Trump pulling US out of global pact on postal rates


Wednesday's announcement is the latest move by the Trump administration to remove the United States from multi-lateral organizations and agreements that it believes disadvantage the country.

Trump administration officials say the leg up, granted under a 1969 provision, was meant to promote growth in poor countries.

Zhang Baohui, a professor of political science at Lingnan University in Hong Kong, said that America's departure from the UPU was part of US President Donald Trump's strategy for the "all-out containment" of China but its significance, in comparison to the damage caused by US tariffs on Chinese imports, would be limited. Since 1969, poor and developing countries - including China - have been assessed lower rates than have wealthier countries in Europe and North America.

President Donald Trump plans to withdraw the US from a 192-nation treaty that gives Chinese companies discounted shipping rates for small packages sent to American consumers, another escalation of his economic confrontation of Beijing. The Trump administration says China's massive trade surplus with the US reflects unfair practices and that it is stealing intellectual property and forcing American and other foreign companies to hand over technology in exchange for access to the Chinese market.

The UPU treaty gives lower mailing rates to poorer countries, including China, which Trump and other critics say has let China flood the USA with dirt-cheap electronics and other goods, often sold online for rock-bottom prices with shipping included. Administration officials said they were assessing rates for other countries and had not made any decisions about whether the policy would extend beyond China.

Officials stressed that the goal is not to leave the UPU, even as they announced Trump's intention to withdraw from the treaty.

The pact has always been a source of frustration for presidents of both parties and prompted complaints from small businesses, big retailers like Amazon and shipping giants like UPS.

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US officials say the growth of transactions on the internet is facilitating a high level of counterfeit goods shipped to the USA, as well as narcotics and fentanyl, with the aid of the lower shipping costs.

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. According to the Financial Times, the cost to mail a 4.4-pound package within the United States is $19 to $23, while China Post pays just $5 to ship a similar package to the United States.

Consequently, U.S. consumers often purchase Chinese goods offered with free shipping. A 2014 study, cited in a Postal Service analysis of the issue, estimated that discounted shipping cost industrialized nations as much as $2.1 billion a year in aggregate.

"Manufacturers and manufacturing workers in the United States will greatly benefit from a modernized and far more fair arrangement with China", said National Association of Manufacturers President Jay Timmons.

Mnuchin noted further devaluations are likely to exacerbate the United States' $390 billion trade deficit with China.

But the changes could have an even bigger impact on small retailers who have found themselves outgunned and undercut by Chinese competitors.

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