A friend helped the Wall Street Journal expose the damage this treaty was doing to his small business in the United States as it tried to fend off counterfeiters.
Would the outcome of these negotiations at-least end up creating a path to coin a universally accepted definitions of 'Developing Country' & 'Developed Country'? Is it HDI, industry or by Military Strength Index?
If MSI is taken into account, then India & China are among the most developed nations!
The Chinese are nationalists. Xi Jinpeng is more nationalistic than Trump. They're not globalists. They've been pretending to play the globalist game to build their economy. You can't really blame them for it, but the rest of the world (not just the USA) is waking up to it.
(Fairer trade is literally the one thing I agree with Trump on...)
What about customers and companies not located within the US or China? It seems that the extra cost of doing business will force all of us to do business elsewhere.
The basic principle is a simple one, a letter could be sent to any address in the UK at the universal rate. There would be no surcharges just because you lived in a remote part of Wales. Equally there would be no discount because you lived next to the sorting office in London and wanted to send a letter to the next street.
In the UK we did celebrate Rowland Hill and his work, sadly times have changed and successive Conservative governments have undermined the universal postal service by privatisation and trying to make it 'better' with 'competition'. Hence, rather than one Royal Mail van delivering letters and parcels there is now a small fleet of other delivery vans and outsourced casual labour 'gig economy' type delivery options. It is not more efficient to send six different vans out to a small village, each of them delivering one or two items when you could have just the one Royal Mail van carrying a few dozen parcels.
Moving on from 1837 to today where ecommerce and email has changed things, there is the 'ePacket', not very well understood by most end consumers. Here is an article on Shopify that helps explain the fundamentals:
Now I am no fan of the 'evils of global capitalism', however, I believe that the work done by China Post and their partners in 30+ countries is very much in the spirit of 'the Penny Black'. If your business in the West does have product made in China for good reasons, e.g. that is where your supply chain is, then you want to get your products to customers in good time. Why send a crate of product to your local warehouse to then have people then resend that on to customers when you can have a pick and pack operation in China?
This is particularly the case if you are wanting to offer your product to people internationally. For instance, Australia. If you have production facilities in China and then have a head office and warehouse in the UK, you can't realistically sell to the Australian market if it takes weeks for your parcels from the UK to get there, inevitably spending a week doing nothing in the Netherlands en-route. It makes customer service a non-starter. What you really want, and what your customer really wants is the China Post ePacket service and no extra trip for your products around the planet.
This applies for premium products people want, not the forged knock-off product that people berate Amazon for. ePacket helps the small to medium sized business compete against the giants of industry that can afford their own planes.
There is no 'win' for American innovation here, this is like a 'tariff' in that it is actually a 'tax' on American consumers. ePacket was as bit as innovative as 'the Penny Black' and it facilitates trade on a level playing field.
I am sure that knee-jerk reactions will mod-down my opinions on this, however, the ePacket and how we got here is not understood that well and going Donald Trump on parcel delivery is not going to solve the problems and frictions that genuinely exist with the status quo.
It will hurt everyone, as a basic fact of economics:
1. American innovators buying components from overseas, which include many on HN and in SV, will now have to pay more, reducing their ability to innovate.
2. American consumers will have to pay more.
3. American consumers will have less innovative products, as their ability to get innovative products from other countries will be reduced, and as innovators in both the U.S. (see #1 and #4) and in other countries will be hamstrung.
4. American innovators will face less competition, which is certainly not what leads to innovation; it leads to profit-taking based on market power, not meritocratic competition.
5. Reduced international cooperation and trade will reduce American innovators ability to sell abroad; the U.S. is only 5% of the world's population; the other 95% of the market is elsewhere. Cooperation and trade will not only be reduced as a direct effect, but also as a result of the U.S. appearing to be an unreliable partner, and as a result of other countries responding in kind by pulling out of treaties when they find any problems.
6. As reduced trade hurts economies here and abroad, Americans will pay more, have fewer people to sell to, resulting in lower wages and fewer jobs.
Finally, the greatest American innovation is democracy, the belief that all men are created equal and that's what leads to prosperity. That innovation has resulted in an explosion of peace and liberty unlikely anything the world has ever seen, and it has, as a secondary side effect, brought an explosion of prosperity unlike anything the world has ever seen. The U.S. is now purposefully killing that innovation.
