April 29, 2009 / 9:36 AM / 11 years ago

UPDATE 1-EU probes new China postal law over trade concerns

* EU analysing if new China postal law breaches trade rules

* Law favours monopoly China Post, excludes foreign firms

* EU business lobby, postal industry criticise law (Adds background, details)

By Darren Ennis

BRUSSELS, April 29 (Reuters) - The European Commission said on Wednesday it was investigating whether China broke world trade rules with a new postal law that allows only a state monopoly to deliver domestic letters and documents.

The probe by the European Union executive, which oversees trade policy for the 27-nation bloc, could further damage brittle trade relations between Brussels and Beijing ahead of high-level talks between the trading partners next month.

“We have received details of the new law and are currently analysing it to see if it contravenes the rules of the World Trade Organisation,” Lutz Guellner, spokesman for EU Trade Commissioner Catherine Ashton, told Reuters.

The law approved on Friday allows only China Post — also the industry regulator and pricing authority — to deliver letters and documents posted within China, cutting out foreign firms such as FedEx Corp (FDX.N), TNT TNT.AS and United Parcel Service Inc (UPS.N).

The EU chamber of commerce in Beijing and the Conference of Asia Pacific Express Carriers (CAPEC), an industry group representing the interests of FedEx, TNT Deutsche Post DHL (DPWGn.DE) and UPS, have described the law as protectionist.

The law, which will become effective on Oct. 1, defines letters and documents as those also including almost all printed material and information stored on CDs or DVDs.

Foreign firms would be allowed only to deliver “packages” and international letters and documents in China, barring them from entering the highly lucrative and fast growing domestic express delivery market. (Reporting by Darren Ennis)

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