Change the unfair international postal rate system now

Change the unfair international postal rate system now

When the US helped found the Universal Postal Union in 1874, it was seeking to create “a single postal territory for the reciprocal exchange of correspondence”. But the UPU’s antiquated system for setting international postal rates, known as “terminal dues”, has not kept pace with the dramatic rise in ecommerce and America is the biggest victim.Today 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. This puts American manufacturers and workers at a significant competitive disadvantage and forces the US Postal Service to subsidise a system that weakens America’s manufacturing base.The US is far from the only victim of the UPU’s distorted system. Brazil, Finland, Norway, and Canada, to name just a few, likewise lose considerable sums; and Iceland’s postal service nearly went bankrupt because of the unfair rules.Last autumn, Donald Trump, the US president, told the UPU that its unfair treatment of America must stop. He warned that the US would pull out of the multilateral organisation unless it amended its rules to allow the US to set its own “self-declared” postal rates, allowing the postal service to recover appropriate costs from overseas shippers. The State Department then submitted a withdrawal notice that will allow the US to leave the union on October 17 after a mandatory one-year waiting period.The union has responded by calling only the third extraordinary congress in its nearly 150-year history to consider appropriate reforms to the terminal dues systems. When members gather on September 24, the voting agenda will include two options that would allow the US to “self-declare” its own rates immediately. One, known as option B and endorsed by nearly 40 countries, would allow all 192 members of UPU to impose self-declared rates immediately. This would end the terminal dues system and give all countries complete control of the rates they charge for the domestic component of international postal transactions. A second option, dubbed the “multispeed approach”, would also allow the US to self-declare rates immediately, while other countries would phase in rate changes at speeds determined by the Extraordinary Congress. Either of these options would keep the US in the UPU. But there are proposals on the table that, if passed, would trigger the prompt exit of the US from the group. Not surprisingly, they are supported by a number of the nations that benefit most from the current system, which allows them to treat the American postal system as a piggy bank. For example, so-called option A is a cynical non-starter from the US point of view. It would only raise rates slightly and slowly while keeping in place the strict caps on what the USPS and other postal systems can charge overseas shippers for domestic delivery. This tweak would not only preserve the current terminal dues system distorting rates but also introduce other inefficiencies. What will be the outcome of the extraordinary congress? Only two things can be said with absolute certainty: the US will start self-declaring its rates soon after October 17 one way or the other; and the US goes into this meeting fully prepared to either stay in or leave the UPU.American presidents as far back as Ronald Reagan have recognised the inefficiencies of the UPU’s terminal dues system. However, Mr Trump is the first to confront the problem directly and take concrete steps toward a solution. Since last October, we have had a two-fold mission: first to provide the UPU with a workable set of amendments that would allow the US to remain in the body but also immediately self-declare rates. Second, ensure that international mail moves swiftly and without disruption if the US leaves the organisation. Our team has moved in “Trump time”, which is to say, as quickly as possible. This is in direct contradiction to those who would use international diplomatic culture to maintain the status quo through endless negotiations and “further studies”. That is a trap we refuse to fall into.At the end of the day, the US simply seeks a system of self-declared rates within the UPU. That arrangement would provide for fair and undistorted competition for companies based in all 192 of its members. The US team is heading to the extraordinary congress to achieve that goal. In the end, however, we will not allow our desire to remain in the UPU to overcome President Trump’s overarching goal of fairness for America through self-declared rates. Let the extraordinary congress begin.The writer is assistant to the US president for trade and manufacturing policy


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