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US Announces Withdraw From Postal Treaty (bbc.com)
412 points by walterbell 4 months ago | hide | past | web | favorite | 374 comments



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.

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.


Globalization is about an even playing field, not one-sided concessions and subsidies


The idea of free trade/globalization is everyone benefiting from the efficiency of each place doing the work it can do most efficiently. Iowa corn and Swiss fine machinery and Arab oil and all sorts of things where one place can do something better and cheaper because of the nature of the place. Poverty (cheap labor) and treaties (cheap postage) shouldn't be the drivers of this efficiency because they aren't caused by fundamental differences, just political ones.


But the issue here is not the differential in efficiencies.

It's China receiving subsidies from the US because it was considered a developing country in 1969. It's not anymore, it's a global superpower now, it can pay its own postage.


No, every few years, there is a reevaluation. Last one was in 2016.


Huh. Very interesting. I have a notion that all decisions should auto expire and be explicitly renewed. Because it's so hard to cull outdated or revisit / repair suboptimal rules. Inspired by stuff like IP/TCP leases and cache TTL.

But your example of the powers that be waving thru a bad rule refresh suggests my notion won't be sufficient.

Thoughts?


Well, the process did exactly what it was required to do, to classify countries by income levels. China is not that rich, not even passing as a newly industrialised country.

Were it to pass as such, say, Kenya and many other African countries would've too.


This. I've got nothing against US aid to less privileged nations, I'm all for it. I can't stand a US adversary who is running re-education concentration camps for Uighurs and implanting remote access devices into US corporate infrastructure getting an unjust benefit form one cent of American tax money that operates the post office.


The US post office is 100% self funded. They get exactly $0 from taxes.


Not so fast. You're right that the general operations of the USPS are no longer directly appropriated by Congress. However, the US government and its citizens do give the USPS significant economic benefits, including a 100% tax exemption from state and local taxes, and the ability to "pay" federal taxes back to itself[1]. USPS need not comply with local zoning, parking, toll road, etc. laws.

According to a 2015 report[2] cited by Fortune, that included $2.1B in waived taxes, the benefit of a federal monopoly on deliveries worth $14.9B, and as much as $490M/yr in subsidized lower interest rates due to not having to have a credit rating and borrow on the open market, but instead getting preferential treatment from the Treasury. Not included in the report is the fact that USPS OIG and USPIS are federally funded through appropriations[3]--whereas UPS or FedEx would have to hire their own off duty police offers at significant expense to receive the same level of protection.

[1] https://www.uspsoig.gov/blog/taxing-postal-service [2] http://www.sonecon.com/docs/studies/Study_of_USPS_Subsidies-... [3] https://www.uspsoig.gov/sites/default/files/document-library...


That's interesting, thanks for the detailed reply.My point was that their operating expenses are covered by fees for postage and not directly paid through taxes. But now I realize that this is more of a grey area than I had though.


Glad you found it interesting!


Also of note, American tax payers were dropping $300MM a year to help Chinese small business.


While it's unlikely that money saved would be directed to more useful endeavors internally, as a US citizen I'd prefer that money not subsidize Chinese commerce (or rather, subsidize US consumers purchasing directly from China).


No it has no bearing on China. It is the same policy with Switzerland. You get the international package to America we pay for the final delivery. Pay for a package to Switzerland and Switzerland pays for the final delivery. It was suppose to be a wash for both parties. China just got a much better deal. Cost me more to mail a package the next state away then for me to get a package delivered from China.

Now you have to pay for Switzerland delivery and then the domestic cost.

Wish and EBay from China is now bye bye.


EBay from China is now bye bye.

Why would this change the be end of direct shipping from China? Currently (rounded off numbers) the cost of shipping a 2 lb (1 kg) package within the US is about $7, and the cost of shipping such a package from China to a US address is about $2. The obvious solution would be that the Chinese shipment ends up costing $9 (current Chinese rate of $2 to the US border, plus $7 standard US shipping). The Chinese shipping would thus end up $2 more than the US. Presumably there would be lots of cases where the $2 greater shipping is offset by lower price of the item?


I can order 8 recycling batteries for $2.99 and have them shipped to my house. That is a loss of $4. They are looking at an increase of $7 at least. BTW when I ship a small box 2 pound of cookies to my son from his mom it cost me around $10.


Sure, certain things will no longer be feasible. My doubt was that these less-than-the-cost-of-shipping items were the bulk of the current direct-from-China Ebay orders, and even if they were, I was doubting that there was not a market for slightly more expensive items.

