US announces intent to withdraw from international postal rate system

The Trump administration on Wednesday announced its intent to withdraw from a little-known United Nations agency that governs global postal rates, another move against international institutions the president has long accused of hurting the U.S.

The decision was borne out of frustration with discounts imposed by the Universal Postal Union (UPU) that allow China and some other nations to ship products into the U.S. at cheaper rates than American companies receive to ship domestically.

{mosads}The administration argues the system undercuts U.S. manufacturers and allows China to flood the market with cheap goods.  

“This is a strong action by this administration to fix this flawed system and make it better,” said a senior administration official.

A senior administration official said the U.S. hopes to renegotiate the rates, known as terminal dues, but was frustrated with opposition from other nations in the UPU. The withdrawal would not take effect for one year, allowing the U.S. some time to broker a new deal.

“Our goal here is to get fair rates, not necessarily to get out of the Universal Postal Union,” the official told reporters.

The withdrawal comes as President Trump is ramping up pressure on China to reverse what he says is its unfair trade practices, as well as its efforts to gain leverage in international organizations.

The 144-year-old UPU sets fees that postal services charge to deliver mail and packages from foreign carriers. For decades, developing nations have been allowed to pay lower rates than wealthier nations. China has fallen under the developing nation category, a designation the U.S. says it no longer deserves because of its booming economy.

A senior Trump administration official said the disparity in foreign shipping rates costs the U.S. $300 million per year, a “major economic distortion” that affects trade flows and American businesses.

The administration wants to move to a system of “self-declared rates” that would allow the U.S. Postal Service to set its own prices for shipping international packages of all sizes. Currently, the Postal Service is only permitted to use self-declared rates on packages more than 4.4 pounds.

The postal rate issue has received little attention in the national media but has been on the White House’s radar for months. Major business groups have long been urging the president to take action to correct the postal rate system, saying it puts them at a distinct disadvantage to their Chinese competitors.

Trump issued a memo in August directing the State Department to renegotiate the rates at a UPU meeting last month in Addis Ababa, Ethiopia, so they no longer give an advantage to foreign shippers.

But an official said the U.S. was “rebuffed” when it asked for revisions.

The decision to initiate the withdrawal process was cheered by business groups.

“President Trump deserves tremendous credit for the administration’s focus on eliminating the anti-US manufacturer subsidy China receives from the U.S. Postal Service,” said Jay Timmons, president and CEO of the National Association of Manufacturers.

“Manufacturers and manufacturing workers in the United States will greatly benefit from a modernized and far more fair arrangement with China.”

Updated at 10:50 a.m.