On September 25, 2019, the Universal Postal Union (UPU) passed Option V, a “compromise proposal” that entails features largely favored by the United States. As a result, the US will remain in the UPU.
The United Postal Union (UPU) is composed of delegates from 192 nations. The UPU is responsible for determining the fate of global postal commerce. It sets rules for international mail exchanges while providing technical assistance and recommendations for growth.
Last October, the Trump administration announced its intention to withdraw from the UPU on the grounds that the current UPU structure pertaining to terminal dues was unfair to the US. Terminal dues are the rates that the 192 countries within the UPU pay each other to deliver mail within their respective borders. When the rates were originally set in the 1960s, they were based on factors such as a country’s economic development. As it stands right now, the rates have not adjusted to take into account the growth that has occurred in some of the countries since that time.
A US departure from the UPU would have drastically changed the international shipping landscape.
What does this mean?
Countries importing more than 75,000 metric tons of parcels and mail will be able to set their own “self-declared rates” starting July 2020. This will allow the US to increase the rates it charges foreign postal systems for processing foreign-origin parcels and mail.
As a result of the proposal, the US will now be allowed to set inbound shipment rates to be at a threshold of approximately 70% of domestic rates. Although new rates will take effect in July 2020, some countries may decide to ease the transition by implementing rates over a five-year period.
“This is a good compromise that will mitigate international mail delivery disruptions while making it a more fair and level playing field by taking steps to end subsidization of mail delivery,” said Angelo Anagnostopoulos, GrayHair Software’s VP of Postal Affairs.
“The outcome of the UPU negotiations will also enable the Postal Service to support infrastructure development abroad that builds capacity for advance electronic customs data transmission and improvements in postal security,” said United States Postmaster General, Megan J. Brennan, in a recent statement. “The safety, sanctity and security of the mail are of paramount importance to the Postal Service, so we appreciate that the agreement reached today includes concrete steps to ensure that the world’s posts will be better positioned to provide data from their customers that will help to reduce the use of the international mail system to transport dangerous contraband and counterfeit goods into the United States.”
The two items that will need to be answered are the details of the new rates and their implementation. Rates are likely to be based on retail rates, but what is not known is if the USPS will raise prices mid-2020 or wait until January 2021.