For the US cost, a "Priority Mail Small Flat Rate Box" is $7.20 between any two US addresses, and a "Priority Mail Flat Rate Envelope" is $6.70. If you don't use one of these, the postage will likely will be slightly more.


Where are you getting those numbers from?

My understanding is that there's a nominal fee for last-mile delivery the USPS charges mail from other countries, which is all (or the vast majority) that's being charged for Chinese shipments, as the Chinese side is subsidized completely (or almost so) for outgoing mail. I think the $2 you are quoting might be the treaty fee for delivering mail from other countries, which is not the true cost of delivery, but mostly works out as long as there's a fairly even flow of mail between two countries. What we have here is that China is subsidizing their side of the outgoing mail, so all that's being paid is the treaty set delivery fee for external mail (which again, isn't the true cost of last-mile delivery).


  the treaty fee [...] is not the true cost of 
  delivery, but mostly works out as long as there's
  a fairly even flow of mail between two countries.
Isn't the core problem here that there _isn't_ an even flow of mail between China and the US? Because there's far more ebay/aliexpress traffic coming out of China than going in.


I think it's not just that, which would be problematic on it's own, it's that China is also subsidizing local delivery, so the only (or almost only) delivery fee for Chinese shippers is the portion they pay to USPS for local delivery, which is artificially very low. So not only are they taking advantage of the difference in trade flows, they are also encouraging it even more.

I think this was covered in an Planet money podcast from NPR.[1] It's also possible I'm not remembering portions of it correctly, but I think they did an interesting treatment of the subject.

1: https://www.npr.org/sections/money/2018/08/01/634737852/epis...


Where are you getting those numbers from?

The US rates are for small flat rate packages and envelopes on USPS.com. I didn't find an exact source for the China-to-US rate, so the $2 was the low end of a small number of articles about shipping rather than an exact quote. I may have misinterpreted, or converted using outdated exchange rates, or missed details about minimum quantities. As you say, there is subsidization involved, but I think this is about right for the amount charged to the shipper.


> I didn't find an exact source for the China-to-US rate, so the $2 was the low end of a small number of articles about shipping rather than an exact quote.

Oh, I'm not questioning your accuracy, I was just wondering the source, since I wasn't finding anything easily. :)

I don't think this is the end of direct shipping from China, but it is a large blow to that random super cheap Chinese knock-offs market. The Planet Money episode I linked in a sibling comment covers the story of an American (unspillable) mug maker that noticed knock-offs selling super cheap from China. He was able to order one with free shipping for $5.59, free shipping from China. He asked his shipping department how much it would cost to mail the mug across the street, and was told $6.30, just for shipping. I think that illustrates the distortion this has on the market very clearly, where something can be manufactured in China and shipped to a US home cheaper than a US manufacturer can just ship the item.

I'm sure there are plenty of items with a higher base cost where Chinese manufacturers will be able to make up that shipping extra in a lower item cost, but given how large the market of very cheap directly shipped items is, I think this will have a very large effect, especially since I think there's a lot more consumer confidence ordering very cheap things from China than somewhat expensive things. I don't care too much if my $10 item from China is crap, or unsuitable for it's intended use, or just fake, but I might really care if it's a $50 item, so I might choose a North American company to order from.


Actually Swiss Post has the same problem as the USPS: buying something from a Swiss online shop is usually expensive because of high Swiss wages, but you can buy stuff for "dirt cheap" from China, and the delivery isn't paid for by the customer but by Swiss Post. Things like S-ATA cables cost maybe at least 7 Francs in Switzerland, but 0.40 CHF from China, with free shipping!


And yet, if the profits can be prevented from all floating to the top, globalisation would appear on the surface to be an excellent way of redressing global inequality. Massive international wage gaps will be perceived by the market as an exploitable inefficiency, which over time will be ironed out.

Or, to put it another way, if two people wish to trade, it must be in both of their interests. If I, as a westerner, go to a third world country and buy a bunch of stuff that from my perspective is cheap but from their perspective is expensive, we both end up happy. What's so terrible about that?

(Of course where it falls down is where labor is cheaper because of poor worker protections and exploitative practices, in which case it constitutes an end-run around the labor laws of the richer party. But they are the ones that should be upset, not the poorer party, whose labor laws would be terrible regardless of exploitation)


'Labor laws' is a bad argument, particularly in poor developing nations.

