On September 25, 2019, the Third Extraordinary Congress of the Universal Postal Union (UPU) adopted a proposal on terminal dues rates—a decision that led the United States to remain a member state. The United States had given its one-year notice of withdrawal from the UPU eleven months earlier, citing concerns that the existing system unfairly advantaged certain developing nations, including China. Following the UPU's decision, the United States rescinded its notice of withdrawal. Under the new system, the United States can begin self-posting terminal dues rates in July 2020.
On August 23, 2018, President Trump issued a memorandum laying out the priorities of the administration in its negotiations at the UPU.Footnote 1 This memorandum focused on the rates that post offices in different countries charge each other for the delivery of international mail. Under the existing UPU framework, which stemmed back to 1969, terminal due rates were based on a country classification system whereby developed nations such as the United States paid more than developing nations.Footnote 2 In the memorandum, Trump expressed concern about this system and stated:
(A) the United States, along with other member countries of the UPU, is in many cases not fully reimbursed by the foreign postal operator for the cost of delivering foreign-origin letter post items, which can result in substantial preferences for foreign mailers relative to domestic mailers;
(B) the current terminal dues rates undermine the goal of unrestricted and undistorted competition in cross-border delivery services because they disadvantage non-postal operators seeking to offer competing collection and outward transportation services for goods covered by terminal dues in foreign markets; and
(C) the current system of terminal dues distorts the flow of small packages around the world by incentivizing the shipping of goods from foreign countries that benefit from artificially low reimbursement rates.Footnote 3
The memorandum also observed that if U.S. concerns were not promptly addressed by the UPU, the United States would “consider taking any appropriate actions” to ensure its criteria were met.Footnote 4
While Trump's memorandum did not discuss China by name, his concerns had particular resonance with respect to that country. Peter Navarro, the White House director of trade and manufacturing policy, later wrote in an opinion piece:
[U]nder the [UPU]'s antiquated “terminal dues” system, the United States Postal Service was being forced to subsidize a flood of small packages, primarily from China, at an annual cost in the neighborhood of $500 million.
This forced subsidy gave China an unfair advantage against American manufacturers and workers . . . .Footnote 5
Several months after Trump's memorandum, the UPU held its Second Extraordinary Congress.Footnote 6 Following unsuccessful negotiations, on October 15, 2018, Secretary of State Mike Pompeo notified the UPU that the United States “hereby denounces the UPU Constitution and, thereby, withdraws from the Universal Postal Union. Pursuant to Article 12 of the Constitution, the withdrawal of the United States shall be effective one year after the day on which you receive this notice of denunciation.”Footnote 7 The United States was a founding member of the UPU, as a signatory to the 1874 Treaty of Berne,Footnote 8 and had an “unbroken record of participation” in it.Footnote 9 In a statement regarding the withdrawal, the Trump administration announced that “the Department of State will seek to negotiate bilateral and multilateral agreements that resolve the problems discussed in the Presidential Memorandum. If negotiations are successful, the administration is prepared to rescind the notice of withdrawal and remain in the UPU.”Footnote 10 Media reports characterized the exit as another move in growing trade tensions with China.Footnote 11
After the United States gave its notice of withdrawal, the UPU called for a Third Extraordinary Congress, as recommended by the UPU's Council of Administration.Footnote 12 The Third Extraordinary Congress convened in Geneva, Switzerland, from September 23–26, 2019.Footnote 13 Leading the negotiations for the United States, Navarro offered support for two potential resolutions with respect to terminal dues rates: first for a measure where “all members of the UPU would be allowed to immediately self-declare rates;”Footnote 14 or second for a “multispeed option,” which “would allow the United States to immediately self-declare rates while other countries would achieve that goal over a five-year period.”Footnote 15 The option preferred by the United States, to immediately move for self-declared rates, was rejected by the UPU Congress on the first day of the session by a vote of 78–57.Footnote 16 China was amongst those countries opposing this option.Footnote 17
The next day, on September 25, the UPU membership unanimously adopted a proposal along the lines of the other option proposed by Navarro.Footnote 18 The UPU press release announcing the adoption of this proposal stated:
The agreement approved by acclamation by member countries on 25 September sees the UPU accelerate rate increases to the system for remunerating the delivery of inbound international bulky letters and small packets. Self-declared rates are to be phased in starting as soon as 2020.
Under the agreed solution, member countries that meet certain requirements – including inbound letter-post volumes in excess of 75,000 metric tonnes—would be able to opt-in to self-declare their rates starting 1 July 2020. Thresholds are included to protect low-volume, developing countries from the impact of the swift reform.Footnote 19
Media reports indicate that the United States, which has above 75,000 tons of mail imports, can start setting its rates on July 1, 2020, and other high-volume importers can start implementing their own rates in 2021 with a five-year phase-in period.Footnote 20 Following the proposal's adoption, the United States gave formal notice that it would remain in the UPU.Footnote 21
China expressed support for “‘a positive solution and compromise in the spirit of UPU.’”Footnote 22 The Chinese Postal Bureau Deputy Director Gao Hongtao stated that China expected to pay almost triple for terminal dues in the future and that this would “‘push up the cost of cross-border e-commerce logistics in China, bringing a certain impact,’” but that the impact would be small as China would also receive a greater amount in terminal dues.Footnote 23
Since Trump took office, the United States has withdrawn from a number of international agreements, including the Optional Protocol to the Vienna Convention on Diplomatic Relations, the Intermediate-Range Nuclear Forces Treaty, and the United Nations Educational, Scientific and Cultural Organization.Footnote 24 Unlike with the UPU, the notices of withdrawal given with respect to these agreements did not lead to renegotiation and the rescission of the withdrawals. Media reports indicate that the administration is considering withdrawing from yet another multilateral treaty, the Open Skies Treaty, which allows parties to engage in unarmed surveillance missions over each other's territories.Footnote 25
