If you face competition from companies importing Chinese products at unfairly low rates, there is good news for you.
A recent compromise at the Universal Postal Union’s emergency congress can get you an edge over your Chinese counterparts. Also, it can make your business more competitive.
According to the latest development, the Universal Postal Union will allow the US to set its own inbound postal rates for international mailing.
With this deal, the US would remain within the agency. The Trump administration had previously threatened to leave it on the grounds that it lets some countries ship goods to the US at unfairly low prices.
The Background of Deadlock
The Universal Postal Union (UPU), a global postal group, sets rates for international mail delivery. And the United States is a part of this organization.
The member countries of UPU pay terminal dues according to their economical development for international mail delivery. The most developed countries pay higher terminal dues than the lest development countries in the organization.
China, with its Alibaba, the world’s largest e-commerce company, has been the biggest beneficiary of the system. This because it enjoys low terminal dues. This means Chinese companies can send low weight (under 2kg) parcels to the US at subsidized rates. What’s more, this subsidized rate is often lower than that of one pays to send the same parcel from one state to another state.
This agreement has not only been hurting US businesses but also putting extra strain on the United States Postal Service (USPS) to subsidize the inbound delivery of light items. So, the Trump administration threatened to exit the 144-year-old postal pact in the last October.
SBE Council president and CEO Karen Kerrigan said then, “The big disparity in shipping rates directly hits our small businesses. President Trump’s action today is a huge win for American small businesses. Our entrepreneurs have to compete on many fronts that impact costs, and shipping rates are a big one,”
“Why past U.S. negotiators and our own Postal Service would allow this to continue for so long is indefensible. Thankfully, President Trump and his team have taken very strong action to make this right and move us into the 21st-century global economy,” She added.
The Latest Development
The Universal Postal Union has agreed to allow the US to set rates for inbound deliveries. With this development, the US will remain within the UPU.
SBE Council president & CEO Karen Kerrigan said after the recent deal, “The final reform package is a tremendous victory for the U.S. and America’s small business community. The Trump Administration and the State Department deserve high praise for their work to reform the long-standing imbalances in international rates that put U.S. small businesses and entrepreneurs at a major competitive disadvantage…”
How Small Business Will Benefit from the New Universal Postal Union Compromise
Now the United States can set rates for inbound parcels. So the Chinese e-commerce companies will not able to ship products at unfairly cheap rates. Subsequently, US small businesses and manufacturers can have a fair fight with their Chinese counterparts in terms of pricing.
Dr. Peter Navarro, Director, Office of Trade and Manufacturing Policy, The White House, said in his press statement, “This agreement will also transform an antiquated, discriminatory system into a modern and resilient one far more prepared to meet the new demands of e-commerce and the increasing challenges of counterfeit goods and drugs such as fentanyl now moving like poison through the international mail system.”
About SBE Council
Small Business and Entrepreneurship (SBE) Council is dedicated to protecting small business and promoting entrepreneurship. For more information about SEB council and Kerrigan Statement on UPU Compromise, click here.
I don’t personally like the negotiating strategy of threatening a pull out. It’s drastic and would have been chaos for the US to follow through on. Kind of a bully tactic.
However, the concessions will help because there were some foreign entities playing a little dirty. Hopefully this cleans things up so the competition is fair.
Yes, I will certainly make the competition fair. Thanks, Robert for your comment!
This can be harder for online ecommerce websites to penetrate the US market but it is good for online sellers based in the US.
Indeed, it is good news for the US small businesses active in the eCommerce domain. Thanks, Aira for the comment.