If you enforce labor laws in developing countries, the cost of production will be high enough that industry doesn't develop. At that point, the people there have no industry and are much worse off (e.g. a sweatshop is better than subsistence farming).

A better argument is 'labor choice'. Individuals need to have the ability to choose their circumstance. If they can choose, and choose freely, over time the whole society can ratchet up their standard of living by making these choices at the margin.


That rosy picture is totally divorced from the actual historical course of Capitalist development.


On the contrary, it's debunking the rosy picture that developing economies can afford developed-economy levels of worker protection.


I don't think you successfully debunked it. You asserted without merit that working in sweatshops is better than subsistence farming, this is both false and a false dichotomy.


It wasn't me, but in any case, that was just an example; even if untrue, it doesn't invalidate the point that choice is the important part.


What about slave labor? Child labor? Should corporations have these choices available to them? If not, why not?

If the reason is ethical than why would we support sweatshop labor, or any other exploitative labor?

What exploited people need is not sweatshop jobs but access to capital and education. Invest in them, do not exploit them.


Child labor is much the same - a society can only ban it when it can afford to do so. An agrarian society has inevirably plenty of child labor, as part of the family. That said, you can probably ban companies from ever employing children, especially with the productivity level of current mass-production tech.

Investment in people is a red herring. You can give people choice and invest in them. Though guess what: developing countries (which is who we're talking about) don't have money to do the latter.


I’m not sure if Swiss fine machinery is the best example here. What is it about the nature of Switzerland that makes it a more natural place to create fine machinery then anywhere else?

Similarly, using American corn as an example of how free trade should work is pretty underhanded. There’s a ridiculous amount of subsidies there, and the US doesn’t have any qualms with dumping the resulting product on international markets.


The climate and soils in Iowa make it a great place to grow corn - even without subsidies farmers would grow corn in Iowa. Despite a much lower cost of labor in other countries Iowa can still compete well in the world markets because corn grows so much better.

There is probably no advantage to making machines in Switzerland that you couldn't duplicate in Iowa, but because Iowa has the natural advantage in corn it is better for everybody if Iowa concentrates on growing the best corn (hopefully this includes improving their soils to grow even better corn), while the people of Switzerland concentrate on making better machines. Then they trade machines for corn and everybody is better off. If instead everybody was a jack of all trades there would be less corn because the people of Iowa aren't as focused, and the machines the Swiss produce wouldn't be as good because they don't get as much practice making them.

Of course the above is simplistic. Iowa has machinists that make fine machines, and there are Swiss farmers who grow some fine corn.


In reality though, Iowa has more than enough corn farmers for the population, and plenty of low-wage manufacturing workers to create said farm machinery there. Especially when the Swiss Franc/USD are 1:1, the Swiss would just open a plant there and finance it


At least in the theoretical example it depends on whether its more economical to build the machines closer to the farms in exchange for sacrificing farmland to do so.

Even if the world isn't so cut and dry to turn all of Iowa into one giant corn farm if Iowa is the best place to grow corn than corn production should naturally trend there, pushing internal business out that can operate elsewhere while subsuming corn production elsewhere where its less profitable.

That kind of effect is very minute on the actual day to day operating economy and decision making process of business entities involved which is why we don't just see all of Iowa turned into a corn farm, but those kind of effects have positive efficiency influence over long time frames.


Economies without large amounts of bulk natural resources are good targets for specializing in value-add industry.

It is both positive- and negative- feedback. There are lots of things Switzerland doesn't have which makes it specialize in the things it does – that concentration of specialization is it's own efficiency generator.


The nature of the place in the context of Swiss watches could mean the établissage system.


This page http://www.vintagewatchstraps.com/blogswissmade.php argues that "swiss made" as a brand was a side effect of British hallmarking laws.

The pages about the various watch brand histories is quite interesting.


I had to look up that term [1], thanks for introducing me to it.

I'm still not sure how Switzerland the geographic place intrinsically leads to more efficient watch-making, as Shenzen and other Chinese factory cities make copious use of établissage in many different industries. Also, Apple's offshored Chinese manufacturing demonstrates that extremely high quality hardware manufacturing is not ethno-culturally-bound, and can be successfully transmitted through a corporate culture.

Ricardo's comparative economic advantage in Net age-birthed industries seems increasingly more hand-wavium the further away I get from intrinsically geographically-tied economic inputs like mineral resources, fresh water, salt water fish migration paths, or latitude-dependent agriculture, etc., and the further one transits away from historical network effects like Swiss watch-making, Silicon Valley software-writing, or Belgian diamond-polishing, etc.

