updated 10:21 AM CEST, Sep 19, 2019

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ACA warns: U.S. withdrawal from Universal Postal Union could impact U.S. citizens overseas

The American Citizens Abroad has issued a warning that U.S. citizens resident overseas could be adversely impacted by U.S. plans to withdraw from the Universal Postal Union by October "unless substantial changes are made to the [existing] tariff structure". 

The ACA's warning, in a statement published on its website, reflects, it said, the importance of the "continued fluidity of... postal mail delivery, a vital component of the machinery enabling voting by U.S. citizens overseas, as well as ensuring communications between U.S. citizens overseas and [such] U.S. administrative offices as the IRS and the Social Security Administration". 

According to the ACA, the U.S. is mainly concerned about what it considers to be the Universal Postal Union's "unfair and unduly burdensome" rate structure.

The UPU has until now existed in relative obscurity, in a "cherished" state "of near invisibility", the ACA points out, setting rules and rates for international mail delivery around the world from its base in Bern, Switzerland. 

From this base, the UPU worked with its 192 member states to agree a fixed remuneration known as “terminal dues,” which are owed to the postal operator of the delivery country of any posted item.

And in general, the UPU's oversight is seen to help to enable the smooth delivery of mail across borders, and thus to facilitate "low-friction international commerce," the ACA explains – or at least it did, until the Trump Administration last year gave notice that the US would withdraw unless the above-mentioned "substantial changes" to the tariff structure were forthcoming.

"China’s terminal dues were fixed in 1969, and favored Chinese shippers with very low rates commensurate with China’s status as a lesser-developed country," the ACA document continues.

"In the absence of modification, this low rate has come to provide a cost savings windfall to Chinese shippers, creating an annual deficit for the U.S. Postal Service of roughly US$300m.

But at the same time, "small packet shipments to U.S. customers  [currently] cost Chinese shippers much less than U.S. shippers pay for the same item to be sent to a U.S. customer" – thus, the ACA explains, the issue for the Trump Administration. 

Likely areas of
negative effect

Although the negative effects of a withdrawal by the U.S. from the UPU would be felt first and foremost within the U.S. economy, the ACA notes that a complete withdrawal from the UPU would be unlikely, "given the massive transactions costs it would imply for American buyers and foreign sellers," and the fact that, in a sense, the UPU is simply“too big to fail”.

Nevertheless, given the fact that IRS communication with taxpayers is heavily dependent on reliable and expeditious delivery of international mail, the ACA warning concludes, the consequences of a failure to conclude a follow-on UPU agreement "could potentially be dire for the overseas taxpaying community".

"The recently introduced legislation revoking otherwise valid passports of taxpayers who have failed to pay IRS bills of US$50 000 or more (indexed to inflation) may create an additional risk to overseas Americans," it continues.

"Revocation of a valid passport, particularly when a citizen is traveling and/or lacks a second nationality, is an extremely troubling prospect – one that U.S. citizens overseas will certainly want to avoid."

The ACA said it therefore is planning to "closely monitor" the matter, and will stand ready to "forcefully advocate in favor of a rapid resolution of this ongoing dispute." 

To read the ACA statement, which was written by the chairman of ACA's Switzerland chapter, ACA director Roland Crim, click here. 

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