The U.S. Postal Service (USPS) plans to abandon the 144-year-old Universal Postal Union (UPU) on October 17 unless an agreement is reached later this month at a UPU meeting in Geneva, Switzerland. The United States is seeking the right to “self-declare” postage pricing on international parcels.
Matthew White of iDrive Logistics, who is cited in a report at transportation industry website Freightwaves, noted that the “practical effect of the exit of the U.S. would be a rate increase of at least 300 percent on postal parcel traffic to the U.S. from heavy net exporting countries as rates kept artificially low for decades begin to normalize.”
The main issue is a 50-year-old terminal dues agreement governing the amount of postage paid to the destination country by the origination country. The agreement, as it stands, is not based on actual costs but on a system that gives lower pricing and other benefits to developing countries shipping goods into developed countries like the United States.
At the time the agreement was made, China was included on the list of developing countries. Now that it is the world’s second-largest economy, the Trump administration has argued that China should no longer benefit from the lower postal rates for developing countries.