The White House said the UPU enables foreign postal services to take advantage of cheap shipments to the United States, creating an unfair cost advantage over U.S. companies that ship goods, and hurting the U.S. Postal Service.
Mr. Trump made a decision to remove a 144-year-old postal agreement with the Chinese that allowed Chinese businesses to send small packages to the United States at a discounted rate. The discounted rate cost the Postal Service more than $170 million a year.
The treaty sets limits for charges on parcels under 2kg (4.4lbs) but the USA would like to change the treaty to allow countries to set their own rates for these smaller parcels, as they can for packages over that weight limit, officials said.
"That said, the U.S. administration's decision to serve notice on a possible UPU withdrawal highlights the importance of ensuring that global governance systems are modernised in line with the realities of today's economy".
The National Association of Manufacturers called the agreement "outdated" and said it "contributes significantly to the flood of counterfeit goods and risky drugs that enter the country from China".
The administration framed the departure as separate from the trade war in which Trump has impod tariffs on roughly half of Chinese goods entering the United States.
It is not clear how much the shipping-cost disparity costs US taxpayers and retailers, in part because the Postal Service does not release detailed country-by-country shipping breakdowns.More news: Woman leaves child alone at doorstep
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He Weiwen, a senior fellow at the Centre for China and Globalisation in Beijing a former economic adviser at the Chinese consulates in NY and San Francisco, said China and the USA needed to "create conditions" for a leaders' meeting to take place during the G20 summit in Argentina.
In addition, on October 3, Reuters reported that United States crude oil shipments to China had completely stopped in recent weeks, citing China Merchants Energy Shipping Co (CMES). While the agreement is meant to give Asian and African countries incentives to develop their economies, China has used the discounted rates so effectively that it now accounts for 60 percent of the packages sent to the U.S. Administration officials are still weighing whether Trump will meet with China's president, Xi Jinping, in Argentina next month. The withdrawal process would take a year.
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.
The officials, who briefed reporters on condition of anonymity, said postal rates would not change for at least six months, and that the United States would prefer to stay inside the union's system. Some scholars saw impeding danger in China's increasing demand for energy resources (oil and natural gas) and export of Chinese goods with import regulation. China joined the UPU in 1914, when its economy was nearly entirely agrarian.
Foreign Ministry spokesman Lu Kang said the move should not be linked to China, despite arguments that the arrangement especially benefits Chinese manufacturers by making it cheaper to ship packages from Beijing to NY than from one side of the U.S.to the other.
"Manufacturers and manufacturing workers in the United States will greatly benefit from a modernized and far more fair arrangement with China", Timmons said in a statement.
"Chinese sellers on EBay and other platforms may disappear, or at the very least they will not find it so easy to sell to Americans anymore", said Gary Huang, chairman of the supply chain committee for the American Chamber of Commerce in Shanghai.