US loses 'hundreds of millions of dollars' to antiquated international postal union, White House says

The Trump administration is once again threatening to leave the international postal union, claiming its “antiquated rules” have resulted in the U.S. subsidizing packages from China at the expense of American workers and manufacturers.

The United Postal Union was established as an agency of the United Nations in 1874 with the goal of setting rules for international mail exchanges.

However, the White House says the agency’s current rate structure has resulted in the U.S. and the U.S. Postal Service losing money on international letters and packages – especially from countries like China.

Top White House trade adviser Peter Navarro told FOX Business’ Maria Bartiromo on Thursday that “Americans are just getting their clocks cleaned.”

“Under the antiquated rules of the Universal Postal Union, the USPS, the postal system, has to heavily subsidize the incoming mail of a number of countries to the tune of hundreds of millions of dollars a year, it puts our manufacturers and our workers out of business,” Navarro said.

Last year, President Trump warned the UPU that the U.S. would pull out unless it changed its rules to allow the U.S. to set its own self-declared postal rates so it could recover costs from overseas shippers. Shortly after, the State Department submitted a withdrawal notice, which required a one-year waiting period.

Navarro noted he will be going to a meeting in Geneva later this month where he will address the U.S.'s future in the UPU – after which the U.S. will have fair rates either way, he said.

Simon Lester, associate director of Cato's Herbert A. Stiefel Center for Trade Policy Studies, told FOX Business that the Trump administration has a “legitimate concern about the status quo,” but was unsure whether a confrontational approach would lead to a solution.

The U.S. Postal Service Office of Inspector General was addressing the rate structure years ago. In 2014, it wrote the system creates winners and losers and benefits “China Post and Chinese online retailers at the expense of the Postal Service … and American retailers.”

In an opinion article published in the Financial Times this week, Navarro hammered down on the idea that China is a big winner.

“Today manufacturers in countries as small as Cambodia and as large as China pay less to send small parcels from their countries to New York than US manufacturers do to ship packages from Los Angeles to the Big Apple,” Navarro wrote, adding that other countries are also “victims” of the rate system.

He told FOX Business that American manufacturers are unable to compete with that, adding that a lot of the products being subsidized are counterfeit products, fentanyl and other opioids.

Meanwhile, the U.S. is scheduled to meet for the thirteenth round of high-level trade talks with China next month as a prolonged trade war drags on. Navarro did not expect the UPU controversy to play into those talks.


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