On the Subject of Global Shipping, Peter Navarro Has a Winning Hand
For decades the United States has stood by and subsidized the shipment of Chinese small packages (4.4 pounds or less) to the United States. Yes, we have done that even as e-commerce shipments have boomed.
In fact, it costs 50 percent or less to send a package from China to the United States than to send the same package within the United States. Manufacturers and retailers in Illinois pick up the costs for those in Beijing – and pay more.
This is because international postal rates, known as “terminal dues,” are set by the Universal Postal Union (UPU), which is affiliated with the United Nations. While China and a handful of countries have effectively gamed the current system, most industrialized countries are in a similar predicament as the United States.
This is poised to change during or soon after a September 24-25 Extraordinary Congress of the UPU’s 192 nation members. The U.S. delegation is headed by Dr. Peter Navarro, the President’s Assistant for Trade and Manufacturing Policy, who has been consistent and clear on the importance of overhauling the current system.
The U.S. principles for reform are simple and eminently fair: we want to self-declare our rates and charge the same to all shippers, foreign or domestic. And the amount of the rate is to be a sovereign decision by the United States.
The United States has been trying to get this issue fixed within the UPU for decades. These efforts accelerated dramatically following an August 23, 2018, Presidential Memorandum and a subsequent notification last fall that the U.S. will leave the UPU this October 17 if the issue is not addressed.
There is a straight-forward proposal before the UPU, Option B, which would allow the United States and other countries to self-declare their own rates immediately. It is currently supported by 40 countries. This represents most of the industrialized world, excluding China, but passage is uncertain given the UPU’s one-country one-vote policy.
By standing strong and continuing to advocate for Option B, the U.S. will ensure success. While some compromises may be acceptable on Option B, that is a slippery slope.
China, for example, has proposed significantly increasing what it pays to the U.S. while being allowed to continue to exploit other countries. The U.S. should not take the bait, and instead call out this cynical and divisive action.
Many countries share U.S. concerns about the UPU. By cooperating with them and pushing for clearly defined self-declared rates, the U.S. will have better shipping arrangements with these countries, whether we stay in the UPU or leave.
The United States and most of the industrialized world have the same principles for UPU reform, that is charging the same to foreign shippers as domestic shippers pay. As a result, the U.S. is poised to quickly implement bilateral agreements with these countries, should it be necessary to exit the UPU.
Despite the strong hand and eminently fair position that the U.S. has put before the UPU, Chinese shippers and those who cater to their interests in the United States have been engaging in fear mongering about a UPU withdrawal.
An especially ugly and specious charge has been that military mail will be interrupted. All that is required to continue to ensure military mail delivery is for the senders to take a simple step, recommended on the U.S. Postal Service’s website: “To prevent mail from entering foreign mail networks, do not include city or country names in APO/FPO/DPO shipping addresses.”
Charges have also been made that Americans overseas will not be able to vote if there is a UPU withdrawal. If the U.S. does not have subsequent agreements in place with a given country should we withdraw from the UPU, there are many workarounds. This includes obtaining a ballot online and faxing it back.
Whether the U.S. stays or leaves the UPU, we are poised to have a fair international postal system that will result in significant economic benefits. Conversely, should the Administration buckle to the UPU or the fear mongers, we will appear weak on broader issues with China.
Given that the Administration has consistently shown strength and resolve on this issue, which has gotten the U.S. to a much better position over the past year, there is reason for tremendous optimism at the coming UPU Extraordinary Congress, and beyond.