Donald Trump says it’s time China started paying the going rate for mail deliveries
Donald Trump says he wants to take the United States out of the Universal Postal Union (UPU), an agreement established at the Treaty of Berne 144 years ago and supervised by the United Nations, which sets the tariffs charged by each country’s postal service to deliver foreign operators’ mail. For decades, developing nations have paid lower rates than the wealthiest nations.
Trump’s argument is that the United Nations classifies China as a developing country despite the enormous strength of its economy, which allows Chinese companies to flood the US market with low-cost products, often cheaper than those produced and distributed by US firms. The Trump administration calculates that these subsidized rates represent a cost to the United States of about $300 million per year.
As part of its mounting trade war with China, the Trump administration now intends to move to a system of self-declared rates, which would allow the US Postal Service to establish its own prices for delivering international packages. The current system only allows self-declared rates for packages weighing more than two kilos.
If you’ve ever wondered how some Chinese companies could send their already low-cost goods for free, the answer is simple: very competitive manufacturing systems based on low labor costs and increased automation, together with those reduced postal rates that, in many cases, companies choose to absorb. If the United States exits the UPU, Chinese manufacturers would have to charge more or build logistics warehouses able to ship their products at the same rates as their US competitors. Inadvertently, Trump’s plans would benefit Amazon (for which he has repeatedly declared his hatred) which he has unfairly blamed for the US Postal Service’s problems.
The memorandum recommending the United States pull out of the UPU claims the huge volume of packages sent from China makes the task of monitoring its content practically impossible, allowing Chinese companies to send opiates to the United States such as Fentanyl, which are fueling the opioid epidemic that is causing more than 70,000 deaths a year. Trump’s decision could somehow be seen as the third chapter in the Opium Wars of the 19th century.
Unpopular as many of Trump’s policies may be, that trade wars are to be avoided, and the symbolism of pulling out of a treaty dating back a century and a half, the reality is that China has been enjoying a substantial trade benefit thanks to its continued status as a developing nation, despite the fact that it is on the brink of assuming global leadership. The process of leaving the UPU will take around a year, which has prompted speculation that this is a move aimed at pressuring China. Does it make sense that this world power, whose political prevalence in part rests on questionable human rights and ironclad control of its society, while its manufacturers benefit from cheaper mail rates? For Donald Trump, and in the context of a trade war, the answer is clearly no.
