Sarah Altendorf

Why Trump’s Decision to Leave the Universal Postal Union Makes No Sense

Say you want to mail a letter from your home in Cairo, Illinois to a friend in Cairo, Egypt. All you need to do is affix the right amount of postage, stick the letter in your mailbox and you can be reasonable assured that the letter will reach its final destination.

You may not think twice about it — and that you don’t think twice about it is because of an international organization called the Universal Postal Union. But on Monday, the Trump administration said it will withdraw from this organization — a move may disrupt the ease at which all people in the United States can send and receive international mail.

The Universal Postal Union is 71 years older than the United Nations itself. It is was created in 1874 as a forum for the postal services of its member states to work together to solve technical problems around delivering mail across international borders. This includes deciding out how much postage to charge for international mail, and also how much one postal service should reimburse another postal service for the cost of delivering mail that originated from a different country.

The UPU was an early example of multilateral cooperation to solve a common problem. It lowered transaction costs for cooperation between postal services and in the process attracted membership from nearly every country on the planet.

One of the UPU’s main tasks today is setting rates at which postal services reimburse each other for the costs of delivering international mail.  It does this by creating a platform in which UPU member states can negotiate amongst themselves  what are known as “terminal dues.”  This is a technical term that refers to the amount that the postal service of one country agrees to pay the postal service of another country for delivering mail that arrived from over the border.

And it is here that the UPU has run afoul of the Trump administration.

The Trump administration objects to the fact that it costs far less for China to send a letter or light package to the United States than it does for the United States to send a similar letter or light parcel to China. In fact, costs less to mail a letter or light package from China to the US than it does to send a similar parcel within the United States.

Cheap mail and packages from a global manufacturing hub like China is a big benefit to US consumers, but it can present some disadvantages to American manufacturers. So, as part of his ongoing trade feud with China, Trump has vowed to pull out of the Universal Postal Union unless China accepts higher shipping costs.

Credit: Chase Elliott Clark under flickr/CC license

Pulling out the entire Universal Postal Union over a feud with China is like throwing the baby out with the bathwater.

The United States may have a legitimate gripe with China over its terminal dues. But it makes no sense to therefore jettison the entire platform upon which international cooperation between postal services is based. Deeper still, the Trump administration’s problem with Chinese terminal dues payments is something that can be addressed through the UPU–not despite it.

The Universal Postal Union’s reimbursement rates are not set by faceless bureaucrats in the Bern headquarters of the UPU. They are set by member states, like the United States and China, that periodically negotiate these rates amongst themselves. The Trump administration is apparently displeased with the last round of negotiation, so they are opting to leave the Universal Postal Union all together.

Pulling out of the UPU could cause a great deal of uncertainty for people in the United States who send or receive mail or packages from abroad.

If the US withdraws from the UPU the US government would have to negotiate postage rates bi-laterally, with nearly every country on the planet. Presumably, this would have to be done within a year which is when the US withdrawal from the UPU would go into effect.  This is not only a waste of US government resources and diplomatic energy — but it’s probably not even reasonable to expect that US diplomats can conclude 191 bi-lateral postal agreements in that time frame. Also, you can expect that the costs of sending and receiving international mail would increase as countries retaliate against the US for raising their terminal dues unilaterally. Deeper still, when the rest of the world is negotiating terminal dues through the UPU, the United States will not be able to participate in those negotiations, likely putting US manufacturers and US consumers at a considerable disadvantage–after all, the United States would no longer have a say on the outcome of negotiations at the UPU.

China was already on track to pay higher terminal dues, with rates that increase 13% annually from 2019 through 2021. If the United States ends up withdrawing from the UPU, other countries will simply write the rules without US participation. The gamble here is that the United States is powerful enough to dictate to other countries the terms of their postage reimbursement rates–and that the Trump administration is competent enough to negotiate 192 separate agreements on postal reimbursement over the the year.

This is a big gamble–and not at all worth the cost of jettisoning a multilateral institution that has ensured reliable international postal delivery for the past 144 years.