EU Chamber brands new China postal law protectionist

BEIJING, April 24 (Reuters) - China approved a new postal law on Friday, allowing only a state monopoly to deliver domestic letters and documents, a move branded protectionist by the EU Chamber of Commerce. The law allows only China Post, also the industry regulator and pricing authority, to deliver letters and documents posted within China, cutting out the likes of FedEx Corp FDX.N and TNT TNT.AS.

“The protectionism in this law ... will limit the development of the country’s logistics industry,” the European Chamber said in a statement.

Violators of the law could face fines of 50,000 - 100,000 yuan ($7,320 - $14,640).

The new law also disappointed the Conference of Asia Pacific Express Carriers (CAPEC), an industry group established to protect the interests of FedEx, TNT, Deutsche Post DHL DPWGn.DE and United Parcel Service Inc UPS.N in Asia.

“CAPEC regrets that the recently enacted China Postal Law excludes ‘foreign business’ from entering a segment of the domestic market,” it said in a statement.

The law, which will become effective on Oct 1, laid out a broad definition of letters and documents, which included almost all printed material and information stored on CDs or DVDs.

The European Chamber said the law raises questions about China’s World Trade Organisation commitments to free trade.

Foreign firms would only be allowed to deliver “packages” and international letters and documents in China, a fast growing market that has averaged over 20 percent growth before the global economic crisis.

“The exclusion provision in the law does not allow Chinese companies and consumers full access to foreign express delivery service providers,” CAPEC said.

The new law would create three levels of competition in China -- China Post, domestic and foreign firms, with China Post allowed to operate in all areas. Foreign firms would have the most restrictions to deal with.

Earlier this year, Thomas Donohue, president of the U.S. Chamber of Commerce, said it would be “a mistake” for China to impose restrictions on foreign express delivery companies as worries about the new restrictions were being discussed.

$=6.83 yuan Reporting by Kirby Chien; Editing by Nick Macfie