The mathematical and empirical analyses of comparative advantage [2] [3], as well as great explanations about it [4], don't seem to address extremely complex goods with very high cognitive input factors, like semiconductors, industrial machinery, bio-pharma products, avionics, spacecraft, high-end electronics manufacturing, fracking, cloud services, search engines, e-commerce, etc., and I suspect comparative advantage breaks down as we evolve those and similar economic areas because ceteris paribus, there is no natural, lasting advantage one nation comparatively holds over another on human cognitive power (which I celebrate). In all those areas, there are leaders, but not so much and to such a comparative degree that they decisively elbow out other nations from economically attempting to enter those industries now or in the future.

The Sudan might be a cognitive desert right now compared to Palo Alto or Shenzen, but there is nothing structurally preventing them from turning into a powerhouse in the future (on a multi-generational timescale) to contend with, as say there is with them turning into the next corn-production hub like Iowa, or oil-producer like Saudi Arabia or the fracking Permian Basin.

[1] https://www.watch-wiki.net/index.php?title=Etablissage

[2] https://www.dartmouth.edu/~rstaiger/Bernhofen%20and%20Brown%...

[3] https://www.nber.org/papers/w17969

[4] https://www.pauldeng.com/teaching/intecon/IE_Fall2011_Lectur...


Interesting, saving this to research later.


in this specific case, it's not about the location of Suisse per se, but more about the people living there - focus on absolute quality, not cost-cutting, not price/value ratio but quality first. Of course this is very simplified, and may be less true for some cases these days.

The other point - most countries subsidy agriculture in some way. If US shouldn't dump their corn on global market, so shouldn't european farmers/milk producers (especially French I think).


Cheap labor/poverty should absolutely drive free trade, at least if you are interested in improving the human condition. People in impoverished nations choose to work in sweatshops because the alternative is so much worse; prostitution, indentured servitude, being completely destitute etc.


Agreed; though that must be actually a choice. There have been cases where governments have made the alternatives worse to push people into "progress".


I disagree. This incentivizes the fostering of an environment where these are the only choices available to people.

It does not help laborers anywhere in the world to exploit labor and further weaken places where labor has already organized and achieved protection.

This is a fundamental failure of capitalism and a particularly harmful neo-liberal belief.


Its the only choice available because the previous means of survival was at best subsistence farming. And it isn't guaranteed to happen, but impoverished countries will never enter modern society if they are just isolated from it for labor protections sake.

The trickle of money from the pockets of capitalists into the dictators of Indochina in exchange for functionally slave labor is still better than if these countries had nothing to offer the world at all.

You would want the optimistic capitalist means to uplift the third world to be simple investment - you take a country with nothing to offer and no resources, invest money in it to educate its people and develop its infrastructure, and then you would have their substantially improved productivity to profit off.

But that has never happened on just the backs of dollars because there is no way to risk manage that kind of arrangement. It almost always comes second to bombs or prophets as a way to provide that collateral - even if the country fails to recoup the investment, you can pillage the natural resources or convert its people into adherents of your own culture. Because those acting in self interest are approaching a scenario where the other party has nothing to offer (except idle hands) and you have everything.


I once believed this as well, via one of my degrees (economics). It turned out to be contradicted by reality.

Ricardo and Adam Smith argued that the consumer surplus gains of free trade for the higher labor market would be greater than the losses sustained in producer surplus in the same market. I.e. that American consumers reap more $$ from imported foreign cars than American workers/business lose.

However, since then its become obvious that the population that loses jobs cares a LOT more than consumers do about their cars being a few $$ cheaper (e.g. Donald Trump won Michigan and Ohio).

In other words - political differences DO matter. Perhaps economics should return to its previous name - Political Economy - in order to actually describe the real world again.


I want to remind everyone that Chinese economy became what it is today because European, American and Japanese companies invested trillions in China. It was a Republican president who kicked it all off. A policy decision of pure capitalism.


It was also a policy decision driven by necessity. Nixon didn’t go to China for the lulz, China was going down a bad path dangerous to the west and western business was hitting a wall in many ways as well.


> It was also a policy decision driven by necessity. Nixon didn’t go to China for the lulz, China was going down a bad path dangerous to the west and western business was hitting a wall in many ways as well.

My understanding is that Nixon went to China to create a another pressure point on the USSR. The Cultural Revolution was bad, but mostly for the Chinese.


