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On August 23, President Trump issued a policy memorandum providing directions to the State Department for negotiations over international postage pricing at an upcoming meeting of the Universal Postal Union (UPU), the United Nations organization that sets international postage rates and regulates the flow of international shipping between 192 nations. The UPU will hold a special Congress in September in Ethiopia.

The memorandum calls on the State Department to improve the UPU’s system of “terminal dues,” the fees postal operators like the U.S. Postal Service charge for delivering mail from other operators (e.g., the Royal Mail of the U.K. or China Post), and to negotiate changes in customs procedures for postal shipments to match those that apply to private shippers under different treaties. These fee arrangements and procedures are set by a treaty between the 192 member-nations of the UPU.

The terminal dues system has become controversial in the age of international e-commerce since it provides developing countries lower final delivery rates than it does to industrialized countries. As a result, e-commerce merchants in the United States complain that vendors in foreign countries are being unfairly subsidized with below-cost delivery services. This problem is especially acute with regard to e-commerce merchants based in China.  The USPS loses tens of millions of dollars providing such deliveries in the U.S. because China Post receives the lower rates charged to developing countries under the UPU treaty.

The UPU recognized the problems with the existing terminal dues system at the last regular UPU Congress in 2016 – and called for a special Congress in Ethiopia next month to address the problems.  (The UPU normally meets every four years.)

On customs procedures, for example, the Trump memorandum calls on the UPU to require postal operators to provide customs officials Advanced Electronic Data (AED) on shipments from foreign post offices – to help combat the flow of illicit opioids.  

Industry reaction

Response to the policy memorandum has been positive – both the USPS and the Postal Regulatory Commission issued statements in support.

The Postal Service and other postal operators in industrialized countries have been urging the State Department to improve the terminal dues system for years – but they have lacked the votes in the UPU to make the necessary changes. Private shippers (UPS and FedEx) have also called for higher rates too – believing that they lose possible business to postal operators charging below-cost rates.

Meanwhile, most industry stakeholders would welcome a UPU solution to the opioid trafficking issue.  Systemic solutions are much more preferable than the flawed approach offered by bills such as the STOP Act, which would place unreasonable burdens on the Postal Service.

NALC generally supports the policy goals outlined in the memo. However, we have two concerns.

• First, any mandate to provide AED on international shipments should provide a sufficient transition period to postal operators in developing countries as well as the funding required to acquire the needed technology.
• Second, the memorandum includes a threat by the Administration to unilaterally impose “self-declared” terminal dues rates if the UPU does not reach an agreement that embodies U.S. policy goals. In a complicated diplomatic situation like the UPU, such threats are rarely effective. The U.S. government is just one of 192 member-countries. Implementing unilateral rates should be a last resort since other countries might respond with retaliatory fees or tariffs on shipments from the United States.  This would leave all postal operators worse off by causing volume and revenue to fall.

“We welcome the UPU’s attention to this matter,” NALC President Fred Rolando said. “The UPU is the right forum for dealing with terminal dues, opioids in the mail and other customs procedures, but great care should be taken to preserve the free flow on international mail – which is beneficial to the international economy and essential for international freedom and democracy,” he added.

See the President’s memorandum here: https://www.whitehouse.gov/presidential-actions/presidential-memorandum-secretary-state-secretary-treasury-secretary-homeland-security-postmaster-general-chairman-postal-regulatory-commission/.