U.S. calls foreign mail system unfair in surprise win for Amazon

[August 25, 2018]  By Jeffrey Dastin

(Reuters) - The U.S. State Department on Friday said it would push for foreign postal carriers to pay the U.S. Postal Service more to deliver small parcels within the United States, taking up a longtime complaint by Amazon.com <AMZN.O>, UPS <UPS.N> and others who have alleged the current system is unfair.

The State Department also said it would push foreign postal services to furnish data that would help customs officials detect opioids and other illegal shipments entering the United States. That task could also add to their costs.

If successful, the effort would benefit U.S. merchants and shippers who say they are undercut by foreign postal services' access to low rates. U.S. shoppers could see higher bills for foreign goods ordered online.

The move may face pushback during meetings next month of the United Nation's Universal Postal Union, from countries like China and Brazil, which already face price hikes for mail to Europe and the United States.

On Thursday, U.S. President Donald Trump issued a memorandum on "terminal dues," or rates one country's postal service pays another for finishing an international delivery.

"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," the memo said.

It added that the U.S. Secretary of State "shall include recommendations for future action, including the possibility of adopting self-declared rates," if insufficient progress is made with the Universal Postal Union.

The policy makes Trump a surprise ally of Amazon, the world's largest online retailer, which he has accused of turning the U.S. Postal Service (USPS) into its "delivery boy."

A UPS worker carries an Amazon box to be delivered in New York, U.S., July 24, 2015. REUTERS/Eduardo Munoz/File Photo

Amazon did not return a request for comment. UPS called the administration's actions "a positive step" toward addressing "longstanding imbalances in the global postal market."

Those companies and industry groups have sought White House meetings since last year to attack arcane postal agreements they say make it cheaper to air-mail goods to Los Angeles from Beijing than from New York.

Others say the issue is not so simple. USPS claims to save money on outbound shipments thanks to the Universal Postal Union's exchange system, and rates for countries such as China have already been negotiated to rise by 2021 to a significant percentage of USPS's costs, the same rate USPS pays other countries.

Mighty Mug CEO Jayme Smaldone, who has found merchants in China cheaply shipping knock-offs of his products directly to U.S. consumers, said, "This isn’t something that should be phased out over years. This is something that's gone on for long enough."

It was not clear if the memorandum followed recommendations, not yet made public, of the postal task force Trump set up this year to examine USPS's business.

(Reporting By Jeffrey Dastin in San Francisco; Editing by David Gregorio)

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