| In 1874, the founders of the UPU believed that one letter generated one reply. Thus they established the principle that the number of letters received by a postal administration more or less equalled the number of letters sent, and that consequently it was not necessary to remunerate the administration of destination for the service rendered. |
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| Although an imbalance was quickly noted for printed papers, it was not until the 1969 Tokyo Congress that a system for remunerating the destination country was introduced. Since 1974, this mechanism has been known as the terminal dues system. |
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| The system, very simple at first, gradually became more sophisticated, with the ultimate goal being a country-specific remuneration system based on costs. |
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| The present terminal dues system comprises two sub-systems: a target system and a transitional system. The target system is applied for relations between industrialized countries and with other countries wishing to belong to this system. The transitional system is applied in relations with developing countries not yet ready to join the target system. |
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| Terminal dues under the target system are based on two elements: a rate per item and a rate per kg, calculated on the basis of a percentage of the charge for a priority letter in the destination country's domestic service. In principle, terminal dues under the transitional system also comprise a rate per item and a rate per kg, but these rates are not based on the costs of the destination country, but rather on world average costs. For most mail flows to, from and between countries in the transitional system, statistical samplings are not taken to determine the number of items per kg (ipk); instead, a rate per kg is applied based on the world average ipk. |
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| Under the target system, payment of terminal dues is adjusted to take into account quality of service performance in the destination country. Such an adjustment will also be applied to certain transitional system countries from 1 January 2006. |
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| The UPU bodies are continuing their work on terminal dues in order to achieve gradually, but as soon as possible, the ultimate objective of a single system by 1 January 2014 at the latest. |
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| One of the UPU's great achievements was to create a "single postal territory" where administrations coordinate their efforts for the exchange of international mail. The principle of the freedom of transit is set forth in article 1 of the Constitution. It carries with it the obligation for each postal administration to forward, always by the quickest routes and the most secure means which it uses for its own items, closed mails and à découvert letter-post items which are passed to it by another administration. The transit services provided to the administration of the country of origin have always been paid for. For letter-post items, the remuneration which covers the cost of land or sea conveyance of mails is called "transit charges". |
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