New Postal Product
Federal Register: March 3, 2010 (Volume 75, Number 41)
Rules and Regulations
Page 9523-9527
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DOCID:fr03mr10-5
POSTAL REGULATORY COMMISSION 39 CFR Part 3020
Docket Nos. MC2010-17 and CP2010-18; Order No. 386
New Postal Product
AGENCY: Postal Regulatory Commission
ACTION: Final rule.
SUMMARY: The Commission is adding Global Direct Contracts 1 to the
Competitive Product List. This action is consistent with a postal reform law. Republication of the lists of market dominant and competitive products is also consistent with a statutory requirement.
DATES: Effective April 2, 2010 and is applicable beginning January 11, 2010.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 202-789-6820 or stephen.sharfman@prc.gov.
SUPPLEMENTARY INFORMATION: Regulatory History, 75 FR 471 (January 5, 2010).
Table of Contents
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Introduction
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Background
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Comments
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Commission Analysis
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Ordering Paragraphs
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Introduction
The Postal Service seeks to add a new product identified as Global
Direct Contracts 1 to the Competitive Product List. For the reasons discussed below, the Commission approves the Request.
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Background
On December 23, 2009, the Postal Service filed a request seeking to add a new product, Global Direct Contracts 1, to the Global Direct
Contracts product.\1\ The Global Direct product provides a rate for mail acceptance within the United States, transportation to a receiving country of mail that bears the destination country's indicia, and payment by the Postal Service of the appropriate settlement charges to the receiving country. In support of its Request, the Postal Service incorporates by reference the Statement of Supporting Justification of
Frank Cebello, Executive Director, Global Business Management, initially filed with its request in Docket Nos. MC2009-9, CP2009-10 and
CP2009-11.\2\ The Request has been assigned Docket No. MC2010-17.
\1\ Notice of the United States Postal Service of Filing of
Functionally Equivalent Global Direct Contracts Negotiated Service
Agreement, and Request to Add Global Direct Contracts 1 to the
Competitive Products List, December 23, 2009 (Request).
\2\ Docket Nos. MC2009-9, CP2009-10 and CP2009-11, Order
Concerning Global Direct Contracts Negotiated Service Agreements,
December 19, 2008 (Order No. 153).
The Postal Service contemporaneously filed a contract related to the proposed new product pursuant to 39 CFR 3015.5. The contract has been assigned Docket No. CP2010-18 and is the successor to the contract approved in Docket No. CP2009-11. See Order No. 153. The Postal Service states that the instant contract is functionally equivalent to previously submitted Global Direct Contracts and is supported by
Governors' Decision No. 08-10, which establishes prices and classifications not of general applicability for Global Direct
Contracts.\3\ In addition, the Postal Service contends that the contract is in accordance with Order No. 153.
\3\ Governors' Decision No. 08-10, July 16, 2008, filed in
Docket No. MC2008-7, establishes prices and classifications not of general applicability for Global Direct and Global Bulk Economy
Contracts, as well as for Global Plus Contracts 2, which combines
Global Direct and Global Bulk Economy services. As part of
Governors' Decision No. 08-10, the Postal Service submitted a description of Global Direct Contracts which it describes as
``contracts giving a rate for mail acceptance within the United
States and transportation to a receiving country with the addition by the customer of appropriate foreign postage charged by the receiving country.'' Request, Attachment 4; see also Request at 2, n.3, citing PRC Order No. 153 at 9 (regarding indirect postage payment).
The contract term is 1 year from the effective date and may be automatically renewed unless the parties agree otherwise. Id. at 3-4.
In support of its Request, the Postal Service filed the following five attachments: 1. Attachment 1-a redacted copy of the contract; 2. Attachment 2-a certified statement required by 39 CFR 3015.5(c)(2); 3. Attachment 3-an application for non-public treatment of materials to maintain the contract and supporting documents under seal; 4. Attachment 4-a redacted copy of Governors' Decision No. 08-10, which establishes prices and classifications for Global Direct, Global
Bulk Economy, and Global Plus Contracts; and 5. Attachment 5-a statement of supporting justification from Docket
No. CP2009-11, which is included by reference for the instant contract to satisfy 39 CFR 3020.32.
