Business

U.S. to begin process of pulling out of U.N. postal pact that cut rates for foreign package deliveries

Reuters

Washington will begin withdrawing from a U.N. pact that lowers rates for foreign postal deliveries of small packages in the United States, the latest move by the Trump administration to challenge practices it sees as unfairly advantageous to China.

White House officials said the United States will start the process of getting out of the Universal Postal Union, a Switzerland-based United Nations organization that connects postal services worldwide.

The White House said the UPU enables foreign postal services to take advantage of cheap shipments to the United States, creating an unfair cost advantage over U.S. companies that ship goods, and hurting the income of the U.S. Postal Service.

“People are getting hurt in this country by an unfair system,” one official told reporters on a conference call.

The move is the latest by the administration of President Donald Trump to distance itself from international multilateral organizations and accompanying policies that it feels are hurtful to the United States.

Trump withdrew the United States from the Paris climate agreement and from the Iran nuclear deal with other world powers.

The White House will seek to renegotiate the terms of the UPU rules even as it begins the process to withdraw, the officials said. The withdrawal process will take a year.

“If negotiations are successful, the administration is prepared to rescind the notice of withdrawal and remain in the UPU,” White House spokeswoman Sarah Huckabee Sanders said in a statement.

The White House said the “subsidy” has facilitated the transfer of a high level of counterfeit goods and the narcotic and fentanyl trade.

Another official said the system allows for a 40 to 70 percent discount on small packages coming in from China to the United States compared to what it would cost to send them domestically, costing $300 million.

“That just obviously is a major economic distortion . . . that affects trade flows and affects American businesses, and that’s what we’re trying to fix here,” the official said.

If it happens, it will benefit U.S. merchants and shippers, including Amazon.com, who say they are undercut by foreign postal services’ access to low rates. U.S. shoppers could see higher bills for foreign goods ordered online.

The National Association of Manufacturers called the agreement “outdated” and said it “contributes significantly to the flood of counterfeit goods and dangerous drugs that enter the country from China.”