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Trump ditches 144-year-old postal pact that boosts Chinese retailers

Packages travel on a conveyor belt for sorting at a post office in Omaha.
Packages travel on a conveyor belt for sorting at a post office in Omaha. (Nati Harnik/Associated Press)

President Trump moved Wednesday to withdraw from a 144-year-old international postal agreement that enables businesses in China to mail small packages to the United States at a hefty discount, an arrangement government officials said boosts foreign competitors and costs the U.S. Postal Service roughly $170 million per year.

Trump’s notice to exit from the Universal Postal Union (UPU) treaty comes as the White House cranks up the pressure on Beijing to drop what it calls predatory commercial practices, including swiping trade secrets from American companies operating in China.

“This has been a long-standing, long-festering problem,” said Robert Taub, chairman of the Postal Regulatory Commission, an independent federal agency.

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The administration framed the departure as separate from the trade war in which Trump has imposed tariffs on roughly half of Chinese goods entering the United States.

Dropping out of the postal treaty, first ratified in 1874, is expected to exacerbate tensions with China, but the Postal Service and business groups applauded the action Wednesday.

“The current system has led to the United States subsidizing the imports of small packages from other countries,” said Jeff Adams, spokesman for the U.S. Postal Service.

Under the treaty, which sets fees that national carriers in 192 countries charge for mail delivery, the U.S. Postal Service bills China-based companies at a sharply discounted rate for parcels that weigh less than 4.4 pounds.

Trump administration officials say the leg up, granted under a 1969 provision, was intended to promote growth in poor countries. But it remained in place after China became an e-commerce powerhouse.

The deal has allowed the country to flood the United States with cheap goods at shipping discounts of up to 70 percent, putting American companies at a disadvantage and straining the U.S. mail system while fueling growth abroad, Taub said.

That resulted in $170 million in losses for the post office last year.

“They’re using our Postal Service and contributing nothing to the overhead, and Americans have to pay for that,” he said.

A one-pound package that costs the U.S. Postal Service about $10 to deliver can be mailed from China for just $2.50, according to White House figures.

Administration officials said they informed the UPU, which is based in Switzerland, that the United States intends to withdraw from the pact — a one-year process, per United Nations rules.

Over this period, the State Department will aim to negotiate better rates for Americans, the White House said, or choose to walk away from the international body in 2020.

UPU Director General Bishar Hussein said in a statement Wednesday that he “regrets the decision” and welcomed the opportunity to talk further with U.S. officials.

“The UPU remains committed to attainment of the noble aims of international collaboration by working with all its 192 member countries to ensure that the treaty best serves everyone,” he said in the statement.

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The postal treaty irked leaders from both parties long before Trump took office, Taub said. The Reagan administration pressed for change with few results, and a 2015 government report warned that mail from abroad was straining America’s postal system.

Singapore and European countries also benefit from the arrangement.

Packages from China surged as the country morphed over the past decade into an e-commerce powerhouse with the world’s largest online retail market, which logs approximately $354 billion in annual sales.

Small packages from China to the United States jumped by 182 percent between 2011 and 2012, according to the latest figures from the U.S. Postal Service.

Sean Heather, vice president of the U.S. Chamber of Commerce’s Center for Global Regulatory Cooperation, praised the administration’s step to negotiate higher rates for China and other countries.

“American companies should not pay more for package delivery within the United States than what the U.S. Postal Service collects to deliver packages from overseas,” he said in a statement.

But some analysts brushed off Wednesday’s move. Derek Scissors, who studies China at the American Enterprise Institute, a right-leaning think tank, said Trump’s announcement doesn’t carry much heft compared with his promise in September. . After Beijing imposed new duties on $60 billion in American imports, Trump said he would punch back with levies on an additional $267 billion in Chinese goods, effectively placing higher border taxes on everything the United States buys from China.

So far, that plan hasn’t materialized.

“It’s a stunt to distract from the fact that the president promised more tariffs last month and doesn’t want to act,” Scissors said.

A stronger approach to securing better rates for the United States would include countries such as Norway that also shoulder a disproportionate burden through the UPU pact, said Blaine Johnson, a China analyst at the Center for American Progress, a left-leaning think tank.

“Threats to withdraw may in fact be counterproductive,” she said, “as U.S. allies may prefer a more consensus-seeking approach.”