China 'regrets' U.S. leaving postal union amid trade dispute

Monday, 22 Oct, 2018

"This won't affect China's e-commerce companies a lot because their principal business is domestic", he said.

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.

President Donald Trump announced that the United States would pull out of an obscure 144-year-old postal treaty, in what looks to be his latest direct shot at 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 US Chamber of Commerce said the rate system is "exploited by a handful of countries". "Maybe it's about something else and maybe we're just waking up to the fact that the trade war is much bigger", said American Apparel & Footwear Association president and CEO Rick Helfenbein at last week's Sourcing Journal Summit. That makes sense. But, insensibly, the union still places China, the world's second-largest economy, in the same category as Bosnia, Botswana, Cuba and other developing countries.

"The global postal system plays a central role in enabling global trade flows - more so now than ever with the growth of e-commerce".

Jim Campbell, a lawyer and consultant on postal issues, said the main problem with the UPU was that its pricing system did not reflect the massive rise in worldwide e-commerce.

Did you know it costs more to ship a product across the street in America than it does to ship that same product from China on to American soil?

"Suddenly the cost of that goes up tremendously for someone who's manufacturing something in the USA and has all these components going into it".

Reports stated that the US withdrew on the grounds that global mailing rates set by the UPU, in the view of the USA, give an unfair advantage in particular to China.

The treaty governs rates on packages weighing 2 kilos (about 4.4 lbs.) or less.

Consumers might appear to "win" by having access to cheaper goods because of the UPU treaty, but only because American taxpayers are subsidizing the whole enterprise by propping up the U.S. Postal Service, which has lost $18.9 billion in the past four years. Administration officials said they were assessing rates for other countries and had not made any decisions about whether the policy would extend beyond China.

The postal loophole can be seen in the shipping options offered by Chinese EBay sellers and others on major e-commerce portals. The company declined to comment Thursday.

The treaty was tweaked in 2016 to adjust for some of the advantages to China after complaints from USA administrations of both political parties. "The anti-competitive nature of the [Universal Postal Union] has concerned the USA government since the Reagan administration", Postal Regulatory Commission Chairman Robert Taub said. When a letter or parcel is mailed overseas, the postal administration of the sender's country - which has received payment for postage, usually in the form of a stamp - pays terminal dues to the destination's postal service for its share of the delivery process.