US to withdraw from 144-year-old UN postal scheme

The White House said it may reverse its position in one year’s time if “negotiations are successful”

The Universal Postal Union may be one of the least-known UN agencies but its remit is far-reaching — it effectively controls how much you pay to send and receive international mail.

Over the past few years it has come under increasing criticism for reportedly advantaging cheap manufacturing countries like China whose retailers can ship their products to consumers in industrialized countries at a much lower rate than domestic producers.

Such criticisms culminated on Wednesday with the US announcing that it would withdraw from the body at the end of 2019, unless reforms are made.

Here’s what you need to know:

What’s the UPU?

The UPU is the world’s second oldest international organization It was set up in 1874, absorbed into the UN in 1948 and is headquartered in Bern, Switzerland.

Nowadays, 192 different nations are members and they meet every four years to set policy and approve a new strategy.

“One of the UPU’s key areas of work is agreeing regulated rates for cross-border mail between the nationally-designated postal operators,” Bruno Basalisco, head of digital and postal economics at Copenhagen Economics — a consultancy specialized in competition, regulation, international trade and public finance — told Euronews.

How does it work?

The UPU established a terminal dues system in 1969 as a way of compensating destination countries for the cost of handling, transporting and delivering items across borders, Basalisco explained.

The rates member states pay in terminal dues depend on which UPU category they’re in, which is based on their level of development. Multiple reports say that China, for instance, has been classed as a developing country alongside Gabon and Cuba.

Euronews reached out to the UPU to verify the information and obtain the organization’s classification of member states as well as terminal dues rates but the UPU declined to disclose the information, stating that is it confidential.

Mounting criticism

The US argues that because member states pay different levels of terminal dues, industrialized nations, in effect, subsidize developing countries’ participation in the UPU.

According to Basalisco, “capped rates for cross-border inbound mail can often be lower than equivalent prices available for domestic customers.

“The challenge arose with cross-border e-commerce and is growing as e-commerce continues to boom.”

James Campbell, a Washington-based lawyer and consultant specialized in postal systems, told Euronews that “this is a problem for the US but it’s a problem for Europe as well.”

Read more HERE