On Thursday, President Trump issued a presidential memorandum that takes aim at a decades-old shipping agreement with a United Nations agency that gives some foreign countries, including China, a dramatically unfair advantage over American-based companies when it comes to shipping costs. The policy is costing American taxpayers hundreds of millions of dollars annually and has made it extremely difficult for American companies to compete in the online marketplace.
In a newly-released video, filmmaker Ami Horowitz explains why the administration’s actions are crucial in giving American companies a fighting chance in the e-commerce world. E-commerce, Horowitz explains, is “the fastest growing segment of consumer sales, and is becoming a more important part of our economy every day.” But the marketplace “is quickly becoming the domain of the Chinese, in large part because the ecommerce playing field is tilted sharply in favor of Chinese merchants at the expense of their U.S. competitors.”
The slanted playing field is the result of an international treaty with the U.N.’s Universal Postal Union that gives preference to less wealthy, “transitional” countries, of which China is included, by forcing federal postal services of wealthier countries to subsidize freight rates for packages coming from the poorer companies.
“Shipping costs have become a big part of the decision-making process when buying something online,” Horowitz says. “The primary reason for this imbalance is a decades-old arrangement for incoming packages set by a U.N. agency called the Universal Postal Union. A deal was made to ship other packages, including China, anywhere in the U.S. for about $1.50, without regard to the real costs borne by the U.S. Postal Service.”
In other words, American customers ordering online often find it is cheaper to have a product shipped from a foreign country than one in the U.S. The result has been China’s growing dominance in e-commerce at the expense of American businesses.
On Thursday, Trump made clear that the U.S. will no longer allow this unfair policy to continue. Here is an excerpt of the memorandum:
(i) UPU terminal dues, in many cases, are less than comparable domestic postage rates. As a result:
(A) the United States, along with other member countries of the UPU, is in many cases not fully reimbursed by the foreign postal operator for the cost of delivering foreign-origin letter post items, which can result in substantial preferences for foreign mailers relative to domestic mailers;
(B) the current terminal dues rates undermine the goal of unrestricted and undistorted competition in cross-border delivery services because they disadvantage non-postal operators seeking to offer competing collection and outward transportation services for goods covered by terminal dues in foreign markets; and
(C) the current system of terminal dues distorts the flow of small packages around the world by incentivizing the shipping of goods from foreign countries that benefit from artificially low reimbursement rates.