The UPU crisis is Trump’s own Brexit moment, warns ParcelHero

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President Trump’s push to unilaterally quit the UPU could lead to the collapse of a vital 145-year-old international organization, according to David Jinks, MILT, ParcelHero’s head of consumer research

The Universal Postal Union (UPU) is unlikely to survive the withdrawal of the USA if a crunch vote does not go President Trump’s way tomorrow (September 24, 2019), warns the international delivery specialist ParcelHero.

David Jinks, MILT, ParcelHero’s head of consumer research, cautions, “The UPU has a vital role to play in ensuring every nation pays a fair amount for its mailing costs when overseas letters and packets enter the postal network of another country. If America quits the UPU and sets its own packet rates unilaterally, many other nations are likely to follow suit, leading to an international mailing free-for-all. Trump is right to be angry at the scandalously low dues China pays the United States Postal Service (USPS) for access to its postal system, but a ‘High Noon’-style showdown at tomorrow’s UPU’s Extraordinary Congress is not the right way to solve the problem.”

Jinks warns that America’s threat to quit the UPU in October if the Union doesn’t agree its demands at its special congress meeting in Geneva starting tomorrow, could lead to the complete collapse of long-established agreements. “That would mean every country would be forced to unilaterally negotiate its own rates with every other country. Trump is facing his own ‘Brexit’ decision: Does he remain in the Union and force change from inside, or leave with no deal in place?” he says.

Jinks continues, “Of course, it’s easy to see why Trump believes the USPS is having to massively over-subsidize overseas packages, particularly those from China. It’s not fair on US retailers that it is much cheaper for a seller to send earrings all the way from China to Chicago, than for a Californian trader to send the same item from Los Angeles to Chicago. The UPU hasn’t noticeably updated its dues structure since it was introduced in 1969. For 50 years China has got away with paying the rates of a developing nation, when today it is the second largest economy in the world.

“It’s not just the US that would benefit from reform of the UPU’s ‘terminal dues’ system. UK merchants could also benefit from the scrapping of the UPU’s antiquated fee structure on packets from China. It would be a huge boost for British traders if cheap Chinese competition vanishes because Chinese sellers are forced to pay a fair rate for access to the UK’s postal system. But it could equally work against British retailers who actually source their stock from the likes of China’s Alibaba.”

Overall, the abandoning of the UPU would do significantly more harm than good, believes Jinks: “America is demanding that every member nation has the right to set its own dues, providing they are not over its domestic postal rates. On the opposing side, China, and many of the UPU’s less wealthy member countries, say the achingly slow path to change the UPU has embarked on should be given the chance to succeed. This means many UPU member states and the US are on a collision course. If no agreement is reached at this week’s UPU conference, there is little doubt Trump will initiate a no-deal exit of the UPU on October 18.

“The US is calling for every nation to be able to declare its own packet rates; China is holding out for a simple tweaking of the existing plan. Things do not look rosy, but there is some hope. A number of key members are suggesting a solution that would mean cross-border rates could be charged at a percentage of domestic rates, likely to be up to 70%. If the US were to agree to this formula, all might yet be well, but right now that is looking a distant prospect. We’re very concerned that the US may indeed exit the UPS with no deal.”

About the author

David Jinks, MILT is head of consumer research for the online parcel broker ParcelHero. He is lead author of 2030: Death of the High Street and appears regularly on national radio and in the national press discussing the impact of e-commerce as well as topics such as the potential consequences of Brexit for exporters and music festival logistics. He also presents regular masterclasses and webinars for the UK government’s Exporting is GREAT initiative. Jinks has over 20 years’ experience as a transportation journalist, and for many years was the publisher of The Chartered Institute of Logistics & Transport’s Logistics & Transport Focus magazine.

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