The Weird United Nations Rule That Makes It Cheaper To Buy From Foreign Companies

Kevin Glass
|
Posted: Dec 04, 2014 3:07 PM
The Weird United Nations Rule That Makes It Cheaper To Buy From Foreign Companies

More and more Christmas shoppers rely on online retail now than ever, and sometimes that means that they're buying from overseas. It might not be widely known, but shipping from Asia is ludicrously low - and it's because of an international United Nations agreement and a special deal between the U.S. Postal Service and the Chinese government mail carrier.

As reported in the Washington Post, this means that goods from overseas are much, much cheaper to ship than goods made in the United States:

The USPS offers this service, called “ePacket,” to foreign postal operators looking to increase global trade with the United States, spokeswoman Darlene S. Casey said in an e-mail. It has proven popular. Between fiscal years 2011 and 2012, China nearly tripled the number of packages sent under this program, from 9.5 million to 26.8 million. Revenues quadrupled. Casey also noted that the USPS relies on business income, not tax dollars, to fund its operations. (It lost another $5 billion last fiscal year.)

But this has still been a money sink for the Postal Service. In 2012, USPS was paid only 94 cents on average for each piece of Chinese ePacket mail, according to a February report from the Postal Service’s inspector general’s office. That report estimated that the Postal Service was losing about a dollar on each incoming item, adding up to a $29.4 million net loss in 2012.

Forums on eBay are filled with angry notes about ePacket. “I must say that it is simply an economic disaster for US Sellers,” one person wrote. “One product that we sell for 2.00 with 2.50 shipping a chinese company is selling for .99 with free shipping,” another complained. The person added, “Too much work no money here anymore. Let the Chinese have it.”

Of course, as the Post notes toward the end, upshot of this is that American consumers have access to cheaply-produced goods at hugely-reduced prices. But what it also means is that we can't say that manufacturers are fighting on a level playing field: when it costs less to send something from China than it does from the United States, something is amiss - especially with a USPS that is hemorrhaging money.