World postal rates overhauled after US quit threat
25 September 2019
The UN's postal agency has voted unanimously to reform its fees, potentially averting a US withdrawal. The compromise deal was agreed after two days of emergency talks by the Universal Postal Union (UPU) in Geneva. The agreement means the US and other high volume importers can set their own rates for delivering mail from abroad. The US had earlier threatened to pull out, arguing that discount rates for countries such as China were putting the US at a massive disadvantage. It said that it had become cheaper for US consumers to ship items from China rather than buying domestically. As a result, it argued this was unfair to US manufacturers and was costing the US Postal Service up to $500m ($404m) a year. The UPU is a 145-year-old agency that sets the prices of international mail, with the mandate of ensuring that global postage is affordable to all. Its 193 members are categorised into different postal rates based on their economic and postal development. UPU Director-General Bishar Hussein called the new agreement an "historical moment", but conceded that higher rates would mean more costs for some people. White House trade advisor Peter Navarro, who led the US delegation, also hailed the decision during a press conference on Wednesday. "We will begin our self-declared rates at the end of June next year. This is exactly what we wanted and planned for," he told reporters. From January 2021, high-volume importers will be able to impose "self-declared rates" for delivering foreign mail and packages. Countries that import more than 75,000 tonnes (75m kgs) of post every year can apply their own rates by July 2020. A five-year period for phasing in new fees has also been agreed upon to help with the transition. White House trade advisor Mr Navarro said that, under the renewed arrangement, "China is certainly going to pay more for the privilege of shipping to our market". China's delegation supported the deal, and said during talks that it had been "actively working... to find a positive solution and compromise". Under the UPU's remuneration system, national postal operators are compensated for delivering mail from abroad. In theory, higher rates are applied to highly developed countries, and lower rates to those that are least developed. But several members complain that advanced economies like China have been miscategorised and are paying lower rates than they should be. The UPU had previously pledged to discuss changes to the system, which is already reviewed by members every four years. But the US signalled last October that it would leave unless the system was changed, and members voted earlier this year to hold emergency talks. Had America withdrawn, it would have been the first country to do so in UPU history.
UPU Director-General Bishar Hussein called the new agreement an "historical moment", but conceded that higher rates would mean more costs for some people. White House trade advisor Peter Navarro, who led the US delegation, also hailed the decision during a press conference on Wednesday. "We will begin our self-declared rates at the end of June next year. This is exactly what we wanted and planned for," he told reporters.
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What reaction has there been?
From January 2021, high-volume importers will be able to impose "self-declared rates" for delivering foreign mail and packages. Countries that import more than 75,000 tonnes (75m kgs) of post every year can apply their own rates by July 2020. A five-year period for phasing in new fees has also been agreed upon to help with the transition. White House trade advisor Mr Navarro said that, under the renewed arrangement, "China is certainly going to pay more for the privilege of shipping to our market". China's delegation supported the deal, and said during talks that it had been "actively working... to find a positive solution and compromise".
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What will change under the new deal?
Under the UPU's remuneration system, national postal operators are compensated for delivering mail from abroad. In theory, higher rates are applied to highly developed countries, and lower rates to those that are least developed. But several members complain that advanced economies like China have been miscategorised and are paying lower rates than they should be. The UPU had previously pledged to discuss changes to the system, which is already reviewed by members every four years. But the US signalled last October that it would leave unless the system was changed, and members voted earlier this year to hold emergency talks. Had America withdrawn, it would have been the first country to do so in UPU history.
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Why is the current system controversial?