UNITED STATES OF AMERICA

POSTAL REGULATORY COMMISSION

WASHINGTON, DC 20268-0001

Section 407 Proceeding Docket No. IM2018-1

NOTICE OF POSTING OF VIEWS

(Issued September 10, 2018)

Consistent with 39 U.S.C. § 407(c), the Commission provided views to the 

Secretary of State on whether certain proposals for the September 2018 Extraordinary 

Universal Postal Union Congress are consistent with the standards and criteria for 

modern rate regulation established by the Commission under 39 U.S.C. § 3622. 

Consistent with 39 C.F.R. § 3017.3(b), these views have been posted on the 

Commission’s website in Docket No. IM2018-1:1

Commission views dated July 24, 2018.

Commission’s supplemental views dated July 26, 2018 and September 4, 2018.

Stacy L. Ruble

Secretary

 

1

In Order No. 2960, the Commission stated, “[a]s indicated in section 3017.3(b), the Commission 

intends to post its views in the docket with which it is associated after conclusion of deliberations on a 

related treaty, convention, or amendment.” Docket No. RM2015-14, Order Adopting Final Rules on 

Procedures Related to Commission Views, December 30, 2015, at 29 (Order No. 2960).

Postal Regulatory Commission

Submitted 9/10/2018 9:26:01 AM

Filing ID: 106494

Accepted 9/10/2018
Docket No. IM2018-1 Attachment A

Title of Documents

Commission’s views dated July 24, 2018.

Commission’s supplemental views dated July 26, 2018.

Commission’s supplemental views dated September 4, 2018.
Docket No. IM2018-1 Attachment B

File of Documents
POSTAL REGULATORY COMMISSION

Washington, DC 20268-0001

Office of the Chairman

July 24, 2018

VIA U.S. MAIL AND EMAIL

The Honorable Michael R. Pompeo

Secretary of State

U.S. Department of State

2201 C Street NW 7th Floor

Washington, DC 20520

Dear Mr. Secretary:

This responds to the enclosed March 27, 2018, letter from the Department of

State, pursuant to 39 U.S.C. § 407(c)(1), requesting the views of the Postal Regulatory

Commission (Commission) on proposals to amend rates or classifications for market

dominant products or services within the Universal Postal Convention that will be

considered at the upcoming 2018 Universal Postal Union (UPU) Extraordinary

Congress (2018 UPU Congress). I am writing to provide you the Commission's views

with respect to the consistency of proposals that establish or amend market dominant

rates or classifications with the standards and criteria established by the Commission

under 39 U.S.C. § 3622.

The Commission has reviewed all 2018 UPU Congress proposals available on

the UPU website as of July 23, 2018, and has identified one proposal that, if adopted,

would likely represent a classification change for a market dominant product. Proposal,

20.18.1 amends Article 18, Basic services, of the Universal Postal Convention to

change tracking for UPU letter post from an optional to a mandatory service. Currently,
Secretary Pompeo

July 24, 2018

Page 2 of 5

the Postal Service only provides tracking for UPU letter post mailpieces as part of

various negotiated service agreements and does not offer tracking for UPU letter post

as a service to all designated postal operators of UPU member countries. Accordingly,

if the 2018 UPU Congress adopts Proposal 20.18.1, the Commission's Mail

Classification Schedule would likely need to be modified to include the tracking service.

Proposal 20.18.1 is consistent with the standards and criteria established by the

Commission under 39 U.S.C. § 3622. 1 The Commission finds that Proposal 20.18.1 will

likely promote the Postal Service's financial health. Although Proposal 20.18.1 does not

include remuneration for the tracking service, Article 30-104.4.2 of the Regulations to

the Universal Postal Convention specifies remuneration to designated postal operators

for providing tracking for letter post. 2 Because the revenue earned from the proposed

tracking service would be greater than the cost of providing the service, adoption of

Proposal 20.18.1 would: provide additional contribution, supporting financial stability

(Objective 5); promote the Postal Service's efforts to enhance mail security and deter

terrorism (Objective 7); establish reasonable rates that do not threaten the financial

integrity of the Postal Service (Objective 8); and enable the tracking service to cover its

attributable costs (Factor 2).

On April 5, 2018, the Commission established a public proceeding under Docket

No. IM2018-1 to solicit comments on the general principles that should guide the

Commission's development of views on relevant proposals, in a general way, and on

1 This finding of consistency with the standards and criteria established by the Commission under

39 U.S.C. § 3622 does not approve the addition of a market dominant product, or modification of an

existing market dominant product, to the Mail Classification Schedule that would be required if the 2018

UPU Congress adopts Proposal 20.18.1.

