State Department backs plan for postal treaty countries to set own rates

Dive Brief:

A new proposal being considered by the Universal Postal Union (UPU) would allow countries to set their own rates for small packages and large letters. The rule change is supported by the U.S. State Department and was discussed at a recent meeting of the federal Advisory Committee on International Postal and Delivery Services, according to Bloomberg.
"There are right now about 30 countries that actively support the U.S. position," Joseph Murphy, unit chief at the State Department’s Bureau of International Organization Affairs, told the advisory committee, according to Bloomberg. It would take two-thirds of the 192 member countries to pass the proposal. There is equal support for another plan that would continue under current rate increases, Murphy told the committee.
This State Department-supported agreement, if passed, could result in the U.S. remaining in the UPU after President Donald Trump announced plans to leave the organization last October. The U.S. relationship with the UPU needed to be reformed to avoid unfair and discriminatory rates, the government claimed in a memorandum from last year, which led to Trump's decision to withdraw from the international body.

Dive Insight:

It's often cheaper for a Chinese retailer to ship a product to a customer in the United States than it would be for an American competitor to ship to that same customer.

"This is because the union, which determines what national carriers can charge to deliver small packages and first-class letters originally sent from abroad, allows poor nations to pay lower rates than wealthy ones," the Bloomberg editorial board wrote in an October piece where it called for the U.S. to stay in the UPU and work out an agreement directly with China. "That makes sense. But, insensibly, the union still places China, the world’s second-largest economy, in the same category as Bosnia, Botswana, Cuba and other developing countries."

The rates set by UPU can put U.S.-based logistics companies like FedEx and UPS at a disadvantage and be costly to the U.S. Postal Service, according to multiple media reports. Though, the Government Accountability Office has said it is an arrangement from which the U.S. consumer benefits, according to The Washington Post.

There are other benefits to remaining in the UPU, a White House official told Government Executive in October, which include access to the organization's data and its help fighting drug trafficking.

Committees within the UPU are expected to meet next month to consider the options they have before them for handling rates, according to Bloomberg.