One reason China has been able to clean the United State’s economic clock for 30+ years is that it has secured much lower international postal rates from the United Nations-affiliated Universal Postal Union (UPU). This is an economic stimulant for Chinese manufacturers, retailers and e-commerce businesses at the expense of their U.S. competitors.
President Trump has taken strong steps to end this, and by accelerated unilateral action, the administration can lock in a clear and tangible trade win over China.
Today, it costs 65 percent or less to send a small package (4.4 pounds or lighter) from Beijing to the United States than to send that same package even a few miles within the United States. And the losses on these low-cost shipments are borne by the U.S. Postal Service, or more exactly, U.S. customers of the Postal Service.
Amazingly, despite having the second largest economy in the world, China has been able to get itself categorized as a developing country within the UPU. This entitles China to drastically lower international postal rates.
In an August 23 presidential memorandum and subsequent Oct. 17 announcement, the administration made resoundingly clear it wants to end the preferential treatment that shippers from China and some other countries receive. The administration has also said it will take related actions to modernize and improve the international postal system, such as eliminating the UPU’s legal authority over customs and security controls.
Many business organizations, such as the National Association of Manufacturers and the U.S. Chamber of Commerce have strongly praised the president’s UPU actions. Postal Regulatory Commission Chairman Robert Taub has also spoken strongly of the need for reforms saying, “The anticompetitive nature of the Universal Postal Union has concerned the United States government since the Reagan administration.”
Even The Washington Post, in an editorial, endorsed the president’s position.
While bilateral negotiations with China require getting both parties to agree, the United States does not have that problem on the postal shipping issue. Like any nation, the United States has the sovereign right to declare what it will charge foreign customers to use postal services.
The administration has pledged to adopt “self-declared rates for terminal dues as soon as practical and no later than January 1, 2020.” “Terminal dues” refers to the costs, or remuneration rates, for international mail and packages. The United States will also withdraw from the Universal Postal Union on October 17, 2019, unless there is success in negotiating new agreements.
The rates issue can and should be solved by the United States quickly and unilaterally. Simply put, U.S. customers should have access to the same rates as international shippers, ending all preferences for foreign shippers. The added revenue will help to stem losses at the U.S. Postal Service, which has lost money for 11 consecutive years.
The Postal Regulatory Commission has issued an order to place foreign mail and packages into the competitive products category. This is an important and deliberate step to end the preferential pricing treatments Chinese items have received.
In five-plus months since the release of August’s presidential memorandum, there has been no progress in trying to reach an agreement with the UPU. At the end of the day, many foreign companies have a strong desire to sell their products in the United States even if their profits are reduced. They will pay the same prices for U.S. postal services as U.S. companies, as determined by the Postal Regulatory Commission.
U.S. negotiators would be better served by ending rate discussions with the UPU and focusing on forging alliances and agreements with dozens of other countries that have had similarly negative experiences with the UPU. From this position of U.S. strength and resolve, the UPU is then most likely to be reformed and realize the wisdom of accepting U.S. rates, thereby keeping the world’s largest economic power as a member.
China has built its e-commerce prowess in good part by shrewdly and persistently manipulating the UPU, at the expense of U.S. businesses and postal consumers. The United States can and should end this surreal situation immediately. From this victory, the United States will show resolve and demonstrate it is firmly committed to securing free and fair trade with China.
Paul Steidler is a senior fellow with the Lexington Institute (@LexNextDC), a public policy think tank based in Arlington, Virginia.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.