GEO

The Government fails to include changes agreed with stakeholders in the draft Law on Post

18 September, 2014

 

The Ministry of Economy and Sustainable Development of Georgia has developed the draft Law on Post, which introduces economically unsubstantiated state regulation on this segment of the market:

  • The regulations proposed by the draft law directly contradict modern international practice and the commitments taken by the EU-Georgia Association Agreement;
  • The draft law is going to have a negative effect on the existence of free, fair, and competitive business environment in this segment of the market;
  • The introduction of the regulations provided for by the draft law is going to become a serious formal/bureaucratic barrier for the activity of international companies, DHL and TNT, and up to 40 companies that currently operate on the Georgian market, and these companies will be compelled to leave the Georgian market.

On April 16, in connection with elaboration of this draft law, representatives TI Georgia and international companies active in this segment of this market (DHL, TNT) met with the Deputy Ministers of Economy and Sustainable Development of Georgia, Mr. Dimitri Kumsishvili, and Ms. Natia Mikeladze. During the negotiations, the parties reached an agreement in connection with a number of issues provided for by the draft law. Despite this agreement, the Ministry of Economy and Sustainable Development failed to include the agreed regulations in the revised draft Law on Post. Afterwards, on July 11, representatives of the companies (DHL, TNT, UPS) met with the Deputy Minister, Natia Mikeladze. This meeting, too, was not followed by any results, and the Ministry again failed to send the revised draft Law on Post to the shipping companies.

The draft law provides for:

  1. Monopolization of the market by Georgian Post

As a result of adoption of the draft law, Georgian Post will be directly (without announcing a competition) granted the status of the national operator and will receive unjustified advantages, which will put it in a privileged position.

The draft law grants Georgian Post a law-based monopoly on several markets:

  • on the market of postal and parcel shipments;
  • on the market of services for customs warehouses;
  • on the market of courier services;
  • on the market of money transfers.
  1. Disregard of advanced international practice

The draft law also contradicts international practice, which regards full liberalization of the market in the area of postal communication, promotion of free competition (EU Directive 2002/39/EC), and abolition of the area of ‘postal reserve service’ (EU Directive 2008/6/EC) as methods of successful reform of this field.

The draft Law on Post also contradicts Georgia’s commitments under the EU-Georgia Association Agreement, which establishes the principles of liberalization of markets of postal and courier services and provides for separation of the markets of ‘universal postal services’ and other types of postal services, and their separate regulation.

Recommendations

We call upon the Ministry of Economy and Sustainable Development of Georgia to ensure the following before the draft Law on Post is submitted to the Parliament of Georgia:

  • conformity of the new procedure provided for by the draft law on legal regulation of the activity of the postal services market with the Georgian legislation and advanced international practice;
  • inadmissibility of repeated regulation of the liberalized markets of postal and courier services and the openness of the market;
  • promotion of free, fair, and competitive business environment on the markets of postal, courier, and financial services.
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