Not weighing in on if this is a good or bad thing overall, but I did listen to a pretty good NPR podcast a while back that explains a little more about this treaty and how it was affecting businesses in the US.
This is absolutely a good idea. Whoever thought it would be advantageous for packages from China to cost less to ship than equivalent packages within the USA, is beyond me.
I hope there are positive economic and environmental results from this move.
What will be the unintended consequences I wonder?
It made sense when they were truly a developing country. But the issue is that entire businesses have been built on top of exploiting these rates. For example, a few years back I bought several specialized antenna cables for $2-3 online (total price, including shipping) and assumed they must be surplus some warehouse was trying to unload here in the U.S. and they'd just drop them in domestic First Class mail. I couldn't believe it when they arrived several weeks later from China and when I asked the post office what it would cost me to ship that exact package back to the sender they quoted me ~$30 (which of course didn't include the cost of the actual contents.) Good luck competing with that.
What will be the unintended consequences I wonder?
Small businesses who use dropshipping direct from Chinese companies will stop being able to compete with big businesses who buy in bulk and ship from US warehouses. This will benefit the likes of Amazon more than anyone else.
Not sure if that's an unintended consequence though.
It made sense when it was just mail (ie information) getting shuffled around, saving both sides from having to negotiate the other end in a foreign currency/language. But since e-commerce landed and it became real trade, being subsidized is suddenly a far greater issue
> Whoever thought it would be advantageous for packages from China to cost less to ship than equivalent packages within the USA, is beyond me.
As a consumer I think it's advantageous. I'd much prefer to pay no shipping when compared to paying significant amounts for shipping, regardless of where the package originates.
I'm not sure if this will really make a dent in the price gap between Chinese and local goods, and if it doesn't, well, people will still pick the more affordable option. Manufacturing and labor costs are still significantly lower in China in comparison.
As the article states, there are also businesses who rely on these rates for their inventory or materials. Those businesses will also get impacted, and the extra cost will likely be passed down to consumers. Stuff on Amazon might not be so cheap anymore
We have the same issue in Switzerland with cheap packages from China which are received as mail but do not fit through the automated sorting system. This requires a lot of manual labor which increases the costs for the postal service.
This is why sometime this year people who receive such mail will be billed additional fees increasing slowly over the next few years.
The treaty allows under developed nations to ship at a much lower rate. China and a few others should simply be reclassified.
I used to use a US parcel forwarding service to shop online and have things forwarded to me in Canada. One of the services they offered was first shipping the US origin package to their warehouse in China (presumably via some kind of discounted or chartered freight service) then forwarding it on from there to the destination country via China Post. This could actually be cheaper than mailing something directly from the US to, say, Switzerland due to the low UPU rates out of China.
Sweeden had a much more interesting solution to this problem. Usually small packages like this avoid VAT because it's not worth the administrative hassle to deal with them. Sweeden decided that such packages should be liable for tax, plus a $15 admin fee to cover the costs: https://www.thelocal.se/20180119/your-cheap-imports-from-chi...
The US is engaging in protectionist policies that will bring back inflation and reduce the purchasing power of the population. The country should better be prepared for the consequences of these policies, because it will be much more costly than the $300 million spent in the postal service.
There's a bunch of businesses arbitraging the differential between warehousing Chinese goods in the US vs shipping them directly with very cheap postage. Wish, DHGate, AliExpress, a bunch of sellers on Amazon, etc., but I don't think this will kill them. At least not all of them; there will likely be consolidation to bigger players and players that already have US-based warehousing and distribution in place.
There's already a number of sellers that compete on shipment speed, rather than just on price. Likewise, there are Fulfilled By Amazon sellers that import from China in bulk and warehouse it with Amazon. So, they can charge an extra 5% or whatever because it will arrive in 2-5 days from a warehouse in California rather than in 2 weeks for goods coming from China. I suspect this will push more business their way rather than completely destroy this market, but it's going to be a big hit.
I don't think it's entirely a terrible thing to put a realistic price on individually importing goods. I've been buying a lot of import stuff for electronics and guitar projects lately, and I'm astonished at how cheaply a bag of electronics parts can be shipped from China. It's a tiny bag of parts coming from the other side of the world, and it's still cheaper than buying locally. That doesn't seem like it should be so, compared to bulk importers that bring the goods over in container-sized quantities so they can ship it to individuals from the same continent.
