A U.S. Victory at the Universal Postal Union

COMMENTARY Global Politics

A U.S. Victory at the Universal Postal Union

Sep 27th, 2019 5 min read
COMMENTARY BY
Brett D. Schaefer

Senior Research Fellow in International Regulatory Affairs

Brett D. Schaefer is the Jay Kingham Fellow in International Regulatory Affairs at Heritage's Margaret Thatcher Center for Freedom.
With U.S. withdrawal looming, the Universal Postal Union convened an Extraordinary Conference on Sept. 24 and 25 to vote on the proposals. Sitikka/Getty Images

Key Takeaways

The central purpose of the Universal Postal Union to facilitate mail and package delivery between countries by setting the rules for international postage. 

Some countries, including China, take advantage of the Universal Postal Union subsidized shipping rates to give their businesses a cost advantage. 

The Trump administration is determined to use its influence to fix the international organizations, particularly when the U.S. is unfairly treated. 

Numerous articles have criticized the Trump administration over its policy towards the United Nations and other international organizations. 

In particular, they assert that U.S. decisions to reduce funding and leave various international agreements have opened the door for the Chinese to increase their influence

When U.S. policy is disjointed, such as when the administration proposes cuts to U.S. contributions untied to policy objectives, American influence is indeed blunted or lessened. 

However, as we saw at the Universal Postal Union (UPU) this week, the U.S. uses its influence to demand specific policy changes, including threats to withdraw or withhold funding, it remains a powerful and effective player.   

The Universal Postal Union, established in 1874, is one of the world’s oldest international organizations. Although the Universal Postal Union preceded the United Nations by 71 years, it joined the UN system as an autonomous specialized agency in 1948. 

The central purpose of the Universal Postal Union to facilitate mail and package delivery between countries by setting the rules for international postage. 

Under the current system, when a person or business mails a letter or small package to another country, the postal operator in the sending country charges for postage and pays the postal administrator in the destination country for its portion of the cost for processing and delivery. Under Universal Postal Union rules, these “terminal dues” on small packages are lower for developing countries, which are grouped based on their level of economic development. 

The Universal Postal Union adopted this tiered system to lower the burden on developing countries and facilitate their participation in international commerce and postal exchange. 

The practical impact is that small packages shipped internationally from developing countries can actually cost far less than identical packages shipped domestically in the U.S.  

Originally seen as a relatively minor effort to promote development, this policy has become a significant economic distortion in the age of international e-commerce

Some countries, including China, take advantage of the Universal Postal Union subsidized shipping rates to give their businesses a cost advantage. 

For instance, Chinese merchants are able to ship small packages to the U.S. at far less cost than U.S. merchants can ship domestically, which can make U.S. businesses uncompetitive. 

According to 2015 testimony from Paul Misener, vice president for global public policy at Amazon.com, “[S]hipping a 1 pound parcel to New York City would cost nearly $6.00 from Greenville, South Carolina but only $3.66 from Beijing. At high volumes, especially for low-priced items, such dramatic shipping cost differences can make or break a small e-commerce business.”

Moreover, the policy has added increasing costs to the U.S. postal system. According to a 2015 U.S. postal system report, the Universal Postal Union rules cost the U.S. postal service over $300 million from 2010 to 2014. The U.S. government recently argued that the Universal Postal Union rules cost U.S. carriers between $300 million and $500 million annually. 

To address these issues, the U.S. sought changes to the system that would restore a fair and non-discriminatory system that avoids preference for foreign mailers of domestic mailers and “fully reimburse the [United States Postal Service] for costs to the same extent as domestic rates for comparable services.” 

After its initial diplomatic efforts to change the Universal Postal Union rules failed, the U.S. notified the Universal Postal Union last October that it would withdraw unless it could resolve the issue. The notification started a one-year countdown that would culminate in U.S. withdrawal on Oct. 17.

Threatening to leave the Universal Postal Union was dramatic, but it succeeded in getting the attention of other member states. 

The Universal Postal Union held a special conference in April to discuss postal reimbursement. The initial proposal of the U.S. sought to allow countries to immediately set their own rates for package delivery to allow for full reimbursement from foreign shippers. The Universal Postal Union membership considered the U.S. proposal and two other options. 

With U.S. withdrawal looming, the Universal Postal Union convened an Extraordinary Conference on Sept. 24 and 25 to vote on the proposals. It was only the third time that the 145-year-old Universal Postal Union had convened an Extraordinary Conference. 

The original U.S. proposal, which would have let countries immediately adopt “self-declared rules” on reimbursement, was rejected 78 to 57 at an Extraordinary Congress held this week. 

However, by unanimous decision, the Universal Postal Union member states did agree to allow “member countries that meet certain requirements – including inbound letter-post volumes in excess of 75,000 metric tons based on 2018 data – […] to opt-in to self-declare their rates starting 1 July 2020.”  

The compromise protects developing countries with low mail volume from negative impacts, but provides a means for the U.S. to increase postal reimbursement for high-volume developing countries like China that exploit UPU subsidized shipping rules. With this compromise approved, the U.S. will remain a part of the Universal Postal Union.

As stated by Peter Navarro assistant to the president of the United States and director for trade and manufacturing policy, who led the delegation: “Today a White House team working closely with the director general of the Universal Postal Union and a broad coalition of friends and allies in the UPU has more than achieved the President’s goal.”

This experience runs counter to the narrative in the press that the U.S. is reflexively hostile to international organizations. In reality, the Trump administration is determined to use its influence to fix the international organizations, particularly when the U.S. is unfairly treated. 

The U.S., which handles about half the world’s mail, was in a strong position to demand changes and worked for months with other nations to make its concerns clear and secure support for changes to address its concerns.

If the U.S. is to see similar success in other UN reform efforts, such as reducing its peacekeeping assessment to 25 percent, it will likewise need to dedicate time, skill, and pressure to achieve it.  

This piece originally appeared in The Daily Signal