"That's costing us about $300 million per year in - in the United States and that's what we're trying to fix", the official said.
"These pose major challenges to achieving fairer and more balanced trade and we will continue to monitor and review China's currency practices, including through discussions with the People's Bank of China", he added. The White House, in a statement, said "sufficient progress has not been made on reforming terms" of the postal treaty and that it would begin the withdrawal process while seeking to "negotiate bilateral and multilateral agreements that resolve the problems".
The US on October 17 announced its intent to withdraw from the little-known UN Universal Postal Union (UPU), arguing that the current system that governs global postal rates allows countries like China to provide subsidies to their postal companies to ship products to the US at cheaper rates thus putting American firms at a disadvantage. Poor and developing countries are assessed lower rates than wealthier countries, an arrangement that has benefited China. The result could be an increase in prices on many household goods, consumer electronics, and clothing if a new rate schedule is not agreed upon.
China, for instance, accounts for a large portion of the flow, but there are also other countries involved and other posts involved, the official said.
Beijing is not a currency manipulator but China's exchange rate practices and the yuan's recent decline are of "particular concern", US Treasury Steven Mnuchin said Wednesday.
Under the union's framework it takes a year for a country to withdraw, during which rates can be renegotiated.
The Trump administration has already imposed tariffs on $250 billion worth of Chinese goods, which have been met with countermeasures out of Beijing. Administration officials are still weighing whether Trump will meet with China's president, Xi Jinping, in Argentina next month. "In that context, whether or not China is labeled a currency manipulator does not seem particularly important. We didn't get fairness, and so this administration's taking unilateral action", the official said.
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Unnamed U.S. officials told Bloomberg News on Wednesday that Trump "sought to revise the treaty in September and was rebuffed by other nations, prompting the decision to withdraw". The biggest winners could be shipping carriers such as UPS. But Navarro and Trump dismissed those changes as insufficient to deal with the explosion of online free shipping offers of goods from China.
China's Ambassador to the U.S. Cui Tiankai told "Fox News Sunday" host Chris Wallace that there is no trade war between the two countries, but then seemed to contradict himself by claiming America started it. "Moreover, while USPS loses an estimated $1 on every small package that arrives from China, outbound mail of American exporters is charged at well above cost".
President Donald Trump argues that the 144-year-old agreement benefits China and other countries at the expense of U.S. businesses - making it cheaper to ship packages from Beijing to NY than from San Francisco to the U.S. East coast, which particularly benefits Chinese manufacturers.
Under the current UPU system, a one-pound package shipped by a USA business costs between $10 to $13. US companies can pay two to four times that amount to ship a similar package from Los Angeles to NY and much more for packages sent to China.
They argued that the treaty allows foreign postal services, especially in China but also in Germany, to take advantage of cheap shipments to the US. "All parties should pay the same parcel delivery rates for the same services from the U.S. Postal Service, regardless of whether the country of origin is foreign or domestic".
USA manufacturers applauded the move.
"Something has to be done", he said.