In a move against online merchants from overseas using the mail to reach US consumers, Washington has declared its intention to withdraw from the Universal Postal Union (UPU), the global organization of postal agencies. The UPU has 192 members.

US officials and interest groups have railed against foreign e-tailers undercutting American competitors by taking advantage of low postal tariffs. The target of their ire is the terminal dues system that regulates compensations that member agencies pay each other for delivery of international parcels weighing less than 2 kilograms.

Terminal dues were established to support mail from emerging economies to developed ones by setting lower delivery fees charged to the postal agency in the origin country. This was of little consequence when mail consisted largely of letters but has become an increasingly irksome bone of contention with the rise of parcel flows moving online orders across borders.

The terminal dues that the Chinese postal service currently pays its counterparts in North America and Europe are lower than domestic mail delivery tariffs in those areas. As a result, sending a parcel from Shanghai to a US address is cheaper than sending a similar parcel from a US origin point. This has evoked protests from US merchants and manufacturers, arguing that they are being put at a disadvantage.

Moreover, the US National Association of Manufacturers, one of the leading voices on the issue, has argued that the system is to blame for a flood of counterfeit goods and drugs entering the US in the mail.

The US administration has stressed that its move against current terminal dues is not solely directed against China, although it is the origin of a large share of international e-commerce shipments hitting the US by mail. It declared that it is taking measures against “harm done through a multilateral organization (the UPU) – not only China.”

Earlier in his term, the US president repeatedly accused Amazon of taking advantage of the US Postal Service (USPS) and contributing to its revenue shortfall.

According to one report, the US Postal Service suffered a US$170 million deficit in 2016 directly attributable to terminal dues, a leap of 20% over the amount it lost the year before on account of terminal dues.

US President Donald Trump directed his officials in August to propose measures to end the abuse of terminal dues in case the UPU failed to address the issue at its congress in September. In its statement from the event, the postal organization declared that it would work on the problem with the aim of providing a comprehensive proposal by 2020.

Trump had given his officials a November 1 deadline to come up with suggestions, but the stance of the UPU apparently led Washington to the conclusion that there was no need to wait. On October 17 the White House sent a letter to the UPU giving notice of its decision to withdraw from the organization effective January 1, 2020, at the latest. From then on, the US would unilaterally set delivery rates for parcels entering the US postal system from other countries.

After the US notified the UPU of its decision, UPU director general Bishar A. Hussein said that the UPU “remains committed to attainment of the noble aims of international collaboration by working with all its 192 member countries to ensure that the treaty best serves everyone.” The UPU has also said that it finds the move regrettable and that it intends to meet with US government officials to discuss the matter.

The outright withdrawal from the UPU is widely regarded as a bargaining ploy, a perception that has been supported by a statement from the White House press office which announced that in the time until the effective withdrawal from the UPU the State Department would seek to negotiate bilateral and multilateral agreements that resolve the problems with terminal dues.

“If successful, the administration is prepared to rescind the notice of withdrawal and remain in the UPU,” the statement read.

By Ian Putzger

Air Freight Correspondent | Toronto