President Trump’s move to pull the US out of the UN’s Universal Postal Union comes as no surprise following its failure to address the problem of ultra-cheap Chinese postage to the West. But it fears it could create a new Post War, with different nations setting their own international postal dues.
As President Trump launches the process of withdrawing the US from the Universal Postal Union, the UPU is paying the price for failing to raise the ultra-cheap rates China pays for postage to the West at its recent Extraordinary Congress.
Trump threatened to impose US postal dues unilaterally if the UPU failed to agree new rates, and now the Financial Times reports he is kick-starting the year long process. Trump’s bomb-shell could result in postal chaos if other countries decide to follow suit. 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. Whether Trump’s letter bomb-shell will ultimately be good or bad news for UK and US traders remains to be seen.
Before the UPU’s meeting on the contentious issue in Abu Dhabi this summer, Trump demanded that it must agree future rates that would “fully reimburse the USPS (United States Postal Service) for costs to the same extent as domestic rates for comparable services”. Instead the UPU decided to kick the decision into the long grass; saying it would look again in 2020.
‘President Trump gave his Secretary of State until November 1st to come up with recommendations for future action, including the possibility of ‘adopting self‑declared rates’. Now he’s clearly weighed up those recommendations and decided quitting the UPU entirely is the best option. Not for the first time, President Trump is opening up a can of worms over overseas trade. If the US declares its own postal dues, China may also impose its own rates and we could end up with a tit-for-tat situation in which every country, including the UK, sets its own dues; overthrowing an arrangement that has been in place for many decades.
If the UK joins in any move towards fair postal remuneration, the result could be a huge boost for UK sellers as cheap Chinese imports vanish. But it could equally work against British retailers importing stock from overseas, or exporting to countries who may be imposing their own unilateral postal dues. With Brexit just around the corner, perhaps this is a fight we hoped Trump would not pick right now Shipping items between the UK and China is crucial in the growth of e-commerce.
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