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E-Commerce Shipment Costs Could Increase as U.S. Announces Treaty Withdrawal

Friday, October 19, 2018
Sandler, Travis & Rosenberg Trade Report

Costs for shipping e-commerce goods from China into the U.S. could increase if the White House follows through on an Oct. 17 announcement that the U.S. will to withdraw from the Universal Postal Union. Instead, the Trump administration plans to adopt self-declared rates for the delivery of goods through international mail “as soon as practical” and no later than Jan. 1, 2020.

The UPU determines the rates that each of its 192 member countries charge to deliver mail and small parcels from foreign carriers. The rates charged to China and other developing countries have been lower for decades, but a New York Times article states that with the explosion of e-commerce in recent years Chinese manufacturers are “taking advantage of the lower rates to ship clothing, household gadgets, and consumer electronics” to the U.S. Not only does this undercut U.S. manufacturers, critics say, but it also facilitates the shipment of counterfeit goods and illegal drugs from China.

According to the White House announcement, a State Department report earlier this year concluded that the UPU has made insufficient progress in resolving these problems. In response, the U.S. will seek to negotiate bilateral and multilateral agreements that address these issues during the one-year UPU withdrawal period. However, the White House also said it is prepared to remain in the UPU if those negotiations are successful.

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