The Postal Service will notify the customer of the effective date of the contract within 30 days after receiving all regulatory approvals. Id. at 3-4. The related contract at issue under Docket No.
CP2009-11 expires on January 11,
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2010. Id. at 2. The Postal Service also explains that a redacted version of the supporting financial documentation is included with this filing as a separate Excel file. Id. at 3.
The Postal Service asserts that the instant Global Direct contract is functionally equivalent with the previous Global Direct Contracts because it shares ``similar, if not the same...'' cost and market characteristics and therefore the contracts should be classified as a single product. Id. at 5. Further, it contends that the contract fits within the Mail Classification Schedule (MCS) language for Global
Direct Contracts included with Governors' Decision No. 08-10, since
``these agreements are `functionally equivalent in all pertinent respects.''' Id. at 5, citing Order No. 85 at 8.
The Postal Service asserts that the instant Global Direct Contract is fundamentally similar'' to that in Docket No. CP2009-11, but notes that many of the terms and conditions have changed, including the following: (a) Allowing mailers to use Canada Post's domestic Incentive
Lettermail Service;\4\ (b) notice of confidentiality rules; (c) modifying the term to a full year; (d) clarifying locations for tendering qualifying items; explaining the availability of pickup service; and (e) reflecting the price changes of Canada Post. Id. at 5.
The Postal Service maintains that the differences do not affect the fundamental service being offered or the essential structure of the contracts. Id. It also states that the proposed MCS language included with the Request presents a modification proposed by the Commission to reflect the actual payment practice.\5\
\4\ The Postal Service states that Incentive Lettermail is the same as Canada Post's Lettermail in terms of size, shape, and content. A mailer performs certain preparation tasks dictated by
Canada Post to qualify for Incentive Lettermail pricing, just as a
Canadian domestic mailer might.
\5\ See Order No. 153 at 9 in which the Commission reviewed the language of the actual agreements compared to the language proposed by the Postal Service to modify the MCS and determined the language proposed for inclusion in the MCS should reflect the actual payment practice under these agreements.
The Postal Service requests that the instant contract be considered the baseline contract for functional equivalency comparisons of future
Global Direct contracts, indicating that future Global Direct Contracts will be based upon the instant contract's provisions rather than those in Docket No. CP2009-10 and CP2009-11. Request at 2. It further requests that Global Direct Contracts 1 be added to the Competitive
Product List, particularly as future Global Direct contracts are more likely to resemble this contract. Id.
In Order No. 373, the Commission gave notice of the two dockets, appointed a public representative, and provided the public with an opportunity to comment.\6\
\6\ Notice and Order Concerning Filing of Functionally
Equivalent Global Direct Contracts Negotiated Service Agreement,
December 30, 2009 (Order No. 373).
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Comments
Comments were filed by the Public Representative.\7\ No other interested person submitted comments. The Public Representative states that it appears that the contract complies with 39 U.S.C. 3633(a) and 39 CFR 3015.5. Id. He observes that the pricing structure and certification indicate that this contract meets its attributable costs and there is no cross-subsidization of this competitive product by market dominant products. Id. at 2-3. He notes that while some of the terms of the instant contract are different than previous Global Direct contracts this does not alter its functional equivalency. Id. at 3. He affirms that his review of the contract and supporting materials filed under seal indicates that the instant contract complies with the pricing formula established in Governors' Decision No. 08-10, is functionally equivalent to the other contracts within the Global
Directs Contracts classification, and is appropriately established as a competitive product. Id. at 2-3.
\7\ Public Representative Comments in Response to Order No. 373,
January 6, 2010 (Public Representative Comments).
The Public Representative concludes that the instant contract's terms are in compliance with statutory requirements for a competitive product and are beneficial to the general public. Id. at 4.
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Commission Analysis
The Postal Service's filing presents several issues for the
Commission to consider: (1) The addition of a new product to the MCS in accordance with 39 U.S.C. 3642; (2) whether the agreement satisfies 39
U.S.C. 3633; and (3) the treatment of Global Contracts 1 as the baseline agreement as requested by the Postal Service. In reaching its conclusions, the Commission has reviewed the Request, the agreement and the financial analyses provided under seal, and the Public
Representative's comments.
