Us To Leave Upu Malaysia Postal Service At Risks

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BEING a member of the 192-nation Universal Postal Union (UPU), Malaysia is expected to see a surge in postal service once the United States withdraws from the world association as President Trump is poised to set up its own 'Brexit'.

The US administration will begin withdrawing from a United Nations pact that offered low rates for foreign postal deliveries of small packages in the country, the latest move to challenge practices it sees as unfairly advantageous to China.White House officials said last week they would start the process of leaving the UPU, a Switzerland-based organization that connects postal services worldwide. The UPU enables foreign postal services to take advantage of cheap shipments to the United States, creating what was described as an unfair cost advantage over US companies that ship goods, and hurting its own postal service.Online shoppers in the United States have often benefited from the arrangement, gaining access to foreign goods at little cost. Trump is distancing the United States from international multilateral organizations and accompanying policies that he says hurt US interests.The system allowed for a 40 to 70 percent discount on small packages arriving in the United States from China compared to what it would cost to send them domestically, costing $300 million. The official described it as an economic distortion that the administration wanted to correct.A change could benefit US merchants and shippers, including Amazon.com Inc and other companies, which have called on US officials for years to address foreign postal services’ access to low rates.Will Malaysia be affected by the decision?Definitely. As postal service is booming in the country and region, it saw a tangible increase of delivery to and via the States over the years. With the potential increase of charges to be imposed, postal shippers may be left to no choice but to multiply its service charge to the the States and other regions as well.The UPU, a 144-year-old organization that sets technical and security standards to keep international mail and small packages around the globe, may also see an upsurge of services in its member nations, while facing the possibility of some countries allying the US raising their charges too.Should this happens, smaller nations like Malaysia will suffer as the competition with other carriers is stiff. Pos Malaysia, for instance, will have to fight with Federal Express and others to win customers. Worse is, Malaysia won't be able to cope with the higher delivery service in the States.One main part of the arrangement has drawn Trump's ire - 'terminal dues', which are the rates the 192 member countries pay one another to deliver mail across borders. Because the fees were developed in 1960s based on factors including a nation's economic development at that points, countries like China, whose economy has grown enormously since then, still pay heavily subsidized rates while the US pays much more.And according to the Americans, that means it can sometimes be cheaper to send a package from China to the United States than it is for Americans to send packages between states.This discounted shipping cost industrialized nations some US$3 billion last year, the US argues. Trump, who has long complained about trade imbalances and NATO spending, called this discrepancy 'discriminatory'.However, he failed to consider its impact on other countries. The US trade war with China is already taking its toll in many countries, and Malaysia is of no exception. Should the war is prolonged, the whole world will see demise in so many big companies, and this move might include postal services.With the States set to exit the UPU, it will be ridding themselves of scores of negotiated service agreements with PC postage providers on 9/30/19, affecting negotiated international rates. This has significant implications for postage providers, international shippers, importers, and domestic small businesses who compete with (particularly) Chinese manufacturers.  This is due to the UPU setting variable rate structures between countries way back in 1969 and pegging them (in essence) to trade imbalance.For instance, as China is also one of Malaysia's largest trading partners, it can't help but to succumb to exorbitant service rate to be imposed by China, since Beijing will has to reciprocate with US higher rates.When the US announced its intention to leave the UPU in October 2018, it was made clear to the other UPU country members that the US was not going to stand idly by and remain disadvantaged. Participating countries don’t want to pay more to the US for delivery, nor do they want American retailers to enjoy lower prices for mail and packages moving into their countries. After all they have had a sweet deal for a long time. In particular the Chinese.Their deal made sense when they were a third world country and Nixon opened up trade. But the one constant in life is that ‘things change.’ So stuff needs to be sent around the world, but the question is, at what price.This is all going to work itself out, and my take is that brinkmanship will come into play. We may even have a period of uncertainty where we don’t know if foreign post offices will deliver our stuff or if they do, at what price.But just like the trade war and the imposition of tariffs the US may have to exercise some muscles to level the playing field. The US is like 80 per cent of the world’s purchasing power. Foreign companies need them more than we need them.Later this month, the UPU will meet in Geneva, Switzerland, and all eyes will be on whether or not there will be some hopes for other member nations to breathe and cling on!

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