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USA May Not Honor UPU Agreement; Terminal Dues In Limbo?

Postcom CEO Michael Plunkett told MAILCOM attendees that there is a movement in the executive branch not to honor the Universal Postal Union’s Istanbul Convention passed in 2016.

The reason: the perception that the terminal dues rates subsidize foreign ecommerce shipments into the United States.

A letter from the International Mailer’s Advisory Group (IMAG) of April 6, 2018 requests the U.S. government accept the acts of the UPU’s Istanbul 2016 Congress.

“I write today to express IMAG’s concern that the United States has not accepted the Acts of the Universal Postal Union’s (UPU) Istanbul Congress. These are the rules for the global network and our participation in that network is essential. It would be to the detriment of U.S. exporters if the United States were not to abide by the Acts” states Kate Muth, IMAG Executive Director.

Click for IMAG Letter of April 6, 2018

“IMAG’s members and their customers rely on this global network for their businesses. Members have established operational processes to abide by the rules of the global network. Uniformity around the definition of a letter or a parcel, around containerization and presentation (just to name a few things) allow for processes and systems to be highly efficient. Those efficiencies, of course, benefit all U.S. businesses that mail and ship to customers around the world,” writes Muth.

“IMAG acknowledges the controversy around terminal dues. It is a complicated issue with a long history and our members fall in different camps on the topic. But the Acts of the UPU are an integral whole that we can’t just pick and choose from. Furthermore, terminal dues are just a small component of shipping costs. We need to be mindful of the implications that abandoning the UPU Acts could have on all aspects of the international delivery system.”

The UPU is the oldest international body, formed in the 1860’s to regulate cross-border flows of mail between countries. The United States has not formally approved a UPU Convention since 2008. Both the 2012 and 2016 conventions have only received pro forma approval, meaning the USPS honors the conventions even though they have not been approved.

An effort was underway in Congress last year that would not let the USPS deliver foreign postal shipments at rates that are less than what is charged domestic mailers.

Driving the debate is the fact some U.S. companies pay more for postage than foreign competitors because of the terminal dues system. For instance, a New Jersey company sells a mug that costs $6.30 to ship alone while Chinese competitors can make and ship the same mug for $5.69. (click to read)

Those efforts have born some fruit in the Trump administration, where rumors swirl that the government may unilaterally announce it will not abide by the UPU terminal dues structure.

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