Amazon fought state sales tax until the writing was on the wall, then Amazon caved and we got overnight shipping instead.
I wouldn't be surprised if something similar happens. In Europe hobbyking, banggood et al opened European warehouses once VAT enforcement became a problem.
The big chinese retailers will start competing with Amazon, which is somewhat ironic since Amazon already acts as the US warehouse for many Chinese products. Good riddance to dropshippers though.
Oh, the terminal dues issue.[1] International mail is delivered in the destination country but paid for in the sending country. The UPU has rates for this, and they vary with the development category of the sending country. The problem is that China is still getting the rate for underdeveloped countries. In 2021, that's scheduled to change. Every 10 years this gets looked at.
if China loses its status as a developing country, all that's likely to happen is the items will end up being shipped from a neighbouring country that still has the status.
When you buy items from AliExpress often they have the option of being sent by Singapore Post. I'm not exactly sure how that works (Singapore isn't that close to China), but although the item comes from China, to the postal service it doesn't.
I had a chat about this with one of the sellers on AliBaba.
He claimed that the items are still being shipped from China, and that he is just witing Singapore / Czechoslovakia / any other developing country on the package (he said it is part of the tracking code), and he gets the benefit of the country whose code he used.
He said the main reason they do that is that the laws differ as to what can be shipped from each country, especially vis a vis things that use radio frequencies. By choosing even distant countries they can be caught breaking minimum standards and are not prosecutable.
He said that the down side is that things can never be returned to sender, since the sending address is fictitious.
This last sentiment has been echoed by many sellers.
Have no way to verify, but it is an interesting claim.
No, Canada negotiated changes within the treaty framework.
The US could do that (and some of the coverage have indicated that the withdrawal is a negotiating tactic to provide more leverage for that, with the plan being to leverage the time it takes to go into effect to negotiate changes and then cancel the withdrawal before it is effective; Canada didn't have to do that to negotiate changes, though.)
I always wondered how Chinese sellers on Ebay could sell small toys and trinkets for less than a dollar with free shipping that took several weeks to arrive. It would cost more than that to send a small empty box between two addresses in the US.
Why does the US have to withdraw instead of negotiating? The US are not the only country that is unhappy about the shipping rates with China.
The postal treaty however is hugely important for smaller countries. I don’t want a world where the US destroy the entire postal system for the rest of us.
[+] [-] godzillabrennus|7 years ago|reply
https://www.wsj.com/articles/this-subsidy-for-china-is-dumb-...
Seems like a win for American innovation if you care about that thing.
Seems like China is going to get hurt by this change which is bad for globalization if you are into that thing.
[+] [-] paulsutter|7 years ago|reply
[+] [-] baldfat|7 years ago|reply
No it just was a bad policy. It has to be a win/win for both sides. Currently this was a bad deal for America.
Prepare for things to cost much more now in regards to electronics.
[+] [-] Abishek_Muthian|7 years ago|reply
If MSI is taken into account, then India & China are among the most developed nations!
[+] [-] atomi|7 years ago|reply
[+] [-] fzeroracer|7 years ago|reply
[+] [-] jscholes|7 years ago|reply
[+] [-] api|7 years ago|reply
(Fairer trade is literally the one thing I agree with Trump on...)
[+] [-] geezerjay|7 years ago|reply
[+] [-] Theodores|7 years ago|reply
https://en.wikipedia.org/wiki/Rowland_Hill
The basic principle is a simple one, a letter could be sent to any address in the UK at the universal rate. There would be no surcharges just because you lived in a remote part of Wales. Equally there would be no discount because you lived next to the sorting office in London and wanted to send a letter to the next street.
In the UK we did celebrate Rowland Hill and his work, sadly times have changed and successive Conservative governments have undermined the universal postal service by privatisation and trying to make it 'better' with 'competition'. Hence, rather than one Royal Mail van delivering letters and parcels there is now a small fleet of other delivery vans and outsourced casual labour 'gig economy' type delivery options. It is not more efficient to send six different vans out to a small village, each of them delivering one or two items when you could have just the one Royal Mail van carrying a few dozen parcels.
Moving on from 1837 to today where ecommerce and email has changed things, there is the 'ePacket', not very well understood by most end consumers. Here is an article on Shopify that helps explain the fundamentals:
https://www.shopify.co.uk/blog/epacket-delivery-explained-ev...