Sure, but applying pressure on the Soviets is a bullet point that covers a lot of ground.

Think about the scale, scope and impact of the Apollo program, which ultimately was done for similar reasons.


Those areas made far more than they invested, and China needed that huge investment because those three areas had already spent a century exploiting it for profit.

JPKab 4 months ago [flagged]

No, China needed that investment because Mao and his communist policies held China back for decades. But feel free to mouth the CCP line of China being a great victim.


> But feel free to mouth the CCP line of China being a great victim

This crosses into nationalistic flamewar, which we ban accounts for, so please don't do it again. More generally, please don't post aggressive snark here, or any snark.

https://news.ycombinator.com/newsguidelines.html


For a start, things before 1950 still happened. Even during the decades you admit happened, those areas refused to acknowledge the existence of China, making trade impossible.

Early Maoist policy hadn't helped matters, but it's pretty hard to argue American, Japanese, and European policy hadn't already left them in an incredibly shitty position.


Are you saying that China was not a victim? They literally had millions of civilian deaths in WWII. I've seen figures from 14 million to 20 million. Never mind the destructive effects of western imperialism up to that point.

As for Mao holding back China, no doubt there were big problems. But the greatest increases in life expectancy at birth came under Mao [1] and his push to greatly expand access to medical care and education in rural areas. That was itself an investment which set the stage for future growth. (It's a lot easier to get things done when your people aren't dying at age 45.)

[1] https://data.worldbank.org/indicator/SP.DYN.LE00.IN?location...


The biggest reduction in global poverty we've seen is due to outsourcing to China. Don't you care about starving Chinese peasants?


> The biggest reduction in global poverty we've seen is due to outsourcing to China. Don't you care about starving Chinese peasants?

Chinese peasants were starving because of bad Chinese domestic policies, not because of a lack of globalization: https://en.wikipedia.org/wiki/Great_Chinese_Famine.


Depends. Are they so desperate that they want to go to war, or are they rather becoming more of a middle class that wants to play the newest video games?


How many wars has China instigated in the last 30 years though? Seems to me the region is shifting to accommodate the new power balance quite nicely.


Before WW I, France and Germany were each others largest trading partners. Trade and prosperity are orthogonal to war.


Trade wasn't anywhere as big as it is now; most trade was within internal colonies, not externally.


I'm not sure about video games, but they do seem to crave mobile phones and luxury goods :D


I'm sure there are plenty of billionaires in China that can do more for them.


> due to outsourcing to China

No it is the demand for better working conditions and wages. That helps the local Chinese and American workers. Oh that's right labor unions are evil????


The demand existed long before the outsourcing. There aren't really labor unions in China.


Can’t have real free trade with central-banking and fiat, must have hard global money.


That is the theory. I might be pessimistic, but it looks to me that everyone claims that one want that even playing field and at the same time, hides as much subsidies as possible to be able to protect ones own industries. Europe is heavily subsidizing its agriculture. The US are heavily subsidizing anything that has a link to anything military and oil. And others are doing the same. True, a few markets have been freed and commerce has increased, but an enormous amount of industries are helped by governments who like to criticize the subsidies of the others. By the way, there was a nice article last year about how the US are subsidizing the oil and fossil fuel industries in two ways: first by direct subsidies (about $20 billions each year and the "hidden" one about the cost of carbon emissions which can be estimated at $200 billions per year (which is real money on the carbon trading market : the government pays for the carbon emitted by its industries). (https://www.forbes.com/sites/ucenergy/2017/02/01/the-200-bil...) It is interesting to see that the "Clean Power Plan" of the previous administration was made to allow for levelling the playing field more or less by removing those hidden subsidies, and that the current administration destroys it. And that is not even including the costs of global warming that will impact the future for todays actions. So to sum up, the supposed efficiency of the markets seems to me like an illusion, or at least, an ideal that will be never reached because it allways allows for cheating. Same for the postal union of this topic : for years, the US had a net gain financially from it and it didn't seem to bother them. Now, it is China that has this net gain and they are not behaving differently than the US did for many years by trying to preserve this advantage.


I don't think anyone sensible would fault China for taking advantage of something that is advantageous for their businesses, nor for them to advocate for it. It would be irrational for them not to, the subsidies exist so obviously any reasonable business would use them.

Nonetheless, it's clearly not in the interest of US businesses. The US is not obligated to provide subsidies that, due to the scale of trade using this tool, demonstrably favor Chinese small businesses over those in the US and distort the market.

