Eric Katz | August 27, 2018 | 0 Comments

Trump Demands an International Mailing System to Better Benefit USPS and U.S. Mailers

President Trump has demanded that the U.S. government charge foreign countries a higher rate for international shipping, stating in a presidential memorandum that other nations are unfairly receiving cheaper rates than postal customers sending packages domestically.

Trump said the changes should take shape at a meeting of the Universal Postal Union in September, when all postal entities across the world will meet in Ethiopia. The president tasked State Department Secretary Mike Pompeo with leading a delegation at the conference to increase the “terminal dues”—or the rates determined by the UPU that foreign mailers pay to a postal operator in the country of destination to cover all related costs of shipping that package—so they charge higher rates to the country of origin sending mail and small packages.

The UPU was established in 1874 and is an agency of the United Nations. Trump's memo applies to packages weighing less than 4.4 pounds.

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Foreign countries are not fully reimbursing the Postal Service for mail they are sending into the United States, Trump said in the memo. The UPU as currently constructed has created “substantial preferences for foreign mailers relative to domestic mailers,” the president said. It has also disadvantaged private sector companies looking to offer international shipping services, according to Trump, and has failed to properly distinguish between “documents” and “goods.”

“The current system of terminal dues distorts the flow of small packages around the world by incentivizing the shipping of goods from foreign countries that benefit from artificially low reimbursement rates,” Trump said.

The Postal Regulatory Commission, the independent agency with oversight of the Postal Service and its rate setting, agreed with the president’s conclusions and said the government has raised concerns about the UPU since the Reagan administration.

“The UPU continues to promulgate agreements that require posts to undercharge for delivery of inbound mail, to insulate postal shipments from full application of national customs laws, and to promote a different legal regime for postal operators and competing private carriers,” said Robert Taub, the PRC’s chairman. “President Trump’s memorandum represents an enormous leap forward to finally addressing these problems on behalf of our fellow Americans—particularly U.S. merchants, U.S. mailers, and U.S. private-sector carriers who are trying to compete fairly in these global markets.”

The Postal Service itself also praised the memo, saying in a statement that it would like to see a "fair" international postal system since the agency does not set the UPU rates but is bound by them. 

"The Postal Service stands ready to support the State Department, the lead representative of the United States in the UPU Universal Postal Union, and to do our part to give effect to the presidential memorandum," USPS said. 

Trump instructed Pompeo to assess the progress made after the UPU conference and by Nov. 1 issue new steps for making the international pricing fairer if imbalances still exist. The president vowed to take “any appropriate actions” to ensure all expenses are recovered and the system if evened out for all participants.

Heather Nauert, a State spokeswoman, said the memo represented “bold actions” to end practices that “undermine American economic prosperity and threaten” national security.

'This Is a Big Deal'

The U.S. delegation in Ethiopia will “follow through on the President’s directive to make clear that UPU rates of postal reimbursement are unfair to United States merchants, mailers and businesses,” Nauert said. “The delegation will also take steps to update unfair rates of reimbursement and ensure that all UPU member nations take action to furnish advance electronic customs data to facilitate the detection of shipments of opioids and other illicit materials.”

She added the U.S. “looks forward to working with other UPU members to accomplish these goals.”

Paul Steidler, a senior fellow at the libertarian-leaning Lexington Institute, praised the memo as beneficial to American businesses. 

"This is a big deal, especially for American entrepreneurial e-commerce companies," Steidler said. "Hard as it is to believe, it's far less expensive to send a small package from China to the United States than to send that same package a short distance within the U.S." He added that Trump made a simple request: "to have fair and nondiscriminatory postal rates." 

Mike Plunkett, a former USPS vice president and current president of PostCom, an association of large-scale private sector mailers, said Trump's memo is likely to create winners and losers. Virtually no American businesses would be harmed by higher rates for international shippers sending packages into the U.S., he said, but foreign countries could take retaliatory steps if the Trump administration attempts to unilaterally institute a new system. 

It is unclear, Plunkett said, "exactly how other countries would react."

The memo also called on State’s UPU delegation to boost the use of “advanced electronic data” that customs officers use to screen foreign packages for illicit materials, including the recent influx of synthetic opioids. Trump previously set the goal of receiving such data for 90 percent of all foreign shipments, and momentum has built in Congress for legislation to require the information in all cases. Customs and Border Protection currently only receives the data for about 40 percent of international packages.

The memo was the second executive action Trump has taken with regard to the Postal Service. A task force he created earlier this year to put USPS on firmer financial footing has delivered its recommendations to the president, but that report has yet to be made public.

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