Trump pulling USA out of global pact on postal rates

Larry Hoffman
October 22, 2018

Trump's decision to withdraw from the Universal Postal Union is likely to deal a another blow to U.S.

Those lower rates for developing countries were added to the treaty in 1969; they were meant to foster development in Asia and Africa by making it easier for businesses in those places to ship goods internationally.

On AliExpress, Internet giant Alibaba's e-commerce portal for global buyers, shipping is free if a pair of $10.29 yoga trousers are transported via ePacket, the name of the subsidized service by the US Postal Service. The Trump administration says China's massive trade surplus with the US reflects unfair practices and that it is stealing intellectual property and forcing American and other foreign companies to hand over technology in exchange for access to the Chinese market.

Under the treaty, a UN body sets lower global rates for packages from certain countries, a move originally created to support poorer nations.

China on Thursday criticized the recent US decision to pull out of a global postal treaty in a further escalation of President Donald Trump's confrontation with China over trade issues.

A better strategy would be for the White House to reach a fairer arrangement as part of its larger trade negotiations with China, superseding the Universal Postal Union's rates.

The UPU system divides countries into categories, based on their level of development, which determines the rates of terminal dues paid to each other. US companies can pay two to four times that amount to ship a similar package from Los Angeles to NY and much more for packages sent to China. "The U.S. Postal Service has been complaining about this for a while and we've always doubted the long-term viability of this channel".

The price of shipping a 4.4-pound package, the largest parcel covered by the treaty, from China to the United States is about $5, according to USA estimates. But unlike the president's obsession with tariffs-which increase costs for both consumers and American industries that depend on foreign trade, foreign supplies of raw materials, or even domestic supply of materials subject to price increases as foreign supplies are hit with tariffs-withdrawing from the UPU at least contains a discernible logic. The withdrawal process would take a year.

The State Department also said it would push foreign postal services to furnish data that would help customs officials detect drugs and other illegal shipments entering the country, which could also add to costs of sending mail to the USA from overseas.

In a report issued Wednesday, the Treasury Department said no country meets the criteria to be labeled a currency manipulator.

If the United States can resolve the rate issue within a year, it can easily rescind that notification, a White House official said.

Withdrawing from the UPU is yet another move in what some trade experts are beginning to see as a wider effort to fundamentally change the U.S.

China's Ambassador to the U.S. Cui Tiankai told "Fox News Sunday" host Chris Wallace that there is no trade war between the two countries, but then seemed to contradict himself by claiming America started it. Chinese sellers estimate shipping through the services take 10 to 20 days from China to the US.

Why it could be cheaper to mail from Beijing than NY to San Francisco?

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