The Trump administration had said it would withdraw from UN body with roots in 145-year-old treaty.
The Trump administration backed down from a threat to withdraw from a 145-year-old international postal body after it struck a deal granting more favorable terms to the U.S. Postal Service and its customers.
The agreement approved by the Universal Postal Union, now a part of the United Nations, in a meeting in Sweden will enable the Postal Service to set its own rates for inbound small packages and bulky letters starting in July 2020. Foreign countries will similarly be able to self-declare rates to charge for the packages originating in the United States and coming into their countries, through a process to be phased in over the next six years. Earlier this week, the Universal Postal Union congress rejected a plan that would have immediately allowed USPS to set its own rates on international shippers. The final plan approved by the congress is seen as a compromise.
Virtually all stakeholders in the U.S. mailing system supported the administration’s efforts to restructure the pricing for certain international mail, including the Postal Service, its regulator, business groups and mailers throughout the industry.
The deal will assuage widespread concerns about chaos that an American withdrawal from the Universal Postal Union —which the administration announced last year—could have caused. Without U.S. participation in that treaty, the Postal Service and other agencies would have been forced to negotiate bilateral agreements with every country individually to set the standards and rates for exchanging mail. That would have caused massive backlogs, according to experts including Universal Postal Union Secretary-General Bishar Hussein.
The new agreement follows a memorandum Trump issued last year in which the president said other nations were unfairly receiving cheaper rates when sending small packages and bulky letters into the United States than postal customers shipping domestically. Trump directed the U.S. contingency at a previous Universal Postal Union meeting last year in Ethiopia—an interagency group led by the State Department—to negotiate a fairer pricing structure, but White House officials said at the time there was little progress toward that goal.
The administration was up front from the beginning that its withdrawal announcement was intended as leverage. The proclamation kicked off a year-long process, during which officials always planned to strike a more favorable payment system for the U.S. Postal Service and its American customers.
The new agreement comes as the Trump administration is engaging in a trade dispute with China, and senior officials said the current system mostly benefits China, as well as Singapore and a few European countries such as France and Germany. Those countries receive a 40-70% discount on packages weighing 4.4 pounds or less, officials said.
Trump said last year the current structure gave preferential treatment to foreign mailers over domestic ones, and placed private sector companies looking to offer international shipping services at a disadvantage.
“The current system of terminal dues distorts the flow of small packages around the world by incentivizing the shipping of goods from foreign countries that benefit from artificially low reimbursement rates,” Trump said in his 2018 memo.
The Postal Service itself, and the Postal Regulatory Commission, which must approve pricing at the mailing agency, supported the Trump administration's threat to leave the Universal Postal Union and fight for more independence in setting rates for incoming international mail. Following the new agreement, USPS said the deal would “essentially eliminate the economic distortions” currently in place.
“The Postal Service would like to thank President Trump for his leadership in helping us to negotiate the resolution of an intractable problem with the payment system for the international exchange of small packets that has persisted over many years, and that has been extremely difficult to resolve,” Postmaster Megan Brennan said. “We are very pleased that the member countries of the Universal Postal Union have reached an agreement that accommodates the concerns of the United States and other countries with that payment system.”
Brennan added the agreement will place stricter requirements on foreign posts to provide USPS with advanced electronic data about the contents of international packages, a key step in the interagency effort to root out illicit materials—such as synthetic opioids—being trafficked through the mail. Brennan repeatedly praised the Trump administration for its efforts and commended other nations at the Universal Postal Union’s congress for working in “the spirit of cooperation.”
“We believe that the global network for the international transportation and delivery of mail will work more effectively, and in a fashion which is fundamentally more fair to all participants in the system,” the postmaster general said.
Fredric Rolando, president of the National Association of Letter Carriers, said he was pleased the U.S. would remain in the international group, but said it was too soon to reflect on the specifics of the deal. The American Postal Workers Union similarly cautioned against withdrawing from the group, but supported efforts to ensure “fair rate structures.”
Mike Plunkett, a former USPS vice president and current president of PostCom, an association of large-scale private sector mailers, cautioned ahead of the negotiations that foreign countries could take retaliatory steps once the Postal Service raised its prices on them. The deal, however, assuaged much of that concern.
“All in all it’s a great result,” Plunkett said. “The U.S. remains in the UPU and yet the U.S. gets to improve its remuneration on international packages.”
He explained the entire international community will be bound by the same structure.
“While there will be increased prices,” Plunkett said, “this takes away much of the uncertainty that probably would have resulted if the U.S. had gone off on its own.”