International Postal Bill in Question

The first hearing on Sen. Thad Cochran's bill S.2082, the International Postal Services Act of 1998, was held last week, and no one is sure whether it will be approved by the Senate or where it will end up next.

Anne Rehfuss, a spokeswoman for Cochran (R-MS), said his subcommittee has “no immediate plans to try to move S.2082. Its status is simply pending before the subcommittee.”

But, she said Rep. Anne Northup (R-KY), a member of the House Subcommittee on Treasury, Postal Service and General Government, under the House Appropriations Committee, is expected to offer it as an amendment to the Treasury Postal Appropriations Bill. Oftentimes, “the House Appropriations bills will come first, and we kind of react or gauge what happens over there before we make any moves in the Senate,” Rehfuss said.

S. 2082, which was introduced May 14, would amend the Postal Reorganization Act of 1970 to subject the postal service to the same rate-making procedure as domestic mail. It would require the postal service to file with the Postal Rate Commission for any changes in international rates just as it does with domestic rates. Cochran, who is chairman of the Senate Subcommittee on International Security, Proliferation and Federal Services, also said allegations have been made that the USPS uses its revenues from First-Class mail to subsidize its international postal services.

Although the USPS strongly opposes the bill, the postal service's main competitors — UPS, Atlanta; and FDX, Memphis, TN, parent company of FedEx, want it to stay alive.

New Postmaster General William Henderson denied that international mail services don't pay their own way. He said that in each rate case, the USPS must demonstrate that total international revenues exceed total international costs to ensure that domestic services, such as First-Class mail, are not cross-subsidizing international ones. He also said that in view of the subcommittee's interest, the board of governors has asked the USPS inspector general to conduct an audit of the allocation of costs between its domestic and international products and services.

“This will provide an objective, factual foundation for answering the cross-subsidization issue,” he said.

Henderson said international rates shouldn't be placed under the domestic price system since international postal business is subject to marketplace competition. He also said the international marketplace is different from the domestic one because the USPS is not dealing with a uniform market in these cases.

UPS chairman and CEO Jim Kelly testified that Cochran's bill is necessary because the postal service is able to exploit the lack of international oversight by engaging in a number of anti-competitive practices overseas.

“The abuse of the monopoly has a direct impact on American consumers, who are now being forced to pay significantly more for First-Class postage than they otherwise would,” Kelly said.

Frederick W. Smith, chairman and CEO of FDX Corp., also addressed the subcommittee, saying, “The same procedures that prevent abuses in domestic postal service should apply to international postal services.”

According to Richard Barton, senior vice president of congressional affairs for the Direct Marketing Association, the USPS is concerned about the wishes of its competitors because, “if UPS and FedEx get what they want out of Congress in terms of international mail, the USPS essentially will not be able to compete.”

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