Boris has Brexit, Donald has Pexit

This column has been updated to reflect that the 55-cent stamp went into effect in January 2019.

Pexit?

I made up that word, but yes, the U.S. Postal Service in a few weeks will withdraw from the Universal Postal Union, or UPU. The move has been on the Trump administration agenda since 2018 for a simple reason: It believes, and USPS executives support the view, that the international small package rates set by the UPU mechanisms cheat the Postal Service and give an unfair commercial advantage to — you guessed it — China.

Fifty years ago, UPU decided to give poor nations a break on postal rates for items sent to rich nations. The rates haven’t changed much, but China sure has. By withdrawing, USPS becomes free to “self-declare” its own rates. That could give it a much needed boost in revenue with no corresponding rise in costs.

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At some point along the line, the UPU, established in 1874, became part of the United Nations. So of course decision-making is hugely cumbersome, marked by regional and national self-interest, and exceedingly slow. I’m guessing there’s not much sympathy there for the U.S. The language and imagery at the UPU web site is classic U.N.

You can find as many opinions on the withdrawal as groups affected. Americans living and working overseas may not like it, nor may their state-side friends and relatives. State and Defense Department employees come to mind, for example. That Christmas fruit cake could become prohibitive to mail. Some outlets normally opposed to Trump administration policies on trade have published editorials in support of Pexit. A trade publication called Supply Chain Dive unearthed an email from a USPS official warning shippers that their discounted rates will disappear on Oct. 1.

Groups ranging from eBay merchants to military service members have weighed in. This Stars & Stripes piece from July notes that in a single year, DoD delivered nearly 87,000 tons of packages and letters to and from points everywhere. The National Association of Manufacturers said the low rates encourage counterfeit goods and bad stuff like fentanyl to flood the U.S.

Next week, the UPU will hold what it calls an extraordinary congress. Normally it meets every four years. But with the U.S. on the verge of withdrawal, and on the approval of two-thirds of its 192 members, UPU said it wants to “fast-track potential changes to the renumeration system.” That system applies to letters and packages up to 4.4 pounds that cross international lines. Key to understanding this is an explanatory sentence from UPU: “[The system] places countries into tiered groups applying different rates based on postal development indexes.”

Among the options the extraordinary congress will consider is moving to a single rate system by 2020, with countries being able to phase in “self-declared” rate through 2025. Doing anything takes votes from half the members plus one.

When I requested an interview on this topic, a USPS spokeswoman sent a statement instead. It reads in part, “If a solution can be found that eliminates the economic distortion caused by the current terminal dues system on U.S. businesses, then the United States will continue its participation in the UPU.” So a lot depends on the extraordinary congress.

Click here for the June 19 official presentation on Pexit from Giselle Valera, the USPS’s executive director of continuity global operations.

Meanwhile, the U.S. Congress is acting quite ordinarily when it comes to the Postal Service. That is to say, it’s not seriously considering any comprehensive postal reform to reverse losses steadily hollowing out USPS’ balance sheet. The agency said it’ll run out of cash in 2024.

The USPS statement on the UPU said Postal executives are working with the Postal Regulatory Commission “and other stakeholders to implement self-declared rates.” You wonder how even that could come out. The commission approved a 5-cent hike in the prices of first class stamp. It became effective Jan. 1. But a lawsuit got it stopped in appeals court. Now what? You’ve got to wonder whether some alliance of shippers of small packages would sue to stop this one too.

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