US economy

US wins victory in international postal dispute


President Donald Trump’s muscular approach to China has delivered a victory as Beijing and other developing countries agreed to pay more to send parcels to the US.

Washington had threatened to quit the UN’s postal body because its rules forced the US to charge much less for shipments from developing countries than for domestic post. Cheap postage, particularly from China, had led to a flood of imports into the US and put domestic importers of goods such as lightbulbs and phone chargers at a disadvantage, the US believes.

The 192 countries of the Universal Postal Union on Wednesday bowed to the US demand that it should be allowed to recover more of the costs of parcel delivery.

The change to so-called “terminal dues” is likely to mean consumers pay more for products from China and other developing countries bought online. Traders in China, Vietnam and elsewhere could see sales drop dramatically, analysts say.

China is currently treated as a developing nation whose postal system needs to be supported by others around the world.

Peter Navarro, Mr Trump’s trade adviser, who represented the US in the UPU’s extraordinary congress in Geneva, described Wednesday’s deal as a compromise. Canada, Brazil and several European countries had backed the US position.

Mr Navarro tied support for the US to other trade and defence issues, such as Nato membership. “I am personally asking you to support the US position. I make this ask because in times like these, where no reasonable person could support the terminal dues system, this is what friends and allies do for each other,” he said this week.

China also backed the compromise deal, in what analysts said was a move aimed at limited the damage.

At present, the price for a 2kg package shipped from one US state to another is $19-$23, while China Post pays $5 to ship it anywhere in the US, according to the US Postal Service. Mr Navarro said the service spent $300m-$500m annually delivering imported mail.

Under the deal agreed on Wednesday, high-volume importers of mail and packages such as the US would be allowed to begin imposing “self-declared rates” for distributing foreign mail from July 2020, at up to 70 per cent of the domestic price.

Paul Steidler, senior fellow with the Lexington Institute think-tank, said: “This agreement will significantly help US manufacturers, retailers, ecommerce companies and others. It is a win. It will be a catalyst for billions of dollars in increased annual US sales, more jobs and higher tax revenues.”

He said the Trump administration’s tough approach had “accomplished more with the UPU in the past year than the US has over the past 20 years”. He added: “This victory should create optimism about for the future of other negotiations with China.”

The UPU was established in 1874 and no country has ever left. The US had declared its intention to leave the union on October 17, but it will not now follow through on that threat.

The body has struggled to adapt to ecommerce when consumers in rich countries can easily buy products from poor ones, where prices are lower.



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