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US Announces Plans To Withdraw From 144-Year-Old Postal Treaty (thehill.com)
JoeyRox writes: The Trump Administration announced today that it's intending to withdraw from the Universal Postal Union, an international postage rate system overseen by the United Nations. "The decision was borne out of frustration with discounts imposed by the Universal Postal Union (UPU) that allow China and some other nations to ship products into the U.S. at cheaper rates than American companies receive to ship domestically," reports The Hill. "The administration argues the system undercuts U.S. manufacturers and allows China to flood the market with cheap goods." The U.S. is hoping to renegotiate the rates, known as terminal dues, but was frustrated with opposition from other nations in the UPU. According to the report, "The withdrawal would not take effect for one year, allowing the U.S. some time to broker a new deal."
"The 144-year-old UPU sets fees that postal services charge to deliver mail and packages from foreign carriers," reports The Hill. "For decades, developing nations have been allowed to pay lower rates than wealthier nations. China has fallen under the developing nation category, a designation the U.S. says it no longer deserves because of its booming economy." The Trump administration wants to move to a system of "self-declared rates" that would allow the U.S. Postal Service to set its own prices for shipping international packages of all sizes. As it stands, the P.O. is only allowed to use self-declared rates on packages exceeding 4.4 pounds.
"The 144-year-old UPU sets fees that postal services charge to deliver mail and packages from foreign carriers," reports The Hill. "For decades, developing nations have been allowed to pay lower rates than wealthier nations. China has fallen under the developing nation category, a designation the U.S. says it no longer deserves because of its booming economy." The Trump administration wants to move to a system of "self-declared rates" that would allow the U.S. Postal Service to set its own prices for shipping international packages of all sizes. As it stands, the P.O. is only allowed to use self-declared rates on packages exceeding 4.4 pounds.
The Planet Money podcast did a good story relating to this topic on August 1st, 2018. The episode was titled "The Postal Illuminati".
This is being blown out of proportions. There is only an advantage for small packages under 1lb. Over 1lb international rates are much higher than domestic. Under 1lb there is about a $1 advantage to foreign shippers. But the USPS is not losing money on delivering these packages, the foreign rates cover the cost of delivery. The argument is over pension contributions and that extra dollar from a price increase for foreign packages will go into postal worker's pensions.
This situation in the media is being distorted by comparing Priority Mail rates to international EMS. My Priority Mail packages arrive in 2-3 days. My EMS packages take at a minimum of 9 days and many take closer to 21 days to arrive. These services are not comparable. If I want three day service from China it costs over $50.
1st/2nd world gets nothing out of it.
Those aren't economic tiers.
"First World" is a relic from the cold war. It refers to the non-communist developed nations that were allied with the US. "Second World" is the communist developed nations that were allied with the USSR. "Third World" is everyone else.
Third World nations were poor due to not being developed. They aren't all poor now. And they don't move into "second world" unless they become communist.
>You haven't explained why that would make the cost
>go down for US exporters though.
Currently, the payment for internationally shipping from the US is basically the price plus a subsidy. For example, a $5 fee paid is $4 for the shipping, and $1 for the subsidy.
If a packages is $5 to a developing country, it might be only 50 cents to ship *from* the developing country. The first world receiver pays more to deliver in country than it is paid on that package--and subsidizes this loss from that extra dollar above.
The reason for this is to let Elbonia pull itself up into the the modern world; it is deliberately subsidized.
The problem is that as China left that developing status, it hasn't given up its rates.
I've actually ordered something for eleven cents, delivered . . .
If China has to pay the rates of an economy of its state of development, subsidy of its shipping no longer has to be built into the other international rates. *That* is where the reduction comes from.
Shipment between the US and Europe don't subsidize one another, and their cost could reasonably be expected to go down without the subsidy for China (or at least not increase as much as they would have).
hawk, wearing his econ professor hat for a change