In the world of UPU negotiations, we have reached a point that can be compared to a game of chess between two long-time friends. The end of this game is called “bilateral agreement,” and the result is a contract that simply says, “I`ll charge you X for deliveries if you charge me Y for deliveries.” While a normal trading negotiation is centered around giving and taking – “I`ll sell you X product at Y price.” With the many variables included, you can see how fine details become a bit tricky. What do experienced sellers do to avoid these high fees? They transport freight through resellers of the Extra-Territorial Exchange Office (ETOE). While this may seem like an exciting sequel to a 1980s alien film, it`s just a big phrase and an acronym for a postal company that`s building its store in another country. President Trump on Wednesday pulled out of a 144-year-old international postal deal that allows Chinese companies to ship small packages to the United States with a juicy rebate, a deal that government officials say stimulates foreign competitors and costs the U.S. postal service about $170 million a year. In the past, the cost of shipping a 4.4-pound package from China to the U.S. was $5.41, less than it would cost a U.S. e-commerce vendor to send the same item to a U.S. address. (Note: International postal rates from China to the United States are rising sharply above 4.4 pounds.) The UPU reported that international mail distribution decreased by 9% in 2015, compared with a 3.2% decline in domestic mail.
Over the same period, international parcel volume increased by 12.1%, while domestic parcel delivery increased by only 6.4%. The postal contract angered leaders of both parties long before Trump took office, Taub said. The Reagan administration, with few results, insisted on changes, and a 2015 government report warned that foreign mail had in doubted the U.S. postal system. What you have overlooked is that the Chinese government could only subsidize port rates. Of course, USPS could calculate more China Post, but not all (or zero) of this increase could be passed on to their customers in China. No increase in consumer prices means no difference, and the Chinese government is simply subsidizing exports. President Trump praised changing that equation and announced Wednesday that he is ordering the U.S.
postal service to impose higher rates on packages from international destinations, including China. The announcement was not highly controversial: many parties involved in e-commerce, from Amazon to small U.S. companies to eBay sellers, have long been asking the U.S. to ask for more for delivery on behalf of foreign postal companies. These changes could help improve competition for U.S. small businesses with Chinese traders, while slowing the flow of counterfeit goods that are shipped cheaply overseas. The South China Morning Post reported that China`s small e-commerce companies would suffer from higher postal costs. However, major Chinese retailers are unlikely to be affected by the contract change.