Trump Is Correct That Postal Rates Need a Radical Revamp

By Daily Editorials

December 18, 2018 4 min read

For all the criticism cast President Donald Trump's way, he's not to blame for the effort to save the U.S. postal system from insolvency. Trump is trying to fix a system he correctly identifies as structurally defective, largely because of an outdated international postal-rate pact that is straining the U.S. service to the breaking point.

Trump's critics like to paint this as a political battle between the president and Amazon founder Jeff Bezos — the owner of The Washington Post — because of the special postal rates Amazon enjoys. Those rates, by the way, are secret, so members of the public aren't allowed to know to what extent they are subsidizing Amazon's package-delivery services. Amazon insists the rates are favorable to the Postal Service.

By going after Amazon, Trump might be looking for ways to get back at Bezos for the repeated embarrassments he suffers daily on The Washington Post's front pages. Even if that's the case, Trump also is correct that the postal-rate structure is long overdue for modernization.

Americans should brace themselves, because such a modernization almost certainly will mean higher across-the-board prices for those convenient package deliveries to our doorstep. Wall Street already is painfully aware of the implications. Tuesday's release of an administration report recommending postal rate increases helped prompt a 6 percent drop in Amazon stock. Trump contends that Amazon's delivery formula is "costing the United States Post Office massive amounts of money for being their Delivery Boy."

But there's much more to this than Trump-Bezos feuding. At the heart of the problem is an international postal rate system formulated back when the vast bulk of mail consisted of letters and postcards, not boxes full of electronics and other products shipped to U.S. consumers primarily from China. A pact signed by 192 nations allows for postal delivery fees on packages weighing less than 4.4 pounds to be collected and retained by the country of origin, while the recipient country agrees to complete the delivery for a modest fee. Since mail tended to flow in both directions, the assumption was that no single country would bear an undue burden.

The formula now accounts for up to $300 million a year in Postal Service losses. In October, the Trump administration advised the 144-year-old Universal Postal Union that the United States planned to withdraw from the international pact. The discounted postal rates China's government charges its manufacturers for overseas mailing amounts to an unfair subsidy that prices U.S. competitors out of the market, the administration contends.

Since Amazon has negotiated its own secret rates with the Postal Service, it has stayed out of the fray. But the administration is correct to demand a wholesale revision of the pricing structure. Survival of the Postal Service depends on it.

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Photo credit: at Pixabay

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