I came across this piece of information from 2015. It is an example of how insidiously international agreements have undermined American business.


International Agreement Forces USPS To Lose Money On Foreign Mail
4:37 PM 06/16/2015
Peter Fricke | Contributor

A 141-year-old international organization forces the United States Postal Service to deliver foreign mail at a loss, costing it over $300 million since 2010.

At a hearing held Tuesday by the House Committee on Oversight and Government Reform, representatives of the USPS, Department of State, and private companies all testified that the existing approach to international shipping rates creates market distortions that hurt American businesses and consumers in the form of reduced competition and higher postage rates.

International postage rates are set by an body called the Universal Postal Union (UPU), an organization established in 1874 and tasked with facilitating the international exchange of mail by requiring participant countries to provide universal postal service at predetermined rates.

Currently, the rates set by the UPU for mail entering the U.S. are actually lower than the cost of delivery, effectively forcing the USPS to subsidize foreign mailers.

“We lose revenue on every single package we deliver,” testified USPS Inspector General David Williams, adding that the Postal Service’s cumulative losses from international mail are now approaching $308 million since 2010, contributing to the agency’s perennial, multi-billion dollar deficits.

Since 1998, the State Department has represented the U.S. at the quadrennial UPU Congress, and Tuesday’s hearing offered a forum for industry stakeholders to outline the goals they want diplomats to pursue at the next Congress, which will meet in 2016.

UPU rates vary according to a complex formula that categorizes countries based on their economic size and level of development, explained USPS Acting Chief Information Officer and Executive Vice President Randy Miskanic.

For most industrialized countries, international rates are based on domestic postage rates, and because the U.S. has among the lowest domestic rates of any such country, “the U.S. is one of the least expensive countries for foreign target countries to mail to, and the financial performance of inbound international mail for the Postal Service suffers.”

According to Amazon Vice President for Global Public Policy Paul Misener, however, the problem is exacerbated by a USPS agreement with China Post to make lightweight deliveries at even lower rates, with the result that “shipments from China to points throughout the United States are often cheaper than shipments entirely within the United States.” (RELATED: Penniless Postal Service Promotes Discounted Rates for Chinese Merchants)

“Shipping a 100g parcel to Fairfax, VA would cost a small business in Marion, N.C. at least $1.94, at a distance of 340 miles,” Misener pointed out, “but [the same package] would cost a company in Shanghai only $1.12, at a distance of over 7,000 miles.”

Not only do such agreements create a competitive disadvantage for American companies of all sizes, Misener claimed, they also “discriminate against American domestic shippers,” which cannot hope to compete with the generous rates imposed by the UPU. (RELATED: How a Concept Called an ‘NSA’ May End the USPS)

“Does anyone want to take the stance that China deserves more subsidies from the United States?” asked Democratic Rep. Gerald Connolly. “I didn’t think so,” he remarked after a moment of silence during which none of the witnesses sought to take up the challenge.

“In today’s global economy, American business will not always win,” Frontiers of Freedom President George Landrith said in a press release. “Yet losing at the hands of flawed policy from a quasi-government agency like the United States Postal Service is simply unacceptable.”

“Put simply,” Landrith argued, “the USPS should not be subsidizing international package shipments to the detriment of American businesses and consumers, and Congress is right to look into this misguided policy.”

http://dailycaller.com/2015/06/16/intern...n-foreign-mail/

The International Postal System Is Profoundly Broken—and Nobody Is Paying Attention
An obscure United Nations body is making mail from developing nations unnaturally cheap—and hurting e-commerce, manufacturing, and postal systems in industrialized countries. The Universal Postal Union is a secretive backroom club, but its missteps were born from the highest of ideals.
David Z. Morris
Dec 14, 2015

The affordable and efficient postal service we take for granted was a modern innovation, pushed by a global wave of reform starting in 1840. By 1874, newly streamlined national systems were connected through a global body, now known as the Universal Postal Union, which has since helped make sending international mail cheap and easy.

A rising chorus of critics, though, claim that the UPU has lost its way. Its politicized and arcane system of pricing agreements has limited competition from private companies and turned national posts against each other, while subsidizing small-parcel e-commerce from developing countries like China. It’s the reason you can order a memory card from Nanjing to Oslo for less than the price of an iced latte—but the real cost of those cheap Chinese trinkets is much greater.

The idealistic foundations of the UPU can be traced back to the work of Sir Rowland Hill. Born in Worcestershire in 1795 to a long line of freethinkers (his grandfather once saved an accused witch from drowning by a mob), Hill was, as a brother put it, “born to a burning hatred of tyranny.” He expressed his love of freedom mostly by working to broaden access to information and communication. He argued for cheaper newspapers, wrote a book on educational reform, and invented a high-speed printing press before discovering his real life’s work: reforming England’s postal system. At the time, the posts were so unwieldy and expensive that elaborate fraud was common, most notably the misuse of the mail privileges of members of Parliament, a practice known as “franking.”

..........................................................

The history of the UPU since 1969 has largely been a war of position over who wins and who loses on terminal dues. Ongoing postal liberalization since the 1980s has added another twist—because terminal dues rates were only available to designated national postal services, keeping them low became a way of excluding private couriers like FedEx and DHL from parts of the mail market, including parts where they could have offered big cost savings over national posts. Broadly, this has led to the USPS and its allies in low-cost and developing systems supporting unnaturally low terminal dues, while more internationally competitive and high-cost systems like Germany and Norway advocate a system that recognizes real costs. The low-cost side has generally been successful—sometimes too much so. One draft UPU agreement—known as REIMS—was officially deemed an attempt at price-fixing by the European Commission, and had to be re-drafted.

“This,” Jim Campbell says, “Is a play in which everybody’s a bad guy.”

An ironic twist, though, arrived with the recent explosion of international e-commerce. While terminal dues are nominally for letters, that includes anything up to two kilograms and more or less envelope-shaped. The rise of platforms like Alibaba and eBay has massively increased the volume of small packets being sent by international post directly from developing countries. Things like audio cables, sunglasses, and circuit boards, which had previously been bulk shipped to wholesalers in destination countries, have begun to flow instead through the postal system, directly to buyers—and subject to UPU terminal dues agreements.

Much of that flow is now from or through China, Hong Kong, and Singapore, which, in part thanks to U.S. support in the UPU, pay very low terminal dues on shipping small packets into industrialized countries. This is costing some postal services lots of money. An independent audit found that even the low-cost USPS took losses totaling $79 million on inbound international single-letter post in 2013. Norway Post, a high-cost net importer of mail, has been hit even harder, acknowledging that losses from inbound international mail must be offset by higher rates charged to Norwegians sending either domestic or outbound international mail.

USPS’s losses may be small potatoes when weighed against its strategic priorities in opposing global postal liberalization. But the broader impacts are more insidious. A comprehensive study by the research group Copenhagen Economics has found that the misalignment of terminal dues rates is leading online shoppers to order directly from countries with favorable UPU positions, rather than from suppliers closer to home—even if the price of the item itself is identical. Both USPS and Norway Post’s inbound mail losses have grown steadily since 2010, indicating this trend is accelerating.

.....................................................

https://psmag.com/economics/the-internat...aying-attention