Product classification. The Postal Service notes that the
Commission has had the opportunity to review the Global Directs
Contracts product in Order No. 153 and found that those contracts were properly classified as competitive. In lieu of a separate statement relative to the instant contract, it incorporates by reference its supporting justification for the contracts in Dockets Nos. CP2009-9,
CP2009-6 and CP2009-11 as Attachment 5 to the Request. The Commission finds this an acceptable method for the Postal Service to support its
Request.
Cost considerations. The Postal Service contends that the instant contract and supporting documents filed in this docket establish compliance with the statutory provisions applicable to rates for competitive products (39 U.S.C. 3633). Request at 3. It asserts that the Governors' Decision (No. 08-10) supporting this agreement establishes a pricing formula and classification that ensures each contract meets the criteria of 39 U.S.C. 3633 and the regulations promulgated thereunder. Request, Attachment 4, Attachment D.
The Public Representative concurs that the agreement appears to satisfy section 3633 of title 39. Public Representative Comments at 1.
Based on the data submitted and the Commission's analysis, the
Commission finds that the agreement should cover its attributable costs
(39 U.S.C. 3633(a)(2)), should not lead to the subsidization of competitive products by market dominant products (39 U.S.C. 3633(a)(1)), and should have a positive effect on competitive products' contribution to institutional costs (39 U.S.C. 3633(a)(3)). Thus, an initial review of the proposed agreement indicates that it comports with the provisions applicable to rates for competitive products.
Baseline agreement. The Postal Service seeks to add a new product,
Global Direct Contracts 1, to the Competitive Product List. It contends that the instant contract is functionally equivalent to previously reviewed Global Direct Contracts. At the same time, it asks that the instant contract be considered a new baseline for future Global Direct
Contracts. Request at 2. The Postal Service indicates that future
Global Direct Contracts are likely to resemble this one. Because Global
Direct Contracts 1 is being added as a new product, the Commission finds it unnecessary to address the issue of functional equivalency with previous contracts.
The Postal Service notes that the Global Direct Contracts 1 contract differs from previously submitted Global Direct contracts, e.g., pertaining to the treatment of confidential information, the availability of domestic Incentive Lettermail Service, and more detail in descriptions for penalties and
Page 9525
postage due assessed by Canada Post. It also cites new provisions that add clarity or update terms, but contends that they do not alter the essential service being offered. Id. at 5. Finally, it asserts that the cost and market characteristics of the instant contract are fundamentally similar to those of the prior Global Direct contracts.
Id.
Having evaluated the instant Global Direct contract along with the supporting financial analyses, the Commission finds that Global Direct
Contracts 1 is properly included as a new product to the Competitive
Product List.
Following the current practice, the Postal Service shall identify all significant differences between any new Global Direct contract and the Global Direct Contracts 1 product. Such differences would include terms and conditions that impose new obligations or new requirements on any party to the contract. The docket referenced in the caption should be Docket No. MC2010-17. In conformity with the current practice, a redacted copy of Governors' Decision 08-10 should be included in the new filing along with an electronic link to it.
The Postal Service shall inform the Commission of the effective dates of the contract and promptly notify the Commission if the contract terminates earlier than scheduled.
In conclusion, the Commission adds Global Direct Contracts 1 to the
Competitive Product List and finds that the negotiated service agreement submitted in Docket No. CP2010-18 is appropriately included within the Global Direct Contracts 1 product.
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Ordering Paragraphs
It is ordered: 1. Global Direct Contracts 1 (MC2010-17 and CP2010-18) is added to the Competitive Product List as a new product, under Negotiated Service
Agreements, International. 2. The Postal Service shall inform the Commission of the effective dates of the contract and notify it if the contract terminates earlier than scheduled, as discussed in this order. 3. The Secretary shall arrange for publication of this order in the
Federal Register.
List of Subjects in 39 CFR Part 3020
Administrative practice and procedure; Postal Service.
By the Commission.
