It’s tough for China to strike a trade deal with US

Lloyd Doyle
October 19, 2018

The formal notification, known as a letter of denunciation, to withdraw from the Universal Postal Union (UPU) is being sent by the State Department in response to what the administration of President Donald Trump views as an unfair advantage primarily for China, but also for such other countries as France and Germany, in online commerce.

Under the treaty, a UN body sets lower worldwide rates for packages from certain countries, a move originally created to support poorer nations.

Giving an example, the official said a one-pound package costs domestically about $10 to $13 for a USA business or manufacturer to send, whereas the Chinese mailer, for the last mile, and same distance, one would reimburse about $2.50.

Administration officials said they informed the UPU, which is based in Switzerland, that the United States intends to withdraw from the pact - a one-year process, per United Nations rules.

U.S. President Donald Trump is distancing the United States from worldwide multilateral organizations and accompanying policies that he says hurt U.S. interests.

The National Association of Manufacturers called the agreement "outdated" and said it "contributes significantly to the flood of counterfeit goods and unsafe drugs that enter the country from China". "But, if the trade war escalates on multiple fronts - U.S. -EU, etc. - then the combined effects could become very meaningful", Yung said.

"The UPU remains committed to attainment of the noble aims of global collaboration by working with all its 192 member countries to ensure that the treaty best serves everyone", he said in the statement.

In addition, on October 3, Reuters reported that U.S. crude oil shipments to China had completely stopped in recent weeks, citing China Merchants Energy Shipping Co (CMES). The move is the latest development in the country's ongoing trade war with China, one of the treaty's top beneficiaries.

"While President Trump has threatened to label China a currency manipulator, the laws governing the report require countries to meet three thresholds to receive the designation: persistently intervening in currency markets; running a significant trade surplus with the USA; and running a large current-account surplus overall".

The move is likely inflame tensions with China, which the administration has accused of unfair trade practices and has punished with tariffs on $250 billion worth of Chinese goods, investment restrictions and other measures. Administration officials said they were assessing rates for other countries and had not made any decisions about whether the policy would extend beyond China. A 1-pound package that costs the USPS about $10 to deliver can be mailed from China for just $2.50, per White House numbers. "As it is now, with tariffs on half of China exports to the USA already announced, and with midterm elections in early November, we think the other half of the tariffs on exports will be beyond this year, and likely a long-drawn out affair", DBS said in its note.

He believes that Trump "will keep raising the stakes until Chinese President Xi Jinping makes a phone call to Trump and asks him how to resolve it so they can both sign a win-win trade deal".

Other reports by Iphone Fresh

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