foreign-invested 
enterprises. 
 
¶5. (SBU) AUSTR Stratford cautioned that the 10th draft 
raised WTO concerns and that USTR lawyers were 
reviewing the draft law to determine whether it is 
inconsistent with China's WTO commitments.  In 
particular, the lawyers are assessing whether there is 
a GATS violation on the treatment of foreign operators 
versus domestic operators.  He noted that this is a 
question of national treatment and that the U.S. 
Government wants a clear understanding of the draft 
law's potential impact on foreign operators before it 
is passed from the State Council Legislative Affairs 
Office (SCLAO) to the National People's Congress (NPC) 
for review.  AUSTR Stratford asked to see SPB's WTO 
compliance analysis given that USTR is in the midst of 
conducting its own analysis.  He cautioned that SPB - 
as a government agency - would want to be careful 
about recommending a draft law for review if it had 
WTO problems. 
 
Postal Law Reform Proposed for JCCT Agenda 
 
BEIJING 00003052  002 OF 003 
 
 
------------------------------------------ 
 
¶6.  (SBU) AUSTR Stratford also told Wang that postal 
law reform would be on the United States' list of 
proposed issues for the 19th JCCT scheduled for 
September 16 in the United States.  He also said 
senior USTR and Commerce officials would be raising 
U.S. concerns about the 10th draft in a meeting with 
MOFCOM Vice Minister Ma Xiaohong on July 17. 
 
SPB Says Draft Postal Law is WTO Compliant 
------------------------------------------ 
 
¶7. (SBU) SPB) Deputy Administrator Wang thanked AUSTR 
Stratford for introducing the U.S. viewpoint and said 
SPB understood the U.S. concerns.  He claimed that 
China conducted a careful study of its WTO commitments 
and that the 10th draft postal law was WTO compliant. 
He also said that honoring WTO commitments was a very 
important principle and then gave the floor to SPB 
Director General (DG) for Policy and Legal Affairs Da 
Wa. 
 
¶8. (SBU) Da said the United States and China have 
discussed this issue over 12 times and opined that the 
core of the issue was how to understand China's WTO 
commitment.  He reviewed China's assessment of its WTO 
commitments and remarked that when China joined the 
WTO, China did not commit to open base or ordinary 
postal services.  He also said China only committed to 
open express mail delivery services with the exception 
of what was reserved for China's postal monopoly.  He 
defined the postal monopoly as including the delivery 
of letter mail and said that according to the existing 
postal law, all delivery of letter mail, express mail, 
private mail, public mail and ordinary mail is under 
the public monopoly.  Da said there were no 
limitations on weight and charges of letter mail. 
 
SPB Says WTO Commitment Only Covers Packages 
-------------------------------------------- 
 
¶9.  (SBU) Da claimed that when China entered WTO, it 
only committed to opening the market for express 
delivery of packages, which did not include mail.  He 
cited China's horizontal commitments and said China 
only allowed entrusted companies to operate incoming 
and outgoing letter mail delivery services.  By way of 
entrustments, foreign enterprises continue to operate 
those letter mail delivery services, except in the 
area of private and government mail.  He claimed that 
China has strictly followed its WTO commitments and 
commented that when the issue of national treatment is 
discussed, it is only in the committed areas. 
 
WTO Compliance Concerns Remain 
------------------------------ 
 
¶10. (SBU) In response, AUSTR Stratford said WTO 
experts from other countries might have a different 
interpretation than SPB.  He reminded Wang that NDRC 
promulgated a rule on auto parts relating to factories 
that use them and noted that the United States and 
European Union believed the rule discriminated against 
imported auto parts.  AUSTR Stratford said China had a 
different analysis and that the WTO found mistakes in 
China's analysis, which resulted in WTO problems. 
 
¶11. (SBU) AUSTR Stratford stressed that he was not 
saying that the United States believes the 10th draft 
is a WTO violation, as there are many complicated 
issues that have to be considered.  He recommended 
that WTO experts from both the United States and China 
sit down and think through the complicated WTO issues 
involved before - and not after - the draft postal law 
is adopted.  Although Wang claimed that the 10th draft 
was WTO-compliant, he accepted AUSTR Stratford's offer 
to have USTR technical experts meet with SPB experts 
to discuss WTO compliance.  However, when AUSTR 
 
BEIJING 00003052  003 OF 003 
 
 
Stratford asked for clarification as to whether it was 
more appropriate to have technical discussions with 
SPB or SCLAO, Da commented that the draft postal law 
has been out of SPB's hands since 2002. 
 
Second Postal Reform and Express Delivery Symposium 
--------------------------------------------- ------ 
 
¶12. (SBU) AUSTR Stratford also discussed the Second 
U.S.-China Symposium on Postal Reform and Express 
Delivery Services (EDS) and proposed that the dates be 
switched to September 18 and 19.  After the meeting, 
Commerce Deputy Assistant Secretary for Asia Ira 
Kasoff joined AUSTR Stratford for a dinner with Wang, 
SPB Director General for Policy and Legal Affairs Da 
Wa and other SPB officials.  During dinner, Wang said 
SPB accepted the revised dates of September 18 and 19 
and confirmed that SPB accepted the U.S. Government 
suggestion to meet with U.S. Department of Justice 
officials to discuss anti-trust issues while in 
Washington, DC for the symposium. 
 
RANDT