Get Ready for Higher International Postage and Service Disruptions

by Merry Law
President of WorldVu LLC

“If the U.S. were to withdraw from the UPU, it would lose access to global processing and coding systems that make international mail possible, and it would have to negotiate bilateral postal agreements with every individual country.” – Universal Postal Union (UPU) Director General Bishar Hussein

The UPU is the UN agency that oversees and coordinates international postal exchange among its 192 member nations and their territories. Beyond payments for international mail, the UPU members set documentation requirements, rules and standards for mail classes and labels, what’s allowed in the mails internationally, and many other items.

In October, 2018, the U.S. delivered at letter to the UPU notifying it of the U.S. intension to withdraw in a year unless some changes were made in the way countries paid each other for incoming international mail. While what countries pay each other for transport or final delivery of mail are not postage rates, they do effect postage rates. If the exchange payments are high, postage will be higher.

The potential withdrawal of the U.S. from the UPU creates two separate issues for senders and recipients of international mail: (1) international payment agreements between countries and its effect on postal rates and (2) how mail can go to and from the U.S.

Under each of the possible resolutions to the situation between the U.S. and the UPU, international postage rates will increase, possibly by a substantial amount. Clearly, if a country pays more to another country for the delivery of mail there, the postage rate paid by mailers in that country will most likely be higher.

Since the U.S. is seeking higher remuneration for handling mail coming from other countries and other countries will likely want commensurate increases in compensation for their handling of incoming mail, a worldwide increase in international postage is very likely. Each country will make its own decision on its postage rates, but increased costs lead to increased prices.

Resolution within the UPU, requiring a vote of the member countries, would be based on a proposal that has not yet been fully formulated. The way in which those rates are determined would need to be applicable to all 192 countries that are UPU members. One option for a UPU proposal would base compensation on a proportion of domestic postage for a mail product equivalent to the incoming international item. Other ideas for possible resolutions are based on modification of the current terminal dues system. These options based on the current system might not meet the U.S. requirements, which would only be clearly satisfied by a change to UPU rules allowing each country to set their own terminal dues rates.

While the U.S. position at the UPU has supporters, many countries appear to be taking a wait-and see attitude. The final proposal submitted to the UPU member countries will not be completed until March, and many countries will likely wait until the details in potential proposals become clearer, weighing in on items as they are raised in line with their own interests.

The comment and voting periods for any proposal are each 45 days. (The U.S. imposed deadline is mid-October.) The number of countries needed to pass a proposal depends on the number of those eligible to vote and the number who do vote, out of the total membership. (In general, the U.S. would need to secure 2/3 of the votes cast in an election in which at least 1/2 the membership with the right to vote participated.)

If resolution within the UPU is not possible or does not meet the deadline set by the U.S. government, the President says the United States will independently set self-declared rates for mail from other countries. Self-declared rates are rates for incoming international mail set by the recipient country. While it remains
unclear what the exact basis for these rates would be, they are likely to be based on some proportion of the postage for existing mail categories defined by USPS. This will likely be met with increases imposed by other countries.

Review and approval of any new USPS postage rates for international products will need approval by the Postal Regulatory Commission (PRC). This process has in some past cases been lengthy, with court cases following lengthy comment and response periods after a PRC decision. In the jigsaw of pieces in the modification of the international country-to-country payment system, it adds another point of uncertainty and potential disruption for international mailers using the USPS.

If the U.S. does withdraw from the UPU, it could lose use of, and access to, the international postal network. As Director General Hussein pointed out, this may require negotiating separate agreements with each of the other 191 members of the UPU—between whenever they start these negotiations and October of this year. Such agreements would sanction the exchange of mail between the U.S. and the other country signing the agreement, but would not grant the U.S. access to the full international postal network. Negotiating a large number of complex agreements within what might be less than six months would be a difficult task under any circumstances.

Additionally, the U.S. could reach some agreement with the UPU to allow use of the UPU network—the forms, labels, standards and processes—by the USPS in exchange for some fee, while remaining outside the remuneration system. Such a fee would likely be substantial, but would allow for the continued exchange of international mail with the USPS if the U.S. comes to agreements on payments for mail transit and delivery with other countries.

International mailers and mail recipients need to prepare for higher international postage rates worldwide. Since international mail through the USPS may be disrupted, mailers also need to look at alternative delivery options, such as remail and direct entry.

About the author: Merry Law, President of WorldVu LLC, is editor of the authoritative Guide to Worldwide Postal-Code and Address Formats and author of Best Practices for International Mailings. She is a member of the Universal Postal Union’s addressing work group and of the U.S. International Postal and Delivery Services Federal Advisory Committee. Merry can be reached at mlaw@worlduvu.com.