The Department of State has begun proceedings with the United Nations to withdraw the United States from the Universal Postal Union, an agency within the U.N. that sets rules and provides advice for international mail exchange.
According to White House officials who spoke on an Oct. 17 press call, the move is meant to address price subsidies offered to other countries shipping goods within the United States, which don’t cover the actual cost of shipping the package.
“The issue here is simply that under the current rules of the universal postal system, foreign governments, foreign posts are able to send packages to the United States at highly subsidized rates,” said a White House official.
“A one-pound package costs domestically about $10 to $13 for a U.S. business or manufacturer to send, whereas the Chinese mailer for the last mile of the same distance will only reimburse about $2.50. The economics of this are pretty straightforward. First of all, the U.S. Postal Service winds up picking up the tab for that, so that’s number one, it hurts the post office. Number two, in order for the post office to make up for the losses on these foreign packages, it also raises the rates on Americans who want to send foreign packages abroad.”
USPS has in recent years struggled to bring in enough revenue to address needed updates, changes and investments.
According to the officials, the State Department led an interagency team that went to Ethiopia in September to try and renegotiate the Universal Postal Union agreements, and while some countries were supportive, the proposal didn’t go anywhere.
State Department proceedings with the U.N. today will begin with a letter of denunciation, which sets the U.S. on the path to withdraw from the agreement over the course of a year.
During that time, the Universal Postal Union’s member countries could potentially decide to renegotiate the agreement in a way that would keep the U.S. from withdrawing.
“We would prefer to stay inside the UPU, it does provide some benefits,” the official said.
According to the official, countries like Iceland, Denmark, Norway, Ireland and Sweeden are interested in a renegotiation, whereas countries like Germany, France and China — who most often benefit from the current system — opposed renegotiation.
The ultimate goal for the U.S., regardless of whether or not it stays in the UPU, would be to expand the self-declared rates system, the officials said.
Currently, self-declared rates, which reflect the full cost of shipping the package, only apply to international packages over 4.4 pounds.
Simultaneously but separate from the withdrawal notice, the U.S. will start working on a program to apply self-declared rates to packages of all sizes, which could be implemented as early as six months from now.
A December 2015 Office of Inspector General of the U.S. Postal Service report suggested that the U.S. take just such an action to offset the terminal dues negotiated by the UPU that skew shipping advantage to postal systems in countries like China.