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US announces intent to withdraw from global postal pact

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US announces intent to withdraw from global postal pact

Most of the Trump administration's trade actions against China have come in the form of tariffs, but Washington took a different approach Oct. 17, announcing its intent to withdraw from a 144-year-old global postal agreement that U.S. officials say unfairly benefits Beijing and puts American shippers at a disadvantage.

In a statement, the White House said that the U.S. State Department will file notice to withdraw from the Universal Postal Union, or UPU, a pact that provides a subsidy for foreign shippers, including those from China. Opponents of the arrangement, including the Trump administration, say the deal provides international companies much lower rates than what U.S. companies pay for the same service, effectively putting domestic interests at a disadvantage.

President Donald Trump said he "concurs" with the State Department's recommendation to adopt self-declared rates "as soon as practical," but no later than Jan. 1, 2020. The notice begins a one-year withdrawal process.

However, the administration said it would engage in bilateral and multilateral negotiations with UPU signatories and left the door open to remain in the agreement should the talks prove fruitful.

"If negotiations are successful, the administration is prepared to rescind the notice of withdrawal and remain in the UPU," the statement read.

The intent to withdraw was applauded by the National Association of Manufacturers, or NAM, a trade group that called the UPU an "anti-U.S. manufacturer subsidy" that China receives from the U.S. Postal Service, or USPS.

The USPS did not immediately return a request for comment.

"This outdated arrangement contributes significantly to the flood of counterfeit goods and dangerous drugs that enter the country from China," said Jay Timmons, NAM's president and CEO, in a statement. "Manufacturers and manufacturing workers in the United States will greatly benefit from a modernized and far more fair arrangement with China."

NAM said the USPS lost about $170 million due to the subsidy in the last fiscal year, adding that it believes the figure could increase by 40% annually as more purchases are made online.

In an Aug. 23 memo to the U.S. Departments of State, Treasury and Homeland Security as well as the Postmaster General and the Chairman of the Postal Regulatory Commission, Trump said that UPU rates are less than comparable domestic postage rates, which he said "distorts the flow of small packages around the world by incentivizing the shipping of goods from foreign countries that benefit from artificially low reimbursement rates."

The union, established in 1874 and now an agency of the United Nations based in Switzerland, was established to coordinate postal policies among its 192 member states.

The Trump administration has already taken aggressive economic measures against China for what it says are Beijing’s market-distorting practices, following a Section 301 investigation by the Office of the U.S. Trade Representative. The White House has imposed tariffs of 10% to 25% on $250 billion of imports from China, and Trump has stated his intent to impose tariffs on a further $267 billion of Chinese goods.