I'd much rather see the market made more balanced by charging the same prices for shipping than by tariffs. At least that's a real cost. Though I have the ulterior motive of thinking charging full price for air freight will reduce carbon emissions and inefficient supply chains.


> I don't think anyone sensible would fault China for taking advantage

But everyone faults the US for taking advantage. /petpeeve


They're not in the same position. China takes advantage of bugs in the rules. The US writes and pushes through the rules, often quite forcefully.


These look different, but the US is simply taking advantage of the set of rules that allow rule-writing.


*used to push through rules

Trump seems quite fond of withdrawing the US from one negotiating table after another.


> Europe is heavily subsidizing its agriculture

USA as well, but there is a good reason for it. It's a strategic. You are 9 meals away from a revolution. Other subsidies are for strategic purposes. There are always a few abuses which you hear in the news, but the logic is sound.


"You are 9 meals away from a revolution." -- See Venezuela.


That isn't why ag is subsidized. Ya know how all your gas has 10% EtOH? That's from corn subsidy.


New Zealand cut off its agricultural subsides and its food exports exploded. Realities of globalization include problems and trade offs but do not match this criticism.


Globalization is a hegemonic project of the West, best understood as a means to transfer capital from the economic peripheries to the imperial core, and has tended to wreak havoc on developing countries that have exposed themselves to it. China has been very sensible to ignore the dogma about free trade and to exploit weaknesses and loopholes in trade treaties when they find them.


Hmm. It might be possible for one person to create wealth without another person losing it. Almost as though it wasn't a zero-sum game. Just a theory.


This is true. Nothing to do with what I said, but, it is true.

It isn't what happens at the moment. Every dollar of growth worldwide is subtracted many times over from our environmental commons. At the moment the global economy is a heavily negative-sum game.


Please illustrate one example of how someone (not the Fed firing up the presses) can make money without someone else giving them money.


I didn't mention money.

You don't need to have read The Wealth of Nations to know that it's possible to increase the GDP of a country without decreasing the overall savings. Service driven economies are the best example of this.


And those services exist without any exchange of money?


This is a total lie. The economic development of many of the poorer nations that have engaged in global trade has exploded in the last fifty years. Human development in those countries, as measured by uncountable metrics (IDH, child mortality, rates of education), has soared.

Please show your evidence that global trade is a zero sum game and that the "imperial core" has reaped all the benefits. Not one example of a singular country (sure, there are some losers for a variety of reasons), but for example, show us how the African continent has gotten worse due to globalization.


> Please show your evidence that global trade is a zero sum game and that the "imperial core" has reaped all the benefits.

I didn't say it was zero sum. Poorer nations have experienced some growth, and a lot of that growth has been extracted by the West. Generally, the more a developing country has embraced globalization, the worse it has been exploited. This is not a hugely controversial statement.

If you'd really like to understand the power dynamics, you'll need to do some reading. Former World Bank chief economist Joseph Stiglitz's "Globalization and its Discontents" is a good start, though a little dated now.

See you on the picket lines, comrade!


Very true. In reality this is following the model South Korea, Japan took.


And the U.S.!


You would have to eliminate all government policy to get rid of subsidies. There a million ways around every clause in a 1000 page free trade agreement. It's just not possible.

I'm a supporter of liberal trade between all countries but you've got to be honest that pure "free" trade just ain't happening while there's a few hundred individual countries on Earth


I may be cynical but I don't believe this. I think its more about producing goods using more exploitable workers and resources.

If all countries had the same worker and environmental protections and same degree of unionization, aka an actual level playing field, then maybe. But instead its more about exploitation and breaking organized labor unions.


I hear you but if it costs $3 to drop ship something from China to CONUS but $4 for me to send it within CONUS I’m not sure how we can say it’s “not one-sided concessions and subsidies”

I get the argument of globalization but I just don’t see it playing out how people say it’s supposed to.


I kept hearing the claim that the US Post Office was losing money on items shipped by Amazon.

So I asked the Postman delivering my Amazon package on a Sunday, and he confirmed that indeed the Post Office was being paid far less on a per package basis for Amazon deliveries than the regular rate.

In the case of this Postal Treaty, it seems like the Post Office is losing money on delivering these <= 4 pound packages from China.

The US Post Office is struggling enough, I think pulling out of this treaty is a good thing if it can help them.


There’s a little more nuance to it. The Postal Accountability and Enhancement Act of 2006 [1] is the major contributor to USPS’ ongoing financial issues. That act requires USPS to maintain a 75 year reserve for retirement and medical benefits. Other agencies including the Armed Forces max out at 20 years by comparison.