2 Regulations to the Convention, Final Protocol, Article 30-104, Supplementary remuneration for

registered, insured and tracked items, March 31, 2017. Payment of the rate for the tracking service is

contingent upon the Postal Service meeting the UPU requirements for data transmission. Id. It appears

likely that the Postal Service will meet these UPU requirements.
Secretary Pompeo

July 24, 2018

Page 3 of 5

specific relevant proposals, if the Commission is able to make these available.3 As part

of Docket No. IM2018-1, the Commission received numerous comments regarding the

effects of the UPU terminal dues system from small businesses, members of Congress,

and industry stakeholders. These commenters expressed concern that the UPU

terminal dues system harms U.S. businesses because terminal dues charged to foreign

postal operators are less than domestic shipping rates. These commenters also

expressed concern that domestic mailers are subsidizing the delivery of Inbound Letter

Post because the cost of delivering Inbound Letter Post mailpieces is greater than

Inbound Letter Post revenue.

Although many of the comments received were not directly related to the

proposal at issue, Proposal 20.18.1, the Commission appreciates receiving these

commenters' concerns about the overall impacts of the UPU terminal dues system. In

the FY 2017 Annual Compliance Determination report, the Commission stated that

because UPU terminal dues are not equivalent to domestic postage rates in the

destination country, it considered these rates discriminatory.4 The Commission also

reiterated its concerns "that the UPU pricing regime for the Inbound Letter Post product

continues to result in noncompensatory terminal dues [and, as a result], domestic

mailers are subsidizing the entry of Inbound Letter Post by foreign postal operators who

use the same postal infrastructure but bear none of the burden of contributing to its

institutional costs." FY 2017 ACD at 68. The Commission also highlighted a 2017

Copenhagen Economics report that quantified the impact of the UPU terminal dues

3 When the Commission adopted procedural rules that were codified in 39 C.F.R. part 3017, it

explained that, although there was no legal requirement to do so, the Commission established these

procedural rules to "allow for increased public input and transparency into the development of its views

pursuant to 39 U.S.C. 407(c)." Docket No. RM2015-14, Order Adopting Final Rules on Procedures

Related to Commission Views, December 30, 2015, at 28 (Order No. 2960).

4 Docket No. ACR2017, Annual Compliance Determination, March 29,2018, at 68 (FY 2017

ACD).
secretary Pompeo

July 24, 2018

Page 4 of 5

negotiated at the 2016 UPU Congress, which took effect in January 2018. Id.

Copenhagen Economics concluded that these terminal dues would result in a global net

financial transfer among designated postal operators that ranges from 2.1 billion to 2.4

billion Special Drawing Rights (SDR)5 in 2018 to 2.8 billion to 4 billion SDR in 2021. Id.

at 68-69.

In response to on-going concerns about the Inbound Letter Post product, the

Commission recently proposed regulations that would require the Postal Service to

provide Inbound Letter Post revenue, volume, attributable cost, and contribution data,

aggregated by UPU country group and by shape, for the previous five fiscal years when

it files its Annual Compliance Report.6 The Commission also recently established a

public inquiry docket to examine the Postal Service's claims that the Inbound Letter

Post product is subject to substantial competition.?

As it did before the 2016 UPU Congress in Istanbul, the Commission expresses

its position that the U.S. government should promote terminal dues that cover the costs

incurred by the Postal Service for handling, transporting, and delivering inbound

international mail and that are aligned as closely as possible with domestic postage

rates. 8

Given that the UPU International Bureau is continuing to publish proposals for

the 2018 UPU Congress on its website, the Commission will continue to review these

additional proposals and any proposed amendments to these proposals and identify

those that require a view from the Commission under 39 U.S.C. § 407(c). In the event

5 The International Monetary Fund exchange rate for one SDR on July 11, 2018, was $1.41 U.S.

dollars.

6 See Docket No. RM2018-2, Notice of Proposed Rulemaking to Revise the Periodic Reporting

Requirements, July 12, 2018 (Order No. 4706).

7 See Docket No. PI2018-1, Notice and Order Initiating Public Inquiry on the Classification of the

Inbound Letter Post Product, July 12,2018 (Order No. 4708).

8 See Docket No. IM2016-1, Notice of Posting of Views, October 7,2016, Attachment 8 at 10.
Secretary Pompeo

July 24,2018

Page 5 of 5

that there are such proposals, the Commission will send you its additional views in a

timely manner.

On behalf of the Postal Regulatory Commission, I wish the U.S. delegation the

greatest success at the 2018 UPU Congress.

