Treasury Declines to Label China a Currency Manipulator

Daniel Fowler
October 18, 2018

"If negotiations are successful, the administration is prepared to rescind the notice of withdrawal and remain in the UPU", according to the statement.

The New York Times reported today that President Trump plans to withdraw from the UPU (Universal Postal Union) treaty. Since 1969, poor and developing countries - including China - have been assessed lower rates than have wealthier countries in Europe and North America.

The Times said it expected the US State Department to inform UPU officials of its intention to pull out of the system and "self-declare" new, higher rates on China.

The formal notification, known as a letter of denunciation, to withdraw from the Universal Postal Union (UPU) is being sent by the State Department in response to what the administration of President Donald Trump views as an unfair advantage primarily for China, but also for such other countries as France and Germany, in online commerce.

Trump has made a point of cutting America's links with worldwide agreements.

The United States has refrained from labelling China a "currency manipulator" in a move which may help defuse escalating tension over trade between the two countries. "According to the union's rules, members will have a year to renegotiate new terms before the withdrawal becomes permanent". Trump previously has announced tariffs against Chinese goods estimated to be worth $250 billion.

It is not clear whether China will retaliate if the United States pulls out of the treaty. The biggest winners could be shipping carriers such as UPS.

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Oil prices fell on Wednesday, with US futures settling below $70 a barrel for the first time in a month, after USA crude stockpiles rose 6.5 million barrels, nearly triple what analysts had forecast, while exports dropped. A 1-pound package that costs the USPS about $10 to deliver can be mailed from China for just $2.50, per White House numbers. The reports are meant to address concerns that foreign countries could depress their currencies to hurt US businesses by making their exports less expensive.

The price of shipping a 4.4-pound package, the largest parcel covered by the treaty, from China to the United States is about $5, according to USA estimates.

Officials added it is actually cheaper to send a package between Beijing and NY than it is to send them between some cities domestically.

The subsidy cost the U.S. Postal Service $170 million last year, according to NAM, a figure it says is growing at a rate of almost 40 percent each year.

"This outdated arrangement contributes significantly to the flood of counterfeit goods and risky drugs that enter the country from China", Mr. Timmons said.

"Manufacturers and manufacturing workers in the United States will greatly benefit from a modernized and far more fair arrangement with China", Jay Timmons, president of the manufacturers association, said in a statement.

"Something has to be done", he said.

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