A recent Associated Press dispatch said “the effects of President Donald J. Trump’s standoff with China could soon be coming to a post office near you, and higher shipping rates for some types of mail are the likely outcome.” As Trump is threatening to pull the US out of the 145-year-old Universal Postal Union, the AP said a showdown looms at a special UPU Congress this week in Geneva.
Established in 1874 and headquartered in the Swiss capital Berne, the Universal Postal Union is the second-oldest international organization worldwide. With its 192 member-countries, it is the primary forum for cooperation between postal sector players. The Philippines became a member of UPU on January 1, 1922. Currently, there are more than 5 million postal employees around the world and 663,000 post offices. Postal services worldwide annually process and deliver an estimated 368.4 billion letter-post items and 6.4 billion parcels.
Trump’s complaint centers on the reimbursement that the US Postal Service receives for providing final deliveries of bulky letters and small parcels sent from abroad—usually ones not weighing more than 2 kilograms. Such mail can include high-value items like mobile phones, memory sticks or pharmaceuticals. The US president complained that some postal carriers like China’s aren’t paying enough to have foreign shipments delivered to US recipients.
The UPU remuneration system for letters and small packets—also known as the “terminal dues” system—ensures that Posts are compensated for the cost of handling, transporting and delivering items across borders. This multilateral agreement facilitates the movement of postal items across borders, ensuring that anyone, anywhere within the UPU’s 192 countries can send and receive international post. The current system was decided by the 2016 UPU Congress and entered into force in January 2018. It places countries into tiered groups applying different rates based on postal development indexes, with the goal of moving all countries into a single-rate system as the quality of postal networks improve.
Trump wants to reform the 145-year-old global system of coordinating postal policies, a method he says treats American companies unfairly. If his reform push fails, he said the US is ready to ditch the UPU in October, which could throw into chaos how packages are sent to and from the US.
White House trade adviser Peter Navarro, head of US delegation to the UPU Congress, said in an article published in Financial Times: “Manufacturers in countries as small as Cambodia and as large as China pay less to send small parcels from their countries to New York than US manufacturers do to ship packages from Los Angeles to the Big Apple. The US simply seeks a system of self-declared rates.”
The reform being pushed by the US is almost exclusively aimed at China, where exporters currently pay a heavily discounted rate to ship packages abroad. If the 192 UPU members approve the US-endorsed amendment, it could raise costs for Chinese e-commerce companies, while helping US companies like FedEx Corp. and United Parcel Service Inc. On the other hand, if the proposal is not approved and the US leaves UPU, the US Postal Service would lose access to the legal, regulatory and technical framework that underpins global mail delivery.
If the US withdraws, small businesses that sell online to customers around the world could see service disruptions and dramatically increased costs for shipping. It will also adversely affect 4 million Filipino-Americans living in the US and their millions of relatives and friends in the Philippines, especially with the fast-approaching Christmas holidays.