Companies split on US exit from int’l postal pact benefiting China
Many American companies applauded the Trump administration’s move this week to pull out of an agreement that makes it cheaper to ship goods to US customers from China than from within the US. But some business organizations are worried it could crimp the flow of global e-commerce.
The administration announced Wednesday that it had begun withdrawing from the United Nations agency that negotiates international postal rates because the organization had failed to address international discounts the US calls unfair. The discounts, aimed at helping developing countries, have continued to apply to China even as it has grown to become the world’s second-largest economy.
The US Chamber of Commerce said the rate system is “exploited by a handful of countries.” The National Association of Manufacturers also applauded the US move.
But the International Chamber of Commerce, the world’s largest business organization, with more than six million members, said that while postal rates should be updated, a US exit from the Universal Postal Union could splinter an essential system for international commerce.
“The global postal system plays a central role in enabling global trade flows – more so now than ever with the growth of e-commerce. We are therefore naturally concerned by any potential fragmentation of the Universal Postal Union system,” John Denton, the group’s secretary-general, said. “Being able to make last-mile shipments to consumers efficiently is vital.”
Others warned that US companies that depend on small components shipped from China could see costs rise.
“Suddenly the cost of that goes up tremendously for someone who’s manufacturing something in the US and has all these components going into it. That’s troubling,” said Jonathan Huneke, a spokesman for the United States Council for International Business.
The treaty governs rates on packages weighing 2 kilos (about 4.4 lbs.) or less. The rates have allowed merchants in countries like China, Hong Kong and Singapore to sell goods to American consumers for only a few dollars.
The service has been popular with merchants selling wares on online marketplaces such as AliExpress.com, eBay. com and Amazon.com, Inc.
EBay has highlighted its large business in China.
“I think what a lot of people don’t know is we’re the No. 1 exporter out of China,” Chief Executive Devin Wenig said in February. “We have a multi, multibillion-dollar business exporting Chinese goods to the United States, to Europe, all around the world.”
Asked in April about the cheaper Chinese shipping rates, the company said it had encouraged Chinese sellers to move products to end-market warehouses to increase shipping speeds. The company declined to comment Thursday.
Parcel carriers such as FedEx Corp. and United Parcel Service, Inc. have called for updating the agreement, which puts them at a disadvantage on some international shipping routes because of the treaty’s lower rates.
“Foreign postal operators should not be given government-approved advantages in what is a competitive market,” UPS Chief Executive David Abney said. “All parties should pay the same parcel delivery rates for the same services from the US Postal Service.” (WSJ)