With best wishes, I am

Robert G. Taub

Chairman

Enclosure

cc: Kevin E. Moley

Assistant Secretary for International Organization Affairs

Bureau of International Organization Affairs

Nerissa Cook

Deputy Assistant Secretary

Bureau of International Organization Affairs

Stephen Anderson

Director

Office of Specialized and Technical Agencies

Bureau of International Organization Affairs

Joseph Murphy

Chief, Postal Policy Unit

Office of Specialized and Technical Agencies

Bureau of International Organization Affairs
Postal Regulatory Commission

Submitted 4/5/2018 11 :58:03 AM

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Accepted 4/5/2018

AS.\·i.mmr Secretary ofStare

for ''''(fNational Orgallizatio" AjJoir.s

Washington, DoC. 20520--6319

March 27, 2018

The Iionorable Robcrt G. Taub

Chairman,

Postal Regulatory Commission,

901 New York Avenue NW,

Suite 200,

Washington, DC 20268-0001

Dear Chairman Taub,

The Secretary of State requests that the Postal Regulatory Commission (PRC) provide its views

on the consistency of proposals to amend rates or classifications for market dominant products or

services within the Universal Postal Convention that will be considered at the upcoming

Extraordinary Universal Postal Union (UPU) Congress with the standards and criteria

established by the Commission under 39 U.S.C. §3622. As background, 39 U.S.C. §407(c) (1)

provides that, beforc concluding any treaty, convention or amendment that establishes "a rate or

classification for a product subject to subchapter I of chapter 36 roftitle 39]" (i.e., a market

dominant product or service), the Secretary of State shall "request the Postal Regulatory

Commission to submit its views on whether such rate or classification is consistent with the

standards and critcria established by the Commission under section 3622."

The Department of State looks forward to receiving the PRC's views on the consistency ofsuch

Congress proposals with the standards and criteria the PRC established under §3622 and will

extend due deference to those views. In order to allow sufficient time to factor the PRC's views

into the United States Government's positions for the UPU Congress, we ask that the PRC

provide its response to this request by August 3, 2018, which is one month before the Congress

convenes.

Thank you for your attention to this matter.

Sincerely,

Nerissa J. Cook

Deputy Assistant Secretary

Bureau of International Organization Affairs
POSTAL REGULATORY COMMISSION

Washington, DC 20268-0001

Office of the Chairman

July 26, 2018

VIA U.S. MAIL AND EMAIL

The Honorable Michael R. Pompeo

Secretary of State

U.S. Department of State

2201 C Street NW, 7th Floor

Washington, DC 20520

Dear Mr. Secretary:

I am writing to follow up on my July 24, 2018 letter, in which the Postal

Regulatory Commission (Commission), in accordance with 39 U.S.C. § 407(c),

expressed its views on whether a certain proposal for the upcoming 2018 Universal

Postal Union (UPU) Extraordinary Congress (2018 UPU Congress) is consistent with

the standards and criteria established by the Commission under 39 U.S.C. § 3622. In

that letter, I indicated that the Commission would provide you with views on any

additional proposals that establish or amend a market dominant rate or classification

that the UPU makes available after July 23, 2018.

On July 24, 2018, the UPU posted Proposal 20.28.1 on its website. Proposal

20.28.1 was put forward by Chile with support from Brazil, Colombia, Costa Rica, Cuba,

the Dominican Republic, EI Salvador, Guatemala, Mexico, Panama, Paraguay, and

Uruguay. Proposal 20.28.1 complements Proposal 20.18.1, which was discussed in my

July 24, 2018 letter. If adopted, Proposal 20.18.1 would change tracking for UPU letter

post from an optional to a mandatory service. If adopted, Proposal 20.28.1 would
secretary Pompeo

July 26, 2018

Page 2 of 3

amend Article 28, "Terminal dues. General provisions," of the Universal Postal

Convention (UPU Convention) to include rates for the letter post tracking service in the

UPU Convention for 2020 and 2021. Currently, remuneration to designated postal

operators for providing tracking for letter post is specified in Article 30-104.4.2 of the

Regulations to the Universal Postal Convention. 1 Proposal 20.28.1 would also

significantly increase the rates for the letter post tracking service from 0.73 Special

Drawing Rights (SDR)2 to 1.00 SDR per item for 2020 and from 0.75 SDR to 1.10 SDR

per item for 2021.

Like Proposal 20.18.1, Proposal 20.28.1 is consistent with the standards and

criteria established by the Commission under 39 U.S.C. § 3622. The Commission finds

that Proposal 20.28.1 will likely promote the Postal Service's financial health. Because

the revenue earned from the proposed tracking service would be greater than the cost

of providing the service, adoption of Proposal 20.28.1 would: provide additional

contribution, supporting financial stability (Objective 5); promote the Postal Service's

efforts to enhance mail security and deter terrorism (Objective 7); establish reasonable

rates that do not threaten the financial integrity of the Postal Service (Objective 8); and

enable the tracking service to cover its attributable costs (Factor 2).

