Potential changes to the Universal Postal Union could greatly impact online sellers. Learn more on how this could impact your business.
What is the Universal Postal Union?
The Universal Postal Union, also referred to as the UPU, is a specialized agency of the United Nations that coordinates postal policies among member nations.
The Universal Postal Union negotiates terminal dues between countries. Terminal dues are fees that post offices charge each other for the delivery of international letter and small parcels. This allows shippers to send letters and packages between countries based on these negotiated rates.
What is the role of the U.S.?
On October 17, 2018, the Government of the United States of America officially notified the UPU of its intent to withdraw from the organization. The Trump administration argues the UPU enables foreign postal services to take advantage of cheap shipping to the U.S. due to the low terminal dues between certain countries specifically China. For example, shipping a package to the U.S. from China costs considerably less than shipping from the U.S. The U.S. government states this creates an unfair advantage over U.S. companies and ultimately hurts the U.S. Postal Service.
The other concern for the U.S. Government is the lack of advance electronic customs data from foreign postal operators. According to the memo, this is “needed to enhance targeting and risk management for national security and to facilitate importation and customs clearance.”
How this impacts e-commerce?
With the intent of the U.S. to withdraw from the Universal Postal Union, the Council of Administration (CA), which is one of the governing bodies of the UPU, requested member countries to submit a vote no later than May 15.
Depending on the outcome of this vote the UPU may renegotiate rates based on the U.S. Government’s demands or the U.S. could back out of the UPU altogether.
Having the U.S. leave the UPU would be uncharted territory. This change would end the U.S. Postal Service’s obligations to the international postal system. The U.S. would be able to set its own rules and rates for each country, likely resulting in increases for international sellers.
At the moment there will be no changes for online sellers. However, the decisions made in the next few months will determine the future of international mail. We’ll be following this closely to ensure that our clients are aware of any changes that may impact cross border shipping.