US plans to exit old treaty on mail rates

Gladys Abbott
October 21, 2018

The Trump administration has announced plans to withdraw the United States from the Universal Postal Union by January 2020.

The so-called "terminal dues" collected by the USPS to deliver small parcels under 4.4 lbs. from overseas companies are steeply discounted under the UPU rate structure compared to actual costs, making it easier for them to undercut domestic sellers.

The heavily discounted shipping rates were meant to stimulate flagging economies, but the Trump administration says China's status hasn't been updated since it became an e-commerce powerhouse over the past decade, clocking about $354 billion in annual sales.

A 2015 report from the Inspector General of the U.S. Postal Service found that the treaty, which was created to facilitate the flow of mail and small parcels among 192 countries, had not been updated to reflect the new realities of e-commerce and China's aggressive undercutting of worldwide competitors.

According to the union's rules, shipping rates for global shipments from developing economies are lower than those imposed on developed economies. And rival logistics firm UPS told Bloomberg on Wednesday that the Trump Administration "took the right step" in withdrawing from the treaty.

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Companies like San Francisco-based Wish.com could suffer if the US withdraws. "Direct mail is dependent on the low-cost channel from the UPU, which offers China a lower rate", Li explained, giving a few examples.

Industry groups, even ones that have questioned the president's tariffs on Chinese imports, applauded the move as proportional and targeted. "The element of uncertainty can lower investor confidence and future expectations", he said, adding that he expects any minor downturns for such companies to be short-lived. "You said the Chinese want to make a deal, but you told them they're (not ready yet)", he was asked. Even though the tariffs will decrease the number of packages the Chinese send to the U.S.it is time to end withdraw from the treaty.

"So, it's hard for them to do a deal, because they've had it so good for so long; it's a very hard thing for them to do", said the USA president when asked why he told the Chinese that they are not ready for a trade deal yet. China did the same to US goods.

"Today, we have the option of choosing mutually assured prosperity, which is a hundred times better than mutually assured destruction", said Zhang.

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