USA targets China on worldwide rates for parcels sent by post service

19 October, 2018, 15:00 | Author: Regina Silva
  • United States Postal Service and other mail outside a home

A senior White House official said the State Department formally notified the Universal Postal Union, a coalition of 193 countries, that the USA intends to withdraw from the pact within 12 months if the administration can't negotiate more favorable shipping rates.

Rates are split by tiers - as a developed country the United States is in tier one, which means packages coming from developing third-tier nations, like China, can enter the country at a discount. It's in line with Trump's hardline stance on trade with China, and his abhorrence of global trade agreements in general.

"The current system has led to the United States subsidizing the imports of small packages from other countries", said Jeff Adams, a Postal Service spokesman.

The Trump administration will begin withdrawing from a United Nations pact that offered low rates for foreign postal deliveries of small packages in the United States, the latest move to challenge practices it sees as unfairly advantageous to China.

Meanwhile, the stock prices of Nasdaq-listed Alibaba and JD.com - China's largest e-commerce companies, accouting for over 80 percent of the domestic market - on Wednesday dropped by 1 percent and 3.9 percent, respectively.

Giving an example, the official said a one-pound package costs domestically about $10 to $13 for a U.S. business or manufacturer to send, whereas the Chinese mailer, for the last mile, and same distance, one would reimburse about $2.50.

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The group said the discounts amount to a subsidy for Chinese shippers that cost the U.S. Postal Service $170 million in 2017.

"They're using our Postal Service and contributing nothing to the overhead, and Americans have to pay for that", he said. Even though China's manufacturing sector isn't as strong as it was ten years ago, the country's incredible consumer growth makes USA consumer growth look weak.

US officials say they will be willing to renegotiate the postal treaty over the next year but will leave if no agreement can be reached. But China pays only about $2.50 for shipping in the US, the official said.

It's not clear whether USA consumers will face higher prices reflecting new shipping rates if the Untied States formally withdraws from the UPU.

"British and American online retailers have long-complained that Chinese e-commerce letter-size packages to the West are massively subsidised by our postal services, thanks to secret rates arranged by the UPU".

The shipping rate under the postal treaty can be a fraction of what it costs to send the same item from the U.S.to China - making returns very hard - and it can be lower than what it costs to ship an identical product within the U.S. The withdrawal process would take a year. The fact is, through the bilateral trade agreement with the United States, you know how much benefit American consumers have got with trade with China over the years and how much money American companies have made from operating in China.

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