Trump Is Right About China’s Postal Subsidy

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Here's the problem: Arcane rules established by the 144-year-old Universal Postal Union make it possible for a Chinese e-retailer to send a package across the Pacific to a customer in the U.S.at a cost lower than what an American competitor would spend to ship the same item to a neighboring state.

Trump may be misguided on much of his trade policy with China, but this is one issue in which his demands are justified and, with the right approach, within reach. The Universal Postal Union sets rates that national postal services charge for shipping small parcels to other countries. Poor and developing nations are assessed lower rates than wealthier countries, a benefit to Chinese companies.

The treaty was tweaked in 2016 to adjust for some of the advantages to China after complaints from United States administrations of both political parties.

Trump and China's President Xi Jinping may meet during the G20 summit in Buenos Aires, Argentina, on November 30 to December 1, and the topic of shipping rates is certain to be on the agenda if they do.

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Pulling out of the Universal Postal Union (UPU) means American consumers may no longer have access to deeply discounted Chinese goods-like $1 yoga trousers, or thousands of other cheap, Chinese-made goods available through online retailers-shipped into the country at postage rates less than what domestic packages are charged. When the USA pulls out, thousands of listings from China-based companies hawking dirt-cheap consumer goods will likely disappear.

The existing global postal system makes it cheaper to ship a package from China to America than from one side of the United States to the other.

In a press conference with his Chinese counterpart in Beijing on October 8, US Secretary of State Mike Pompeo lashed out at China over trade and defended US steps to bolster ties with Taiwan, saying "we have a fundamental disagreement" and "great concerns about actions that China has taken". "This outdated arrangement contributes significantly to the flood of counterfeit goods and unsafe drugs that enter the country from China", Jay Timmons, the president of the National Association of Manufacturers, said in a statement.

There is no information on how rates are likely to be adjusted but, earlier in August, the US State Department said it would push for foreign postal carriers to pay the US Postal Service more to deliver small parcels within the US.

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The subsidy cost the U.S. Postal Service $170 million last year, according to NAM, a figure it says is growing at a rate of almost 40 percent each year.

The administration announced Wednesday that it had begun withdrawing from the United Nations agency that negotiates worldwide postal rates because the organization had failed to address global discounts the USA calls unfair. It sets different tiers, where more developed countries like the USA pay higher rates and less developed countries get a discount.

It is not clear whether China will retaliate if the United States pulls out of the treaty.

"People are getting hurt in this country by an unfair system", the official said.

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Under the UPU's framework, it takes a year for a country to withdraw from the framework, during which rates can be renegotiated.

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