Canada’s Strong Stand to Fix International Postal System

Joins with US and 30 Countries to Overhaul Universal Postal Union

An Interview with Pierre Morin of Canada Post

Canada, like the United States, has major problems with the international postal system run by the Universal Postal Union. In Canada, as in the United States, it costs a fraction of what it does to obtain small packages (4.4 pounds or less) from countries like China compared with the costs of sending the same size package within country. This hurts Canadian and U.S. manufacturers, retailers and e-commerce companies.

The Trump Administration has gotten a lot of attention and praise for its push to reform the UPU with self-declared rates, another way of saying that the U.S. will determine how much it charges to deliver mail and small packages from other countries. Behind the scenes, though, Canada has been stridently championing such reforms for years. And today, 30 countries are with Canada and the U.S. on the push to reform the Universal Postal Union.

Lexington Institute’s Paul Steidler recently spoke with Pierre Morin of Canada Post about these issues. As a Senior Advisor, Mr. Morin is Canada’s chief representative to the Universal Postal Union.

Steidler: In a nutshell, what is the Universal Postal Union (UPU) and what is, or should be, its mission?

Morin: The UPU is affiliated with the United Nations, comprised of 192-member countries and the second oldest international organization. It is responsible for setting treaty-level rules for the exchange of postal items, both documents and goods. The UPU establishes rules using the very slow United Nations one-country, one-vote system. To the UPU’s credit, it has been trying to move faster in recent years.

As the Canadian delegate to the UPU, I can attest that American small businesses are being forced to subsidize foreign competitors – with dire consequences. In fact, small businesses all over the industrialized world are experiencing many of these frustrations. Today, over 30 countries have joined a coalition to the fix the UPU remuneration system, once and for all.

Steidler: What are some of Canada Post’s concerns with current UPU practices?

Morin: Simply put, too many countries, like Canada and the United States, cannot cover their delivery costs. The longer it takes to address these unsustainable elements of the UPU remuneration system, the more problematic the UPU is seen by cross border stakeholders. Moving to self-declared rates for all postal items containing goods would remedy the problem.

Today, though, the UPU’s international reputation as trusted facilitators of trade is being questioned, even though trade opportunities abound. The situation in Canada illustrates why.

A one-kilogram package sent by a Canadian business to its customers approximately 200 kilometers away in Ottawa costs 12.04 Canadian dollars (CAD) through the post and almost twice as much using an operator outside the postal territory. The remuneration paid for this one-kilogram package by a designated postal operator such as DHL Deutsche Post (Germany), or PostNL (Netherlands) or Royal Mail (United Kingdom), amongst many others would be equivalent to 4.12 CAD (as of 1 January 2018). The pricing distortions are even greater for lightweight items and for those items that must be transported greater distances.

Based on the example above, the shipping cost for this Canadian business is 290% more to send its Ottawa customer the one-kilogram online purchase. And let’s not go into ulcer producing examples of postal items from China to Canada!

Steidler: How do you view the U.S. Administration’s call for self-declared rates and its potential exit from the UPU in October?

Morin: Canada does not always agree with the U.S. Administration, but we are 100% aligned with our neighbor to the south on the need to move to self-declared rates. This has been our view for many years, and it is regrettable that the rest of the UPU ignored it for so long. Now, the UPU membership is faced with the potential exit of the United States from the UPU in October 2019 and they only have themselves to blame for having ignored the problem for too long.

Steidler: What other countries have strong concerns with the UPU? What are those concerns?

Morin: The concerns from a growing coalition of 30 countries are the same as the ones described in the (U.S.) presidential memorandum. More and more designated postal operators are not covering their costs to deliver goods. Also, there are fewer and fewer deliveries of nearly cost covering and cost covering documents within postal networks.

Steidler: How optimistic are you that these matters can be resolved or significantly addressed in the coming months?

Morin: As we say, Canada will steadfastly and relentlessly lead the newly created Universal Postal Coalition and give it the old college try but it will be up to the voting member countries of the UPU to make the final decision. Canada will find a way forward regardless of the outcomes at the UPU. We are not entirely sure smaller countries around the world will survive such a huge shock to the single postal territory.

If the status quo is maintained and other member countries decide to follow the U.S. lead by also leaving the UPU, then these smaller countries will most likely be left behind. That is what keeps us up at night and motivates us to lead the charge. Canada firmly believes that we are “Stronger Together” and that no one in the worldwide postal family should be left behind!