1 Regulations to the Convention, Final Protocol, Article 30-104, Supplementary remuneration for

registered, insured and tracked items, March 31, 2017. Unlike the UPU Convention, which can only be

amended by the UPU Congress, the Regulations to the Convention may be amended more frequently by

the UPU Postal Operations Council.

2 The International Monetary Fund exchange rate for one SDR on July 25, 2018, was $1.41 U.S.

dollars.
Secretary Pompeo

July 26, 2018

Page 3 of 3

Again, on behalf of the Postal Regulatory Commission, I wish the U.S. delegation

the greatest success at the 2018 UPU Congress.

With best wishes, I am

Sincerely yours,

Robert G. Taub

Chairman

cc: Kevin E. Moley

Assistant Secretary for International Organization Affairs

Bureau of International Organization Affairs

Nerissa Cook

Deputy Assistant Secretary

Bureau of International Organization Affairs

Stephen Anderson

Director

Office of Specialized and Technical Agencies

Bureau of International Organization Affairs

Joseph Murphy

Chief, Postal Policy Unit

Office of Specialized and Technical Agencies

Bureau of International Organization Affairs
POSTAL REGULATORY COMMISSION

Washington, DC 20268-0001

Office of the Chairman

September 4, 2018

VIA U.S. MAIL AND EMAIL

The Honorable Michael R. Pompeo

Secretary of State

U.S. Department of State

2201 C Street NW, 7th Floor

Washington, DC 20520

Dear Mr. Secretary:

I am writing to follow up on my letters of July 24,2018, and July 26,2018. In

these letters, the Postal Regulatory Commission (Commission), in accordance with

39 U.S.C. § 407(c), expressed its views on whether certain proposals for the September

2018 Universal Postal Union (UPU) Extraordinary Congress (2018 UPU Congress) are

consistent with the standards and criteria established by the Commission under 39

U.S.C. § 3622.

On September 2, 2018, the UPU posted Proposal 20.28.2 on its website.

Proposal 20.28.2 was put forward by Italy and amends Proposal 20.28.1 for which the

Commission provided a view in my July 26, 2018 letter. If adopted, Proposal 20.28.2

would amend Article 28, "Terminal dues. General provisions," of the Universal Postal

Convention (UPU Convention) to include rates for the letter post tracking service in the

UPU Convention for 2020 and 2021. Currently, remuneration to designated postal

operators for providing tracking for letter post is specified in Article 30-104.4.2 of the
Secretary Pompeo

September 4, 2018

Page 2 of 3

Regulations to the UPU Convention. 1 Proposal 20.28.1 from Chile would significantly

increase the rates for the letter post tracking service from 0.73 Special Drawing Rights

(SDR)2 to 1.00 SDR per item for 2020 and from 0.75 SDR to 1.10 SDR per item for

2021. Proposal 20.28.2 from Italy amends Proposal 20.28.1 from Chile and would

increase the rates for tracked items in Article 28 of the UPU Convention to 1.50 SDR for

2020 and to 1.60 SDR for 2021.

Like Proposal 20.28.1, the Commission finds that Proposal 20.28.2 is consistent

with the standards and criteria established under 39 U.S.C. § 3622. The Commission

finds that Proposa/20.28.2 will likely promote the Postal Service's financial health.

Because the revenue earned from the proposed tracking service would be greater than

the cost of providing the service, adoption of Proposal 20.28.2 would: provide additional

contribution, supporting financial stability (Objective 5); promote the Postal Service's

efforts to enhance mail security and deter terrorism (Objective 7); establish reasonable

rates that do not threaten the financial integrity of the Postal Service (Objective 8); and

enable the tracking service to cover its attributable costs (Factor 2).

1 Regulations to the Convention, Final Protocol, Article 30-104, Supplementary remuneration for

registered, insured and tracked items, March 31, 2017. Unlike the UPU Convention, which can only be

amended by the UPU Congress, the Regulations to the Convention may be amended more frequently by

the UPU Postal Operations Council.

2 The International Monetary Fund exchange rate for one SDR on August 28, 2018, was $1.40

U.S. dollars.
Secretary Pompeo

September 4, 2018

Page 3 of 3

Again, on behalf of the Postal Regulatory Commission, I wish the U.S. delegation

the greatest success at the 2018 UPU Congress.

With best wishes, I am

~--- Robert G. Taub

Chairman

cc: Kevin E. Moley

Assistant Secretary for International Organization Affairs

Bureau of International Organization Affairs

Nerissa Cook

Deputy Assistant Secretary

Bureau of International Organization Affairs

Stephen Anderson

Director

Office of Specialized and Technical Agencies

Bureau of International Organization Affairs

Joseph Murphy

Chief, Postal Policy Unit

Office of Specialized and Technical Agencies

Bureau of International Organization Affairs