Shoshana M. Grove,
Secretary. 0
For the reasons discussed in the preamble, the Postal Regulatory
Commission amends chapter III of title 39 of the Code of Federal
Regulations as follows:
PART 3020--PRODUCT LISTS 0 1. The authority citation for part 3020 continues to read as follows:
Authority: Authority: 39 U.S.C. 503; 3622; 3631; 3642; 3682. 0 2. Revise Appendix A to Subpart A of Part 3020-Mail Classification
Schedule to read as follows:
Appendix A to Subpart A of Part 3020--Mail Classification Schedule
Part A--Market Dominant Products 1000 Market Dominant Product List
First-Class Mail
Single-Piece Letters/Postcards
Bulk Letters/Postcards
Flats
Parcels
Outbound Single-Piece First-Class Mail International
Inbound Single-Piece First-Class Mail International
Standard Mail (Regular and Nonprofit)
High Density and Saturation Letters
High Density and Saturation Flats/Parcels
Carrier Route
Letters
Flats
Not Flat-Machinables (NFMs)/Parcels
Periodicals
Within County Periodicals
Outside County Periodicals
Package Services
Single-Piece Parcel Post
Inbound Surface Parcel Post (at UPU rates)
Bound Printed Matter Flats
Bound Printed Matter Parcels
Media Mail/Library Mail
Special Services
Ancillary Services
International Ancillary Services
Address List Services
Caller Service
Change-of-Address Credit Card Authentication
Confirm
International Reply Coupon Service
International Business Reply Mail Service
Money Orders
Post Office Box Service
Negotiated Service Agreements
HSBC North America Holdings Inc. Negotiated Service Agreement
Bookspan Negotiated Service Agreement
Bank of America Corporation Negotiated Service Agreement
The Bradford Group Negotiated Service Agreement
Inbound International
Canada Post--United States Postal Service Contractual Bilateral
Agreement for Inbound Market Dominant Services (MC2010-12 and
R2010-2)
Market Dominant Product Descriptions
First-Class Mail
Reserved for Class Description
Single-Piece Letters/Postcards
Reserved for Product Description
Bulk Letters/Postcards
Reserved for Product Description
Flats
Reserved for Product Description
Parcels
Reserved for Product Description
Outbound Single-Piece First-Class Mail International
Reserved for Product Description
Inbound Single-Piece First-Class Mail International
Reserved for Product Description
Standard Mail (Regular and Nonprofit)
Reserved for Class Description
High Density and Saturation Letters
Reserved for Product Description
High Density and Saturation Flats/Parcels
Reserved for Product Description
Carrier Route
Reserved for Product Description
Letters
Reserved for Product Description
Flats
Reserved for Product Description
Not Flat-Machinables (NFMs)/Parcels
Reserved for Product Description
Periodicals
Reserved for Class Description
Within County Periodicals
Reserved for Product Description
Outside County Periodicals
Reserved for Product Description
Package Services
Reserved for Class Description
Single-Piece Parcel Post
Reserved for Product Description
Inbound Surface Parcel Post (at UPU rates)
Reserved for Product Description
Bound Printed Matter Flats
Reserved for Product Description
Bound Printed Matter Parcels
Reserved for Product Description
Media Mail/Library Mail
Reserved for Product Description
Special Services
Reserved for Class Description
Ancillary Services
Reserved for Product Description
Address Correction Service
Reserved for Product Description
Applications and Mailing Permits
Reserved for Product Description
Business Reply Mail
Reserved for Product Description
Bulk Parcel Return Service
Reserved for Product Description
Certified Mail
Reserved for Product Description
Certificate of Mailing
Reserved for Product Description
Collect on Delivery
Reserved for Product Description
Delivery Confirmation
Reserved for Product Description
Insurance
Reserved for Product Description
Merchandise Return Service
Reserved for Product Description
Parcel Airlift (PAL)
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Reserved for Product Description
Registered Mail
