AGREEMENT BETWEEN THE AMERICAN INSTITUTE IN TAIWAN AND THE TAIP-
EI ECONOMIC AND CULTURAL REPRESENTATIVE OFFICE IN THE UNITED ST-
ATES ON THE APPLICATION OF AN EMS (EXPRESS MAIL SERVICE) PAY-FOR
-PERFORMANCE PLAN

Article 1 Agreement
The American Institute Taiwan (AIT) and the Taipei Economic and
Cultural Office in the United states (TECRO) agree to apply the
attached EMS Pay-for-performance Plan (the Plan).

Article 2 Designated Representatives
1.AIT's Designated Representative, the U.S. Postal Service, sha-
ll carry out the responsibilities of the Participating Admini-
stration in the application of the Plan.
2.TECRO's Designated Representative, the postal administration
of Taiwan, shall carry out the responsibilities of the Partic-
ipating Administration in the application of the Plan.

Article 3 Entry into force and duration
AIT and TECRO, through their Designated Representatives, shall
agree on the date of entry into force of the Plan, the duration
of application of the Plan, and any amendments to the Plan.


FOR THE AMERICAN INSTITUTE FOR THE TAIPEI ECONOMIC AND
IN TAIWAN CULTURAL REPRESENTATIVE
OFFICE IN THE UNITED STATES



────────────── ───────────────
Barbara J. Schrage David T. Lee
Deputy Managing Representative


────────────── ───────────────
Date:03/05/2004 Date:08/25/2004



EMS Pay-for-performance Plan
(Version of 1 January 2004)

Article 1 Definitions
a."Participating Administration" means a postal administration
which adheres to the provisions of the Plan.
b."D Event" means the date and time that an EMS item is received
at the destination office of exchange.
c."E Event" means the date and time that an EMS item is handed
over to Customs.
d."F Event" means the date and time that an EMS item is dispatc-
hed from the destination office of exchange, if appropriate,
after passing through Customs.
e."H Event" means the date and time of an attempted but unsucce-
ssful delivery of an EMS item.
f."I Event" means the date and time of a successful delivery of
an EMS item.
g."On-time Transmission" means transmission of data related to
events D, H and I no later than noon local time on the day af-
ter the event took place.
h."Delivery standards" means sufficient information transmitted
to the postal networks in order to measure a Participating Ad-
ministration's performance.
i."Validated Delivery Standards" means sufficient information
transmitted to the postal networks in order to measure a Part-
icipating Administration's performance.
j."On-time Delivery" means an attempted or successful delivery
in accordance with the Validated Delivery Standards of a Part-
icipating Administration.

Article 2 Eligibility
a.A postal administration that fulfils the requirements below
shall be considered eligible to be a Participating Administra-
tion:
i.use of the standard EMS identifier and bar code on all of
its outward EMS items;
ii.transmission of sufficient data in its EMS event messages
so that its delivery performance may be measured against
its Validated Delivery Standards;
iii.obtainment of Validated delivery Standards.

Article 3 Delivery charges
The EMS delivery charges that Participating Administrations app-
ly during a given year to EMS items delivered under the EMS Pay-
for-performance Plan shall be those that are in effect on 1 Jan-
uary of that year. A Participating Administration may only incr-
ease its EMS delivery charges by announcing the increase by 31
August of the year prior to which the increase will take effect.

