Extraordinary Postal Congress
UPU Extraordinary Postal Congress
The Universal Postal Union is holding an Extraordinary Postal Congress in Addis Ababa, Ethiopia this week. This may have a drastic impact on international eCommerce. The UPU coordinate rates and standards between every national postal system, and has been a vital to international structure since 1874. Crucial reforms are needed for terminal dues if the US is going to be able be competitive in both global and domestic eCommerce.
The UPU uses a system to help developing countries by subsidizing more prosperous countries with terminal dues. As a result the wealthier countries pay a higher share of the costs. Countries are positioned in nine different categories based on their level of development. The rates developing countries pay are usually far lower than rates paid by domestic shippers in more developed countries. In some cases, terminal dues are so low that that developed countries like the US actually lose money on mail sent to them internationally. The Extraordinary Postal Congress meeting may result in significant changes to how some countries are positioned.
China Has an Unfair Advantage
The UPU categorizes China as a category three economy entitling them to huge international postal discounts. China is however, the second largest economy in the world. This allows Chinese retailers to undercut American retailers by very wide margins. The Chinese economy is benefiting at the expensive of US retailers and the United States Postal Service. The USPS loses an estimated $1 on every small package that arrives from China. In Fact, mail services for small packages shipped from China to the US cost significantly less than what USPS charges American mailers for a comparable service.
The Cost to American E commerce and the USPS
Terminal dues on items from China to the US average $1 per Kilogram. As a result, USPS received less compensation for a China Post package moved from a Los Angeles port to its final destination inland, than it would have from someone in Los Angeles who sent an identical package within the United States. Costing the China Post less than the price of a U.S. stamp. Conversely, it is far more expensive to send a similar package to China. The Extraordinary Postal Congress gives us an opportunity to change China’s unfair trade advantage with the US.
UPU Can Influence Fair Trade
The Extraordinary Postal Congress convened in an effort to reform the UPU. Just 1 of 192 countries invited is the US. This give us a small voice in a big crowd. It is vital the we work with our allies to influence the UPU to categorize China as the developed country that it is. Finally this would create fairer trade between China and the rest of the developed world.