On October 17, 2018, the Trump Administration announced plans to withdraw from the Universal Postal Union treaty for the reason that there is a dispute over the discounted postal rates charged on Chinese packages shipped to the United States.
The move is part of the administration’s ongoing efforts to level the playing field between Chinese and US businesses. The withdrawal won’t go into effect for a year.
And in the year, negotiations have been ongoing, and there is hope that the parties could reach a satisfactory agreement to maintain US participation in the Universal Postal Union (UPU).
What Is The UPU
The Universal Postal Union established by the Treaty of Bern of 1874 is a specialized agency of the United Nations that coordinates postal policies among member nations, in addition to the worldwide postal system. It has 192 member states now.
The UPU Constitution established the organization and its governing framework. Within that framework, the UPU Congress is the primary decision-making entity for the organization, and the forum for member nations to negotiate UPU matters, including future rules for international mail exchange.
Using one country, one vote process, the UPU Congress typically holds a quadrennial meeting to set policies for the upcoming four-year cycle.
Why Is The US Withdrawing From The UPU
Built into the UPU framework was the principle that rich countries should bear more of the cost of moving mail around the globe, and developing countries should get discounts.
And, even as it has become the world's second-biggest economy and biggest manufacturer, China has remained on the UPU's list of developing nations, which allows it to pass off much of its postal burden to the U.S. and the European Union. The Trump administration has estimated the U.S. spends $300 million per year to subsidize shipments from China.
What's more, in 2011, the USPS entered into agreements with the postal services of Hong Kong and China to create a new category of first-class mail for parcels up to 4.4 pounds. The new service, called ePacket, was specifically "structured to foster growth in e-commerce". This made ePacket shipment explode.
The cost to ship a 4.4-pound package from China to the US is less than that a US eCommerce seller to ship the same item to a US address. And the low price is attractive to both buyers and sellers. A small item from a Chinese seller on eBay, or from one on Amazon's third-party marketplace without using Amazon's fulfillment service, is most likely an ePacket shipment.
While USPS doesn't break out the P&L of ePacket as a line item, it said the service generated an additional $493 million in revenue for fiscal years 2014 through 2016 in a 2018 audit report. It is no wonder that theUS wants to change the situation.
What Is The Influence Of The Withdrawal
As of October 17 approaches, the administration has given the UPU an ultimatum, that they: either allow the USPS to set rates for China mail that arrives in the US, or the US will officially leave the UPU on October 17th.
It is most likely that the UPU flinches and the world makes concessions that give a reason for the US to remain in the treaty. Rates, especially those on Chinese small parcels, could increase in order to stem complaints from American merchants unfairly disadvantaged by current shipping rates.
And if the US leaves the UPU on October 17, it is may well layout a set of its own rates for each individual country based on whatever standard it sees fit. Other countries could accept or reject these rates based on how much they value the ability to send mail to the US. There is no doubt that they will increase the rate of Chinese packages.
Either way, the ultimatum that the administration has given means as of October 17, no longer cheap Chinese shipping which directly influences ePacket. Even though the ePacket service agreements were negotiated bilaterally, those rates are pegged to the UPU treaty.
They will have to pay the same domestic rates as us once their e-packets arrive here. And Wish, Chinese e-commerce sellers, Ali-express, etc will be influenced by the change for the reason that their main shipping method is ePacket.
How To Solve The Issue Of Shipping Rate Increase
However, will the change really control e-commerce from China to the US?
There is good news that will cheer up the buyers and sellers who want to ship from China to the US, especially dropshippers who dropship from China to the US. CJPacket provides a small parcel shipping service announced to maintain the original shipping price when shipping to the US from China.
It also provides a logistic tracking from origin to a destination that you can enter the tracking number and check the package's logistic information. And it is one of the advantages of CJDropshipping which is a dropshipping platform that provides products sourcing, order processing, and shipping to dropshippers from China to all over the world.
Find winning products to sell on app.cjdropshipping