Article 4 Calculation of inter-administration payments
a.Inter-administration delivery payments shall be based on net
flows of EMS traffic between Participating Administrations. In
the event that administrations reciprocally apply separate ra-
tes for items containing documents and for merchandise, the
net flow of items containing documents and merchandise shall
be calculated separately.
b.The percentage of the delivery charge to be applied between
Participating Administrations shall be based on the percentage
of items delivered on time (On-time Delivery) and the percent-
age of items for which data is transmitted on time (On-time
Transmission) for each inter-administration link, as defined
in paragraphs d, e and f.
c.If an item is handed over to Customs, E event data followed by
F event data should be transmitted. On-time Delivery is measu-
red from the D event unless an E event and an F event are also
transmitted. In this case, On-time Delivery is measured from
the F event.
d.In 2004, the percentage of the delivery charge to be applied
shall be as shown in the chart below.
┌────┬───┬──────┬────┬─────┐
│D event │H/I │On-time │On-time │Percentage│
│ │event │Transmission│Delivery│of │
│ │ │of H/I event│ │delivery │
│ │ │ │ │charge for│
│ │ │ │ │items │
│ │ │ │ │below the │
│ │ │ │ │incentive │
│ │ │ │ │threshold │
│ │ │ │ │(see │
│ │ │ │ │paragraphs│
│ │ │ │ │e and f) │
│ │ │ │ │ │
├────┼───┼──────┼────┼─────┤
│Yes │Yes │Yes │Yes │100% │
├────┼───┼──────┼────┼─────┤
│Yes │Yes │No │Yes │90% │
├────┼───┼──────┼────┼─────┤
│Yes │Yes │Yes │No │90% │
├────┼───┼──────┼────┼─────┤
│No │Yes or│Yes or No │Yes or │0% │
│ │No │ │No │ │
├────┼───┼──────┼────┼─────┤
│Yes or │No │Yes or No │Yes or │0% │
│No │ │ │No │ │
└────┴───┴──────┴────┴─────┘
e.Inter-administration payments shall also include an incentive
target or threshold for On-time Delivery and On-time Transmis-
sion of event data. Administrations that reach this threshold
will have achieved the performance target and will not be pen-
alized for failures related to On-time Delivery and On-time
Transmission. These failures include late delivery, late data
transmission and the anomalies in attachment 1.
During calendar year 2004, the incentive threshold shall be
set at 90%. This means that an administration that achieves
On-time Delivery and On-time Transmission for 90% or more of
the items that it receives from another Participating Adminis-
tration, shall receive 100% of its delivery charge for all it-
ems from that administration, as long as D and H or 1 events
have been transmitted for these items. If 90% service perform-
ance for On-time Delivery and On-time Transmission is not rea-
ched, only the percentage of items under the threshold will be
penalized at the percentage indicated above. (For example, if
an administration reaches 85% performance, only 5% of the ite-
ms will be penalized.)
In 2004, the minimum amount that the destination administrati-
on will receive for items for which there is a D and H or I
event and that are either delivered late or for which event
data are transmitted late is 90% of that administration's EMS
delivery charge.
f.For 2004 through 2007, the percentage of delivery charge paid
for penalized items and the incentive threshold will be as fo-
llows:
┌──┬──────────────────┬─────┐
│Year│% delivery charge paid for penalized│Threshold │
│ │items below threshold │ │
├──┼──────────────────┼─────┤
│2004│90% │90% │
├──┼──────────────────┼─────┤
│2005│85% │92% │
├──┼──────────────────┼─────┤
│2006│80% │94% │
├──┼──────────────────┼─────┤
│2007│75% │96% │
└──┴──────────────────┴─────┘
g.Each Participating Administration shall receive a quarterly
payment document that shall show the number of items for which
D, H or I event data was transmitted, the number of items del-
ivered in accordance with each Participating Administration's
Validated Delivery Standards, and the number of items for whi-
ch D, H and I event data were transmitted on time.
h.If a Participating Administration pays a separate delivery ch-
arge for documents and merchandise, it shall transmit the nec-
essary data so that a separate quarterly payment document for
document and merchandise items may be produced. If the Partic-
ipating Administration does not transmit the necessary data so
that a separate quarterly payment document for document and
merchandise items may be produced, all items shall be conside-
red as merchandise.

Article 5 Delivery standards
a.Participating Administrations may revise their Validated Deli-
very Standards quarterly. The Delivery Standards that apply
for any given quarter must be communicated to the other Parti-
cipating Administrations one month prior to the beginning of
the quarter for which the revised standards come into effect.
b.The Validated Delivery Standards for each designated office
of exchange must cover the entire territory of a postal admin-
istration to which EMS items are delivered.
c.The three classes of Validated delivery Standards are describ-
ed in attachment 2.
d.The Participating Administration agrees to only send EMS items
to offices of exchange designated for the receipt of EMS disp-
atches and for which Validated Delivery Standards have been
established. EMS item that arrive at non-designated offices of
exchange shall be sent to designated offices of exchange for
the scanning of the D Event.

Article 6 Accounting procedures
The accounting procedures to be applied between Participating
Administrations under the Plan are in attachment 3.

Article 7 Exchange of event data
Each Participating Administration agrees to receive all tracking
events data that are transmitted by all other Participating Adm-
inistrations with which it applies this Plan.

Article 8 Related arrangements
Except as specifically provided in the Pay-for-performance Plan,
all other arrangements respecting the exchange of EMS items bet-
ween the Participating Administrations shall remain in effect.