One of the biggest worries for e-Commerce shippers going into the holiday season was the potential departure of the United States on October 17th from the Universal Postal Union agreement governing rates and services for small packages shipped between countries. In short – had the U.S. chose to leave, they would have had to negotiate bilateral rates with every country rather than the union’s agreed-to rate structure.
The President has made no secret that he feels that the rates were non-compensatory and wanted them to be increased.
The agreement reached between the U.S. and the UPU calls for the following:
- There is an increased speed for the phase-in of increased rates for inbound international bulky letters and small packages.
- Beginning July 1, 2020, member countries with inbound letter post volumes in excess of 75,000 tons will be able to opt-in and self declare rates.
- The approach favored and proposed by the U.S. – for all countries to immediately set their own rates – was roundly refused.
A key trade industry group, the International Mailers Advisory Group, said:
IMAG is pleased that the Universal Postal Union (UPU) was able to find a solution to achieve global remuneration reform that allows the United States to remain in the UPU, a 144-year old organization of which the United States was a founding member. By remaining in the UPU, the United States retains its important leadership role in the global postal system. Mailers and shippers will see no interruption in service through the critical holiday season and beyond.
For e-Commerce shippers, this likely will translate into an increase in inbound rates to the United States via the international mail system. However, there is an opportunity for an increase in velocity with the launch of CBP’s Type 86 entry pilot which will allow Kesco to electronically process inbound customs clearances of low-value shipments, speeding the parcels through the mail system to waiting recipients.
Importers who had previously been paying 25% in additional duties for Lists 1, 2 and 3 will find themselves paying 30% beginning October 1, 2019. In the increasingly tit-for-tat trade war between the United States and China, on Friday morning Beijing increased the duty on $75 billion in American exports to their country. The increases, set to match the American September 1st and December 15th dates, increase duties between 5 and 10% on a wide list of products. For automotive manufacturers, however, December 15th is when China restores a 25% duty on imported automobiles.
The President and his economic advisors met throughout the day prior to departing for the G7 meetings in France and at the end of the day announced the actions that would be taken. By the end of the day Friday, a statement was posted on the USTR’s website and publication in the Federal Register will happen most likely next week.
The changes that were announced were:
- Lists 1, 2 and 3 on which 25% additional Section 301 duties were being collected will increase by 5% to now 30% on October 1, 2019.
- Lists 4A and 4B, slated to collect 10% additional duty when they become effective on September 1 and December 15, respectively, will be increased by 5% to now 15% with the same dates of imposition.
Importers and exporters are asking themselves what the ceiling could be for these duties in both countries. The honest answer is that we don’t know. What traders should be concerned and be vigilant for are non-tariff barriers, or restrictions that make it more difficult for products to get to market for additional safety checks, declarations to government agencies or delays in obtaining customs releases in one or both countries.
Kesco understands that this fluid situation is causing commercial challenges for our customers and are working with our overseas partners and our Kesco Customs Solutions teams to do our best to help keep everyone informed and their goods moving through their supply chains.