Now I am no fan of the 'evils of global capitalism', however, I believe that the work done by China Post and their partners in 30+ countries is very much in the spirit of 'the Penny Black'. If your business in the West does have product made in China for good reasons, e.g. that is where your supply chain is, then you want to get your products to customers in good time. Why send a crate of product to your local warehouse to then have people then resend that on to customers when you can have a pick and pack operation in China?
This is particularly the case if you are wanting to offer your product to people internationally. For instance, Australia. If you have production facilities in China and then have a head office and warehouse in the UK, you can't realistically sell to the Australian market if it takes weeks for your parcels from the UK to get there, inevitably spending a week doing nothing in the Netherlands en-route. It makes customer service a non-starter. What you really want, and what your customer really wants is the China Post ePacket service and no extra trip for your products around the planet.
This applies for premium products people want, not the forged knock-off product that people berate Amazon for. ePacket helps the small to medium sized business compete against the giants of industry that can afford their own planes.
There is no 'win' for American innovation here, this is like a 'tariff' in that it is actually a 'tax' on American consumers. ePacket was as bit as innovative as 'the Penny Black' and it facilitates trade on a level playing field.
I am sure that knee-jerk reactions will mod-down my opinions on this, however, the ePacket and how we got here is not understood that well and going Donald Trump on parcel delivery is not going to solve the problems and frictions that genuinely exist with the status quo.
[+] [-] forapurpose|7 years ago|reply
1. American innovators buying components from overseas, which include many on HN and in SV, will now have to pay more, reducing their ability to innovate.
2. American consumers will have to pay more.
3. American consumers will have less innovative products, as their ability to get innovative products from other countries will be reduced, and as innovators in both the U.S. (see #1 and #4) and in other countries will be hamstrung.
4. American innovators will face less competition, which is certainly not what leads to innovation; it leads to profit-taking based on market power, not meritocratic competition.
5. Reduced international cooperation and trade will reduce American innovators ability to sell abroad; the U.S. is only 5% of the world's population; the other 95% of the market is elsewhere. Cooperation and trade will not only be reduced as a direct effect, but also as a result of the U.S. appearing to be an unreliable partner, and as a result of other countries responding in kind by pulling out of treaties when they find any problems.
6. As reduced trade hurts economies here and abroad, Americans will pay more, have fewer people to sell to, resulting in lower wages and fewer jobs.
Finally, the greatest American innovation is democracy, the belief that all men are created equal and that's what leads to prosperity. That innovation has resulted in an explosion of peace and liberty unlikely anything the world has ever seen, and it has, as a secondary side effect, brought an explosion of prosperity unlike anything the world has ever seen. The U.S. is now purposefully killing that innovation.
[+] [-] derekmhewitt|7 years ago|reply
https://www.npr.org/sections/money/2018/08/01/634737852/epis...
[+] [-] nakedrobot2|7 years ago|reply
I hope there are positive economic and environmental results from this move.
What will be the unintended consequences I wonder?
[+] [-] blihp|7 years ago|reply
[+] [-] onion2k|7 years ago|reply
Small businesses who use dropshipping direct from Chinese companies will stop being able to compete with big businesses who buy in bulk and ship from US warehouses. This will benefit the likes of Amazon more than anyone else.
Not sure if that's an unintended consequence though.
[+] [-] ENGNR|7 years ago|reply
[+] [-] jayd16|7 years ago|reply
Well its a 144 year old treaty so probably Ulysses S. Grant and the 43rd Congress.
[+] [-] Arnt|7 years ago|reply
[+] [-] plugger|7 years ago|reply
As a consumer I think it's advantageous. I'd much prefer to pay no shipping when compared to paying significant amounts for shipping, regardless of where the package originates.
[+] [-] ctrl-j|7 years ago|reply
I don't know how unintended, but I would imagine that cost of imported goods will go up, since the costs are usually passed onto the consumer
[+] [-] hw|7 years ago|reply
As the article states, there are also businesses who rely on these rates for their inventory or materials. Those businesses will also get impacted, and the extra cost will likely be passed down to consumers. Stuff on Amazon might not be so cheap anymore
[+] [-] pishpash|7 years ago|reply
[+] [-] sschueller|7 years ago|reply
This is why sometime this year people who receive such mail will be billed additional fees increasing slowly over the next few years.
