U.S. Will Remain in Postal Treaty After Reaching New Rate Agreement

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Nick Cumming-Bruce

c.2019 The New York Times Company

 

GENEVA — The Trump administration had threatened to leave the body, the Universal Postal Union, after Oct. 17 if its members did not change the system of fees that postal services charge for collection and delivery of mail and small parcels.

The administration’s primary concern has been the sliding scale of fees that allowed China, the world’s second-largest economy, to take advantage of lower rates that are available to developing countries. As a result, manufacturers in countries like China and Cambodia have been able to pay far less to send a small package to the United States than what it costs American businesses to ship them from Los Angeles to New York.

The compromise deal struck Wednesday will allow the United States to set its own postal fees beginning in July 2020 and allow other countries which receive more than 75,000 metric tons of mail a year to phase in higher rates starting in January 2021. As a result of the change, China, which was the major beneficiary of the old system, will have to pay more for shipping goods to the United States.

Delegates from around 140 countries stood to applaud as Bishar Hussein, head of the Universal Postal Union, said the new formula had passed, averting the threat of chaos in international mail services that only a day earlier he had warned would follow a U.S. withdrawal.

Hussein called the outcome “the most remarkable day in the history of the union,” the nearly 150-year old organization that regulates the postal services of 192 member countries.

Peter Navarro, President Donald Trump’s trade adviser, said the decision was a “huge victory for millions of American workers and businesses” that would save the U.S. between $300 million and $500 million a year.

“We’ll buy less Chinese stuff, buy more from other countries, we will make more in America and the market will be free of distortions,” Navarro said. “China is certainly going to pay more for the privilege of shipping to our market.”

On Tuesday, Navarro told delegates the United States was prepared to leave the postal treaty, an ultimatum that reflected deepening impatience in Washington over the slow pace of reform to a global postal system that has failed to keep up with market and economic changes or recognize the growth of China, which is now the biggest player in the $30 trillion e-commerce market, with a roughly 30% share.

Such an outcome could have proved highly disruptive to American consumers and businesses, including U.S. companies that depend on low-cost shipments as part of their business model.

Companies like eBay have criticized the current system as unfair but warned that a U.S. withdrawal could have disastrous consequences, particularly before the holiday season. The company had urged the United States to reach some type of agreement and on Wednesday said it supported the outcome.

“The agreement comes at a critical time when shippers need stability ahead of the upcoming holiday season,” eBay said.

On Wednesday, Navarro said the agreement will “transform an antiquated, discriminatory system into a modern and resilient one far more prepared to meet the new demands of e-commerce and the increasing challenges of counterfeit goods and drugs such as fentanyl now moving like poison through the international mail system.”

Navarro had arrived in Geneva calling for the union to switch to a system of self-declared rates that would allow countries to decide their own fees. That option, which he acknowledged was the most disruptive, was voted down Tuesday.

Hussein had started talks with the United States and other key actors in the process over the weekend but acknowledged by Monday night “there were moments when I really felt things were falling apart.” The terms of a deal emerged only after another round of hard bargaining among a group of 34 countries from different regions, including China and the United States, that ran late into Tuesday night and resumed early on Wednesday morning.

As part of the agreement, the United States will also pay $40 million to the postal union over a period of five years to help finance the installation of electronic screening systems to boost mail security.

Navarro claimed the outcome as victory for “a new brand of Trumpian diplomacy,” asserting the principle that international organizations like the postal union had to “respect the rights of the United States and serve their members rather than be used as piggy banks for bad actor countries that seek to bend their rules.”