Trump administration to pull US out of United Nations postal treaty

Mae Love
October 18, 2018

Many websites now offer free shipping from China, in part because of the cheap postal rates, administration officials say.

The formal notification, known as a letter of denunciation, to withdraw from the Universal Postal Union (UPU) is being sent by the State Department in response to what the administration of President Donald Trump views as an unfair advantage primarily for China, but also for such other countries as France and Germany, in online commerce.

China and other less-developed nations around the world enjoy deep discounts under the Universal Postal Union Agreement, negotiated in 1969.

Under the union's framework it takes a year for a country to withdraw, during which rates can be renegotiated.

The world's two biggest economies are clashing over the trade deficit the US runs against China as well as USA allegations that China is using predatory practices to challenge American technological dominance. The biggest winners could be shipping carriers such as UPS.

"These disparities have introduced a massive distortion in the eCommerce market", Navarro wrote in a Financial Times op-ed last month. Washington has imposed tariffs on about $250 billion in Chinese goods, and Beijing has retaliated by targeting about $110 billion in USA products. "Moreover, while USPS loses an estimated $1 on every small package that arrives from China, outbound mail of American exporters is charged at well above cost".

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A senior White House official said the State Department formally notified the Universal Postal Union, a coalition of 193 countries, that the USA intends to withdraw from the pact within 12 months if the administration can't negotiate more favorable shipping rates.

Australia has been called on by Canada to help "save the WTO", with the Morrison government preparing to attend a meeting next week that deliberately excludes trade war combatants the United States and China. 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 officials say the treaty is used by shippers of the narcotic fentanyl to the US from China.

The group said the discounts amount to a subsidy for Chinese shippers that cost the U.S. Postal Service $170 million in 2017.

The National Association of Manufacturers called the agreement "outdated" and said it "contributes significantly to the flood of counterfeit goods and risky drugs that enter the country from China".

"President Trump deserves tremendous credit for the administration's focus on eliminating the anti-US manufacturer subsidy China receives from the U.S. Postal Service", Jay Timmons, the president of the National Association of Manufacturers, said in a statement.

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