American consumers may not realize it, but when they purchase small items online from Chinese vendors, the buyers are saving big money on shipping expenses to get their purchases from there to here. The opposite happens when Chinese buy online and have their purchases shipped from the United States.
The international exchange of small packages has become a large and fast-growing business in the e-commerce age, but like some other aspects of the economic relationship between the United States and China, the Chinese are winning and Americans are losing.
According to Paul Steidler, an expert with the Lexington Institute, China sends small packages halfway around the world to the United States at half the cost or less for Americans to send an identical package a town away. This is because international postal rates are governed by the Universal Postal Union. The UPU is affiliated with the United Nations, and its rates favor China.
Steidler said that until recently, China has dominated the UPU, but that might be changing because in August 2018, the Trump administration began a campaign to reform the UPU.
Employing the president’s familiar negotiations style, the U.S. gave the UPU a one-year notice that we would leave by Oct. 17 unless a fair and reasonable agreement could be achieved. The Trump team insisted that foreign customers must pay the same for U.S. postal services as domestic customers.
Steidler claims that most industrialized countries support the U.S. position because they believe Chinese businesses are getting an unfair cost advantage while U.S. businesses are paying too much. With the Trump deadline approaching, officials of the UPU will meet Tuesday, Wednesday and Thursday to discuss changes that might be more favorable for the United States.
The U.S. is prepared to exit the UPU and negotiate postal arrangements one-on-one with other countries.
Should the UPU fail to come through with a fair and equitable arrangement, the U.S. is ready to play hardball because the U.S. Postal Service has negotiated more than 500 international contracts.
We in farm country have questioned the president’s wisdom for imposing tariffs on Chinese products. The retaliatory tariffs China imposed on U.S. exports have greatly harmed U.S. farmers, and so far there’s been little reason to believe the tariffs have achieved the results that Trump intended.
Instead, China’s retaliatory tariffs have cut severely into the profits and markets of U.S. agricultural producers.
To give credit where it’s due, it’s encouraging to see the U.S. employing a negotiating strategy that might yield an outcome that favors the U.S. on international postal rates. We’ll know more in mid-October, Steidler said.