The United States will consider staying in the Universal Postal Union if it is allowed to set its own rates for small international packages.
In 2018, the U.S. notified the 192-country postal union that it was pulling out as it claims countries like China were unfairly using the union’s rules which disadvantaged America’s United States Postal Service.
The 144-year-old United Nations run program offers global discounted shipping between its 192 members. The U.S. claims the UPU gives foreign companies, an unfair advantage in shipping costs. According to the South China Morning Post, it costs about US$20 to mail a 2kg parcel from one state to another, yet a 2kg package from China costs only US$5 to ship from state to state under the UPU.
Packages delivered under the UPU were done free of charge, but in 1969 that changed when terminal dues began to be issued. The dues were dependent on how developed a country was; the more developed, the more dues it had to pay. Currently, China is still classified as a developing nation.
In 2006, the United States entered into a bilateral agreement with China Post that gave sellers first class tracking and delivery confirmation for low rates as long as an item weighted less than 4.4 lbs (ePackets), according to The Atlantic.
The volume of ePackets more than doubled between 2014 and 2016, according to USPS. This brought in about $493 million in revenue for the USPS, but also added some costs. Specifically, because it’s so expensive to send an unclaimed ePacket back to China, undeliverable packages cost the USPS anywhere from 20 cents to 57 cents each, according to The Guardian.
The rate also significantly undercuts private carriers such as FedEx Corp. and UPS Inc. that offer international shipping but cannot compete against the subsidized rates set by the UPU.
In an October 2018 statement, U.S. President Donald Trump directed postal regulators to set self-declared rates for terminal dues as soon as possible, and no later than Jan. 1, 2020. The Postal Regulatory Commission and U.S. Postal Service have begun that process.
Should the U.S. set its own, higher rates for delivery of packets from other countries, the same tactic could be used by foreign postal services in response.