November 2019
The Universal Postal Union (UPU), a world-wide organization created for the purpose of facilitating international mail exchange, agreed in September to allow the United States to set its own inbound postage rates, thereby keeping the US as a member nation. In exchange for an annual contribution of approximately $40 million into the UPU’s “voluntary fund” the US will be able to increase the rates other countries pay for shipping into the US. The $40 million is notably less than the $300 million to $500 million in annual savings for the US predicted by Peter Navarro, President Trump’s trade advisor.
In October of 2018 the US State Department had proposed to the Universal Postal Union (UPU) that it self-declare international postal rates and subsidies (if any) for packages under 4.85 lbs. Had this proposal not been accepted by September 30, 2019 the US planned to withdraw from the nearly 150 year old organization on October 17, 2019.
The Universal Postal Union is an organization of 192 member countries, created in 1873 and headquartered in Berne, Switzerland. The organization meets every four years and in addition can hold a special meeting, called an “Extraordinary Congress,” to address matters of importance. There have been three Extraordinary Congresses in its long history – 1900, 2018 and September of 2019.
At issue in the September 2019 Extraordinary Congress was the structure of “terminal dues” which were developed by the UPU and have been in place for 50 years. Terminal dues are the rates paid on parcels to receiving countries by sending countries. Rather than being based on the receiving country’s costs for processing and delivering the parcel, terminal dues are based on the sending country’s economic development level, its mail volumes, cost levels and tariffs – among other criteria.
While the US State Department did not specifically called out China’s terminal dues, most observers say it is reasonable to believe that China’s classification as economically underdeveloped (determined in 1969) is the issue. Because of its advanced economic development, the US has much higher international rates. The economically underdeveloped classification given to China allows China to have such low shipping rates into the US that US shippers cannot compete with China even within the US.
Results of US withdrawal from the organization were expected to be much higher shipping rates for small packages both into and out of the US.
Approval of the US Congress is not required for withdrawal from the UPU. Permission for any member country to withdraw from the organization is included in the UPU Constitution, and the 2007 Postal Accountability and Enhancement Act give the US State Department power to “conclude treaties, conventions and amendments related to postal services and other international delivery services.”