The treaty allows under developed nations to ship at a much lower rate. China and a few others should simply be reclassified.
This does not require having to leave the treaty.
[+] [-] eigenvector|7 years ago|reply
[+] [-] ilamont|7 years ago|reply
1. https://www.caixinglobal.com/2018-10-18/trump-to-withdraw-us...
[+] [-] eksemplar|7 years ago|reply
[+] [-] gaff33|7 years ago|reply
[+] [-] coliveira|7 years ago|reply
[+] [-] jayd16|7 years ago|reply
[+] [-] devoply|7 years ago|reply
[+] [-] SwellJoe|7 years ago|reply
There's already a number of sellers that compete on shipment speed, rather than just on price. Likewise, there are Fulfilled By Amazon sellers that import from China in bulk and warehouse it with Amazon. So, they can charge an extra 5% or whatever because it will arrive in 2-5 days from a warehouse in California rather than in 2 weeks for goods coming from China. I suspect this will push more business their way rather than completely destroy this market, but it's going to be a big hit.
I don't think it's entirely a terrible thing to put a realistic price on individually importing goods. I've been buying a lot of import stuff for electronics and guitar projects lately, and I'm astonished at how cheaply a bag of electronics parts can be shipped from China. It's a tiny bag of parts coming from the other side of the world, and it's still cheaper than buying locally. That doesn't seem like it should be so, compared to bulk importers that bring the goods over in container-sized quantities so they can ship it to individuals from the same continent.
[+] [-] 0xfaded|7 years ago|reply
I wouldn't be surprised if something similar happens. In Europe hobbyking, banggood et al opened European warehouses once VAT enforcement became a problem.
The big chinese retailers will start competing with Amazon, which is somewhat ironic since Amazon already acts as the US warehouse for many Chinese products. Good riddance to dropshippers though.
[+] [-] dawnerd|7 years ago|reply
[+] [-] com2kid|7 years ago|reply
For those who enjoy cheap odd tablets, now is the time to stock up.
[+] [-] adrr|7 years ago|reply
[+] [-] Animats|7 years ago|reply
[1] https://www.lexingtoninstitute.org/terminal-dues-time-end-dr...
[+] [-] fyfy18|7 years ago|reply
When you buy items from AliExpress often they have the option of being sent by Singapore Post. I'm not exactly sure how that works (Singapore isn't that close to China), but although the item comes from China, to the postal service it doesn't.
[+] [-] sam_goody|7 years ago|reply
He claimed that the items are still being shipped from China, and that he is just witing Singapore / Czechoslovakia / any other developing country on the package (he said it is part of the tracking code), and he gets the benefit of the country whose code he used.
He said the main reason they do that is that the laws differ as to what can be shipped from each country, especially vis a vis things that use radio frequencies. By choosing even distant countries they can be caught breaking minimum standards and are not prosecutable.
He said that the down side is that things can never be returned to sender, since the sending address is fictitious. This last sentiment has been echoed by many sellers.
Have no way to verify, but it is an interesting claim.
[+] [-] csdreamer7|7 years ago|reply
Still, if the US leaves the treaty it won't matter to Americans in a year.
[+] [-] TorKlingberg|7 years ago|reply
[+] [-] mcantelon|7 years ago|reply
https://www.theglobeandmail.com/report-on-business/canada-po...
[+] [-] dragonwriter|7 years ago|reply
The US could do that (and some of the coverage have indicated that the withdrawal is a negotiating tactic to provide more leverage for that, with the plan being to leverage the time it takes to go into effect to negotiate changes and then cancel the withdrawal before it is effective; Canada didn't have to do that to negotiate changes, though.)
[+] [-] sparkpeasy|7 years ago|reply
[+] [-] megaremote|7 years ago|reply
[+] [-] iask|7 years ago|reply
[+] [-] the_mitsuhiko|7 years ago|reply
The postal treaty however is hugely important for smaller countries. I don’t want a world where the US destroy the entire postal system for the rest of us.
[+] [-] irrational|7 years ago|reply
[+] [-] dgellow|7 years ago|reply
[+] [-] exabrial|7 years ago|reply
[+] [-] apexalpha|7 years ago|reply
https://www.youtube.com/watch?v=DkckYLBCNfI