Home Business News The UPU crisis is Trump’s own Brexit moment

The UPU crisis is Trump’s own Brexit moment

by David Jinks MILT
23rd Sep 19 3:27 pm

The Universal Postal Union (UPU) is unlikely to survive the withdrawal of the USA if a crunch vote does not go President Trump’s way tomorrow (24 September, 2019), warns the international delivery specialist ParcelHero.

ParcelHero’s Head of Consumer Research, David Jinks MILT warns, “The UPU has a vital role to play in ensuring every nation pays a fair amount for its mailing costs when overseas letters and packets enter the postal network of another country. If America quits the UPU and sets its own packet rates unilaterally, many other nations are likely to follow suit, leading to an international mailing free-for-all. Trump is right to be angry at the scandalously low dues China pays the United States Postal Service (USPS) for access to its postal system, but a High Noon-style showdown at tomorrow’s UPU’s Extraordinary Congress is not the right way to solve the problem.”

Jinks warns that America’s threat to quit the Union in October, if the UPU doesn’t agree its demands at its special congress meeting in Geneva starting tomorrow, could lead to the complete collapse of long-established agreements. “That would mean every country, including the UK, would be forced to unilaterally negotiate its own rates with every other country. Trump is facing his own Brexit decision, does he remain in the Union and force change from inside, or leave with no deal in place?”

Jinks said, “Of course, it’s easy to see why Trump believes the USPS is having to massively over-subsidise overseas packages, particularly those from China. It’s not fair on US retailers that it is much cheaper for a seller to send earrings all the way from China to Chicago, than for a Californian trader to send the same size item from Chino to Chicago. The UPU hasn’t noticeably updated its dues structure since it was first introduced in 1969. For 50 years China has got away with paying the rates of a developing nation, when today China is the second largest economy in the world.”

Jinks added, “It’s not just the US that would benefit from reform of the UPU’s ‘terminal dues’ system. UK merchants could also benefit from the scrapping of the UPU’s antiquated fee structure on packets from China. It would be a huge boost for British traders if cheap Chinese competition vanishes because Chinese sellers are forced to pay a fair rate for access to the UK’s postal system. But it could equally work against British retailers who actually source their stock from the likes of China’s Alibaba.”

Overall, the abandoning of the UPU would cause significantly more harm than good, He said, “America is demanding that every member nation has the right to set its own dues, providing they are not over its domestic postal rates. On the opposing side, China, and many of the UPU’s less wealthy member countries, say the achingly slow path to change the UPU has embarked on should be given the chance to succeed. This means many UPU member states and the US are on a collision course. If no agreement is reached at this week’s UPU conference there is little doubt Trump will initiate a no-deal exit of the UPU on 18 October.”

Jinks concluded,  “The US is calling for every nation to be able to declare its own packet rates; China is holding out for a simple tweaking of the existing plan. Things do not look rosy. However, there is some hope; a number of key members are suggesting a solution that would mean cross-border rates could be charged at a percentage of domestic rates, likely to be up to 70%. If the US were to agree to this formula, all might yet be well. But right now, that is looking a distant prospect; we’re very concerned that the US may indeed exit the UPS with no deal.”

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