Terminal fees, set by the United Nations’s Universal Postal Union (UPU) are under fire from President Trump. Trump claims that goods are flooding into the US with the USPS receiving less compensation than the price charged to domestic US sellers, effectively postal subsidies for Chinese sellers.
The thinking behind terminal fees is that they’re less for underdeveloped countries in order to encourage international trade. The problem is that countries such as China have been classified as a transitional country – not entirely industrialised – and so get lower rates than for instance posting to the US from the UK. China, incidentally, is also a country well known for churning out low cost goods, often fakes or lookalikes, and often sold at a lower price due to low wages than products can be manufactured in the West.
The postal subsidies aren’t a problem unique to the US, we’ve heard from many sellers in the UK that Chinese sellers can sell certain low cost goods at a lower price then a UK seller would have to pay for domestic postage alone!
Trump it would appear has had enough. He has ordered the US Postmaster General the secretaries of State, Treasury, and Homeland Security, Postmaster General, and Chairman of the Postal Regulatory Commission to take a look at terminal fees that: Fully reimburse the USPS for costs to the same extent as domestic rates for comparable services; Avoid a preference for inbound foreign small packages containing goods that favors foreign mailers over domestic mailers; and Avoid a preference for inbound foreign small packages containing goods that favors postal operators over private-sector entities providing transportation services.
If negotiations at the UPU’s September 2018 Second Extraordinary Congress in Ethiopia fail to yield reforms then Trump has decreed that the United States will consider taking any appropriate actions to ensure that rates for the delivery of inbound foreign packages are aligned with the rates for domestic packages.
Trump may not be everyone’s favourite political world leader, but in this case his views are likely to align with those of many marketplace traders who see overseas competitors benefiting from lower cost delivery charges than they can access domestically. We suspect that many online merchants would love the Royal Mail to up their charges for Chinese sellers and level the playing field a little.