A last-minute deal that will keep the United States in an international postal treaty is good news for Canadian companies, business groups say.
However, the agreement could increase costs for small e-commerce companies selling goods manufactured in countries such as China.
The deal, which was approved unanimously at a special meeting of the Universal Postal Union (UPU) in Geneva on Wednesday, will give national postal services greater control over the rates they charge their foreign counterparts to complete deliveries of small packages.
The United States had pushed for the changes, saying the previous system gave some countries, most notably China, an unfair advantage. Last year, it gave notice that it planned to leave the UPU – a move that would have been effective in October.
The deal means the United States will stay in the organization, Peter Navarro, the U.S. representative at the UPU meeting, said at a press conference.
That’s a relief for Canadian small businesses that have customers or suppliers south of the border, said Corinne Pohlmann, senior vice-president of national affairs and partnerships at the Canadian Federation of Independent Business.
“The disruption of having the U.S. pull out would have created far more uncertainty, which would have made it very difficult for a lot of smaller firms who often rely on the postal system to get goods to market or even to bring goods in from other markets,” she said.
Under the new agreement, countries that import a high volume of mail will be able to increase terminal dues – the rates they charge the postal service in the originating country – at the end of June, 2020.
Under the previous system, terminal dues were set by the UPU and based on the sending country’s GDP per capita. However, the United States said that because that system classified China as a developing country, it was effectively giving Chinese manufacturers a subsidy worth hundreds of millions of dollars a year.
It is currently cheaper to send a small package from China to the United States – or Canada – than to send a package from one U.S. state to another.
The Canadian delegation to the UPU meeting spoke in favour of the proposal.
The day before, it had backed another option, which was favoured by the United States, that would have allowed all countries to self-declare rates in 2020.
Canada Post did not immediately respond to a request for comment on Wednesday.
However, when the possibility that the United States would leave the UPU was still on the table, Canada Post said it was unlikely that Canadian businesses sending packages to the United States would see price increases owing to a pre-existing agreement between postal services in the two countries.
If the cost of sending packages to Canada from countries such as China rises, that could be good for some businesses.
“It does potentially level the playing field a little bit,” Ms. Pohlmann said. “I think like a lot of American firms, Canadian firms felt it was a bit unfair that things can get shipped in from China at a far lower cost than they could ever provide to even Canadians.”
Dave Bryant, the owner of Offroading Gear, an online store that sells accessories and equipment for people driving off-road, says increased shipping costs will benefit established online sellers while making it more difficult for smaller sellers who are shipping goods from Chinese manufacturers directly to consumers without ever holding them in inventory.