1. https://www.congress.gov/bill/109th-congress/house-bill/6407


Square that idea with the differences in national labor law for us, please?


> bad for globalization

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.


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!


I wouldn't hold my breath. The discussions about developed/developing are probably as old as the distinction itself and (as evidently shown here) many people have to win or loose depending on the classification of a country.


No, they won't. These terms just aren't used any more. That's partly because of the euphemism treadmill, and on the colonial history of these terms.

More importantly: the real world does not conform to any such arbitrary differentiation into a single binary variable.

There just isn't any need for such a classification anyway. If you want to index something to a country's wealth, just use any per-capita economic measure and be done with it. GNP is fine, I'm sure it wouldn't make much of a difference if you used iPhones/per million or the Big Mac Index, instead.


This is a nice anecdote. But what about the mass of consumers who will now have to pay a markup for the exact same product from an importer?


They will pay more because currently the cost is partially covered by the USPS. Such treaty makes sense in two cases:

- the cost of recovery is high. 140 years ago, doing the accounting for all the parcels, letters sent from France to the US would have cost and from the US to France to then "balance" the accounts would have been way higher than the recovered money from one party.

- the traffic is balanced, that is, both countries send/receive approximately the same numbers of parcels/letters each way, each year.

Once these two assumptions do not hold any more, it makes sense to reconsider the situation. This is a question of balance.


That cost is now just properly being paid by those wanting those goods. Previously that cost was being subsidized by all USPS users (and taxpayers via bond underwriting, tax breaks given to USPS, etc).


It is 100% reasonable to have to pay more for shipping when a good has to travel a farther, less convenient voyage and go through customs. Anything else viciously incentivizes overuse of transportation and puts an uncompensated load on border protection.


I would love to hear a reasonable counterpoint on this.


I've ordered a lot of things from Ali Express, most shipping from China to the US. For a few, the price of the product + shipping was less than the price of a single US stamp! It's hard to justify that ridiculous level of subsidy. I have to pay more now? Too bad.


They will be incentivized to pay for similar American goods and services which will be better for the economy in general.


The purchaser will justly pay more. Under the current system, the US tax payer pays for it.


What about American innovation that relies on certain parts from China, such as the entire electronic industry which we operate in?


They should pay the cost of shipping their parts from China to the US without a subsidy from the US taxpayer.


Of course you realize that this change will likely disproportionately affect the poor and middle-class (who will see a sharp rise in shipping costs) as well as smaller businesses who rely on thin margins to survive.

The cost of $300 million per year as quoted in the article seems like peanuts compared to some of the other actions this administration has burdened tax payers with.


If you want to help poor people, subsidizing imports from China is a stupid way of going about it.


Generally speaking, continuing to kick the crutches out from under the lower classes is a bad idea especially when there are no better solutions being implemented.

You need to keep in mind that the postal treaty wasn't JUST for China either, almost every single nation was part of the postal treaty. Withdrawing from this treaty would likely result in increased postage for all international shipments.


Luckily there is a very easy way for people to avoid paying for shipping... although maybe things have changed since I was young. Shop at local stores if shipping costs make buying by mail too expensive. Like it was forever prior to Amazon.

Prior to 2005 it was consistently less expensive to shop at the local CVS, book store, or radio shack than to order online.

If my business model requires public subsidies for shipping my goods to turn a profit, my business model is garbage since 100% of my profits are literally taxpayer funded. Maybe small quantity mail order batteries from China isn't actually a reasonable thing to have and it maybe actually costs less to buy batteries in giant crates and have them available in local stores.

I might even say that this is obviously the case (for the battery example). Plus you build the local economy rather than subsidizing it's obliteration.


As a person who ran a local store 'back when', the cost of shipping was factored into the wholesale price which then was used by the store to calculate the retail price. The end result was that shipping was included in the mark up percentage, typically 60 to 100%.

If a middle man was used, like an importer/warehouser, that middle man added their markup on shipping as well, typically 20 to 40%.


The only thing I do want to bring up about shopping locally, for electronic components specifically, is that stores like Radioshack are essentially extinct, at least where I am in the Midwest. There are no local electronic stores of any variation except for Best Buy.


Which is precisely why I do not shop at corporate mega stores that make it impossible for smaller businesses to compete using shady practices to lower prices.

