Outdated global postal system hurts US manufacturers

Outdated global postal system hurts US manufacturers
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Last week, delegates from 192 countries met in Addis Ababa, Ethiopia to discuss the future of the global postal network. They met in the headquarters of the African Union in a building designed, built and financed by China.

It was an all-too-fitting setting given how much China benefits from an outdated postal system at the expense of manufacturers in America, and it is an urgent reminder of Congress’ need to fix the unfairness in the system.

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International postal operators came together in 1874 to establish the Universal Postal Union (UPU) — the second-oldest international organization worldwide — to create a system for exchanging mail between countries.

To make the process more affordable for mailers, they agreed in 1969 to a system of subsidized rates for shipping letter post items with the cheapest rates going to the poorest countries like Botswana, Gabon and China. These rates are called “terminal dues,” and despite a lack of oversight, they were not much of a problem for decades.

When the UPU agreed to the terminal dues system almost 50 years ago, they decided to treat items up to 4.4 pounds as “letter post” because nobody was expected to ship commercial packets through the mail.

Things look very different in 2018: e-commerce is massive, and innovative products are easier than ever for unscrupulous actors to counterfeit. But one thing hasn’t changed: China still gets the Botswana-level rates through the UPU even though it is far from a “poor” country today.

These days, the best way to get counterfeit goods, and even illegal drugs, into the United States is through international mail. By charging less for these international shipments under the UPU terminal dues agreement, our own postal service subsidizes these shipments to the tune of hundreds of millions of dollars per year.

For manufacturers in America, this can mean that it’s cheaper for Chinese competitors (and counterfeiters) to ship products to customers located anywhere in the United States than for U.S. companies to ship their products across the street.

One such U.S. manufacturer, Mighty Mug, discovered this unfairness when the company’s founder and CEO, Jayme Smaldone, ordered a counterfeit version of his Mighty Mug product from China. The Chinese product shipped for less than it would have cost Smaldone to send his own product to a nearby friend or relative.

To make matters even worse, the UPU agreement still does not fully require advanced electronic data for shipments, which means counterfeits and drugs are impossible to track. According to our own State Department, the United States has not even affirmed the UPU agreements for the past decade. 

Thankfully, a growing number of public officials have recognized this problem, including Reps. Kenny MarchantKenny Ewell MarchantDems press Mnuchin on Trump tax returns Mnuchin to consider providing more penalty relief for taxpayers The Hill's 12:30 Report: Dems aim to end anti-Semitism controversy with vote today MORE (R-Texas) and Ralph Abraham (R-La.); Sens. Bill CassidyWilliam (Bill) Morgan CassidyFive things to watch for in Trump's 2020 budget Overnight Health Care - Presented by Kidney Care Partners - FDA chief Scott Gottlieb resigns | House Dems to take up drug pricing bills next week | Planned Parenthood, doctors group sue over Trump abortion rule Paul says forced vaccinations is 'giving up on liberty for a false sense of security' MORE (R-La.), Marco RubioMarco Antonio RubioThe 25 Republicans who defied Trump on emergency declaration Ocasio-Cortez's favorable, unfavorable ratings up: poll Rubio, Menendez request probe into administration's nuclear negotiations with Saudi Arabia MORE (R-Fla.), Rob PortmanRobert (Rob) Jones PortmanThe 25 Republicans who defied Trump on emergency declaration Overnight Defense: Senate rejects border emergency in rebuke to Trump | Acting Pentagon chief grilled on wall funding | Warren confronts chief over war fund budget 12 Republican senators defy Trump on emergency declaration  MORE (R-Ohio), Ron JohnsonRonald (Ron) Harold JohnsonThe Hill's 12:30 Report: O'Rourke jumps into 2020 fray Trump vows veto ahead of Senate vote on emergency declaration Senate to rebuke Trump on wall MORE (R-Wis.) and James LankfordJames Paul LankfordGOP senators eye 'nuclear' move to change rules on Trump nominees Senate GOP goes down to wire in showdown with Trump Overnight Defense: Pentagon seeks B over five years for Space Force | Trump says Warmbier comments 'misinterpreted' | GOP bristles at Trump plan to pay for wall MORE (R-Okla.); and most recently, President Donald TrumpDonald John TrumpJoint Chiefs chairman denies report that US is planning to keep 1K troops in Syria Kansas Department of Transportation calls Trump 'delusional communist' on Twitter Trump has privately voiced skepticism about driverless cars: report MORE.

So how do we fix it? The first thing the Senate can do is pass Sen. Portman’s Synthetics Trafficking and Overdose Prevention (STOP) Act, which would close the customs loophole and require advanced tracking data.

This will make it easier to track counterfeit goods and dangerous products entering the United States and stop their flow at the source.

Then, because it is unlikely that the United States wins this fight through the one-country, one-vote system of the UPU, manufacturers also need the administration and Congress to work together to move to a fair system of so-called “self-declared rates,” in which the United States, not the UPU, sets the postage rates for products coming from countries like China. 

The next few months are a critical time for fixing this growing problem. Manufacturers look forward to working with the administration and Capitol Hill to get tough on China.

Jay Timmons is president and CEO of the National Association of Manufacturers (NAM) and chairman of the board of the NAM's Manufacturing Institute.