Reserved for Product Description
Return Receipt
Reserved for Product Description
Return Receipt for Merchandise
Reserved for Product Description
Restricted Delivery
Reserved for Product Description
Shipper-Paid Forward
Reserved for Product Description
Signature Confirmation
Reserved for Product Description
Special Handling
Reserved for Product Description
Stamped Envelopes
Reserved for Product Description
Stamped Cards
Reserved for Product Description
Premium Stamped Stationery
Reserved for Product Description
Premium Stamped Cards
Reserved for Product Description
International Ancillary Services
Reserved for Product Description
International Certificate of Mailing
Reserved for Product Description
International Registered Mail
Reserved for Product Description
International Return Receipt
Reserved for Product Description
International Restricted Delivery
Reserved for Product Description
Address List Services
Reserved for Product Description
Caller Service
Reserved for Product Description
Change-of-Address Credit Card Authentication
Reserved for Product Description
Confirm
Reserved for Product Description
International Reply Coupon Service
Reserved for Product Description
International Business Reply Mail Service
Reserved for Product Description
Money Orders
Reserved for Product Description
Post Office Box Service
Reserved for Product Description
Negotiated Service Agreements
Reserved for Class Description
HSBC North America Holdings Inc. Negotiated Service Agreement
Reserved for Product Description
Bookspan Negotiated Service Agreement
Reserved for Product Description
Bank of America Corporation Negotiated Service Agreement
The Bradford Group Negotiated Service Agreement
Part B--Competitive Products 2000 Competitive Product List
Express Mail
Express Mail
Outbound International Expedited Services
Inbound International Expedited Services
Inbound International Expedited Services 1 (CP2008-7)
Inbound International Expedited Services 2 (MC2009-10 and CP2009- 12)
Inbound International Expedited Services 3 (MC2010-13 and CP2010- 12)
Priority Mail
Priority Mail
Outbound Priority Mail International
Inbound Air Parcel Post (at non-UPU rates)
Royal Mail Group Inbound Air Parcel Post Agreement
Inbound Air Parcel Post (at UPU rates)
Parcel Select
Parcel Return Service
International
International Priority Airlift (IPA)
International Surface Airlift (ISAL)
International Direct Sacks--M--Bags
Global Customized Shipping Services
Inbound Surface Parcel Post (at non-UPU rates)
Canada Post--United States Postal Service Contractual Bilateral
Agreement for Inbound Competitive Services (MC2010-14 and
CP2010-13--Inbound Surface Parcel post at Non-UPU Rates and
Xpresspost-USA)
International Money Transfer Service
International Ancillary Services
Special Services
Premium Forwarding Service
Negotiated Service Agreements
Domestic
Express Mail Contract 1 (MC2008-5)
Express Mail Contract 2 (MC2009-3 and CP2009-4)
Express Mail Contract 3 (MC2009-15 and CP2009-21)
Express Mail Contract 4 (MC2009-34 and CP2009-45)
Express Mail Contract 5 (MC2010-5 and CP2010-5)
Express Mail Contract 6 (MC2010--6 and CP2010-6)
Express Mail Contract 7 (MC2010--7 and CP2010-7)
Express Mail Contract 8 (MC2010--16 and CP2010-16)
Express Mail & Priority Mail Contract 1 (MC2009-6 and CP2009-7)
Express Mail & Priority Mail Contract 2 (MC2009-12 and CP2009- 14)
Express Mail & Priority Mail Contract 3 (MC2009-13 and CP2009- 17)
Express Mail & Priority Mail Contract 4 (MC2009-17 and CP2009- 24)
Express Mail & Priority Mail Contract 5 (MC2009-18 and CP2009- 25)
Express Mail & Priority Mail Contract 6 (MC2009-31 and CP2009- 42)
Express Mail & Priority Mail Contract 7 (MC2009-32 and CP2009- 43)
Express Mail & Priority Mail Contract 8 (MC2009-33 and CP2009- 44)
Parcel Select & Parcel Return Service Contract 1 (MC2009-11 and
CP2009-13)
Parcel Select & Parcel Return Service Contract 2 (MC2009-40 and
CP2009-61)
Parcel Return Service Contract 1 (MC2009-1 and CP2009-2)
