Published: Fri, October 19, 2018
Economy | By

U.S. to exit global postal treaty

U.S. to exit global postal treaty

The Postal Service applauded the action Wednesday.

The treaty sets rates that national postal services charge to deliver mail and small packages from other countries.

As Pakistan is seeking assistance from the International Monetary Fund to get over its economic crisis, the Trump administration is likely to exercise its influence to ensure that before any financial assistance is granted, the monies would not be diverted to repay Chinese loans. "There's no price crash, meaning USA oil and gas markets are well-prepared to find new buyers in Asia to replace China if necessary".

The deal has allowed the country to flood the United States with cheap goods at shipping discounts of up to 70 percent, putting American companies at a disadvantage and straining the USA mail system while fueling growth overseas, Taub said.

In its first paragraph, the Times paints the treaty simply as something that undercuts American competitors and floods the market with cheap consumer goods, but that's a byproduct of the glacial pace at which the 192-member organization moved as China became a global ecommerce force.

MCM Musings: Say what you will about Trump, but the Universal Postal Union agreement is ripe for upending as it has contributed to the significant trade imbalance between the us and China by putting a finger on the scale in favor of Sino-based sellers.


According to UPU, the official notification on Wednesday, from US Secretary of State Mike Pompeo, said that the withdrawal "shall be effective one year after the day on which [the UPU receives] this notice".

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. And it could crimp shipments of cheap goods from Chinese manufacturers directly to US consumers - a practice that many USA retailers and small businesses say hurts them.

The postal treaty irked leaders from both parties long before Trump took office, Taub said. Since 1969, poor and developing countries - including China - have been assessed lower rates than have wealthier countries in Europe and North America.

"And that loss is growing at a roughly 40 percent rate annually" because of booming Chinese e-commerce sales to Americans, according to NAM.

The rise of worldwide online shopping has resulted in an increase in small packages being sent via the postal system, and U.S. firms say it can now cost more to post an item within the USA than it does to send a similar item from Shanghai to the US. Withdrawal from the postal treaty does not take effect for at least one year, setting the stage for talks which could renegotiate its terms. "Manufacturers and manufacturing workers in the United States will greatly benefit from a modernized and far more fair arrangement with China". "This inequity puts American small businesses and manufacturers at a severe competitive disadvantage". Tensions have been escalating since July, when the Trump administration levied tariffs on $34 billion worth of Chinese goods.

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