Priority Mail Contract 1 (MC2008-8 and CP2008-26)
Priority Mail Contract 2 (MC2009-2 and CP2009-3)
Priority Mail Contract 3 (MC2009-4 and CP2009-5)
Priority Mail Contract 4 (MC2009-5 and CP2009-6)
Priority Mail Contract 5 (MC2009-21 and CP2009-26)
Priority Mail Contract 6 (MC2009-25 and CP2009-30)
Priority Mail Contract 7 (MC2009-25 and CP2009-31)
Priority Mail Contract 8 (MC2009-25 and CP2009-32)
Priority Mail Contract 9 (MC2009-25 and CP2009-33)
Priority Mail Contract 10 (MC2009-25 and CP2009-34)
Priority Mail Contract 11 (MC2009-27 and CP2009-37)
Priority Mail Contract 12 (MC2009-28 and CP2009-38)
Priority Mail Contract 13 (MC2009-29 and CP2009-39)
Priority Mail Contract 14 (MC2009-30 and CP2009-40)
Priority Mail Contract 15 (MC2009-35 and CP2009-54)
Priority Mail Contract 16 (MC2009-36 and CP2009-55)
Priority Mail Contract 17 (MC2009-37 and CP2009-56)
Priority Mail Contract 18 (MC2009-42 and CP2009-63)
Priority Mail Contract 19 (MC2010-1 and CP2010-1)
Priority Mail Contract 20 (MC2010-2 and CP2010-2)
Priority Mail Contract 21 (MC2010-3 and CP2010-3)
Priority Mail Contract 22 (MC2010-4 and CP2010-4)
Priority Mail Contract 23 (MC2010-9 and CP2010-9)
Priority Mail Contract 24 (MC2010-15 and CP2010-15)
Outbound International
Direct Entry Parcels Contracts
Direct Entry Parcels 1 (MC2009-26 and CP2009-36)
Global Direct Contracts (MC2009-9, CP2009-10, and CP2009-11)
Global Direct Contracts 1 (MC2010-17 and CP2010-18)
Global Expedited Package Services (GEPS) Contracts
GEPS 1 (CP2008-5, CP2008-11, CP2008-12, CP2008-13, CP2008- 18, CP2008-19, CP2008-20, CP2008-21, CP2008-22, CP2008-23, and CP2008-24)
Global Expedited Package Services 2 (CP2009-50)
Global Plus Contracts
Global Plus 1 (CP2008-8, CP2008-46 and CP2009-47)
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Global Plus 2 (MC2008-7, CP2008-48 and CP2008-49)
Inbound International
Inbound Direct Entry Contracts with Foreign Postal
Administrations
Inbound Direct Entry Contracts with Foreign Postal
Administrations (MC2008-6, CP2008-14 and MC2008-15)
Inbound Direct Entry Contracts with Foreign Postal
Administrations 1 (MC2008-6 and CP2009-62)
International Business Reply Service Competitive Contract 1
(MC2009-14 and CP2009-20)
Competitive Product Descriptions
Express Mail
Reserved for Group Description
Express Mail
Reserved for Product Description
Outbound International Expedited Services
Reserved for Product Description
Inbound International Expedited Services
Reserved for Product Description
Priority
Reserved for Product Description
Priority Mail
Reserved for Product Description
Outbound Priority Mail International
Reserved for Product Description
Inbound Air Parcel Post
Reserved for Product Description
Parcel Select
Reserved for Group Description
Parcel Return Service
Reserved for Group Description
International
Reserved for Group Description
International Priority Airlift (IPA)
Reserved for Product Description
International Surface Airlift (ISAL)
Reserved for Prduct Description
International Direct Sacks--M-Bags
Reserved for Product Description
Global Customized Shipping Services
Reserved for Product Description
International Money Transfer Service
Reserved for Product Description
Inbound Surface Parcel Post (at non-UPU rates)
Reserved for Product Description
International Ancillary Services
Reserved for Product Description
International Certificate of Mailing
Reserved for Product Description
International Registered Mail
Reserved for Product Description
International Return Receipt
Reserved for Product Description
International Restricted Delivery
Reserved for Product Description
International Insurance
Reserved for Product Description
Negotiated Service Agreements
Reserved for Group Description
Domestic
Reserved for Product Description
Outbound International
Reserved for Group Description
Part C--Glossary of Terms and Conditions [Reserved]
Part D--Country Price Lists for International Mail [Reserved]
FR Doc. 2010-4410 Filed 3-2-10; 8:45 am
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