Once Amazon or Wal-Mart are the only company left, they will be free to raise the prices to whatever they want.


maybe it would be possible for some of those stores to prosper again with a change in the market conditions


Stopping the externalization of costs will help everyone but is rarely popular since the immediate impact is felt by certain parties.


I doubt it. Chinese companies aren’t sending wholesale stock vis epacket. Losing consumer ability to by tiny quantities of fake LEGO or whatever in quantity 1 volume isn’t putting anyone out of business.

I would rather subsidize domestic shipping to lower barriers to e-commerce entrants if we feel a burning desire to subsidize something in this area.


Note this news has nothing to do with epacket


Huh?

epacketEMS is a class of mail with tracking. How is it unrelated?


ePacket rates are negotiated directly, not set under the UPU treaty which the US is planning on exiting.

The USPS makes a profit on epacket shipments [0][1], but loses money on UPU inbound shipments. The two aren't directly related.

[0] https://www.uspsoig.gov/sites/default/files/document-library..., page 6 table 2

[1] https://www.uspsoig.gov/sites/default/files/document-library..., footnote 17


Awesome! I appreciate the info.


Most actions disproportionately affect the poor and middle class--that doesn't mean we shouldn't take them. Although it doesn't always work out in practice, ideally, other wealth redistribution policies should blunt the impact of said actions. That said, $300m is not very much, so it seems largely like a symbolic gesture.


Fixed it for you:

This change will likely disproportionately affect the poor and middle-class (who will see a sharp rise in manufacturing jobs) as well as smaller businesses who rely on manufacturing to survive.

Given the state of the economy, "burdened" is not a reasonable description.


Manufacturing jobs are a thing of the past, even China is automating more every day. When "the jobs come back", it won't be to employ the poor and middle-class but to set up automated production. Which, this time around, will be more competitive than low waged Chinese workers.


It isn't time to give up on the USA. The USA got an extra 378000 manufacturing jobs in the past year and a half. That is jobs, not just automated production.


Even if you have a source for this data, how many of these jobs are going to be lost to automation and process improvements in the next 5-10 years? My father recently retired form a steel mill. He wasn't replaced. My city's entire economy used to be based around steel manufacturing. There's still plants here, but the number of people who work in the steel industry has steadily declined. Here is a cited source to say it's down 42% since 1990 [0]. In addition to the steel industry, I work in the financial sector. It used to take a room full of accountants to file with the SEC. Now it takes one or two to input the data and check for errors in the software. Process enhancements and technology are going to eat people's lunch and manufacturing is one of the easiest areas to automate and streamline.

[0]: https://www.politifact.com/punditfact/statements/2018/mar/08...


How recent? Steel is doing very well right now. They are hiring. Your source even shows this, not that your source is at all trustworthy.

1990 is a long time ago.

Steel is far from the only kind of manufacturing. Even if steel mill jobs all disappeared, overall manufacturing could be doing well. I'm not even 100% sure that steel should be lumped in with manufacturing; it's kind of like the final step of mining.

Process enhancements and technology face declining benefits. At some point, you've automated everything that makes sense to automate.

The jobs are going to stick around for 10 years unless we go back to a policy of purposely regulating American industry out of existence.


You are missing the forest. When mundane tasks are automated people MO e on to better things. Every. Single. Time.


OP was arguing that manufacturing jobs are coming back. I cited a couple examples showing automation is going to make this very hard to be sustainable. I am not arguing that this is a bad thing or that people won't find productive ways to spend their time. I am arguing that bringing manufacturing back is not a long term sustainable plan.


Sources for this number? Also, in addition to how many that existed already? In which industries? Which companies?



What is your source? All I could find is clearly one sided opinions on this matter.


See St. Louis Fed data from FRED: https://fred.stlouisfed.org/series/MANEMP

It's true that manufacturing jobs are on the rise, but it's still fairly clear what the long term trend looks like.


There is a multiplier effect of manufacturing jobs.


Manufacturing continues and will forever...not "a thing of the past." This subsidy was a small part of the larger policy landscape that caused you to think manufacturing was a thing of the past. We have makers everywhere!!


The sheer volume China, and other Asian countries, are producing in the electric industry pales any impact this treaty could have. I seems to me that this treaty gained significance due to e-commerce. Thus it impacts consumer orders, not industrial ones. So the only parties to be impacted are online retailers (and every private sender).

Not sure how that would impact the current global work-share in any measurable way...


Amazon will be pleased I guess? AliExpress is coming for them. I for one welcome our new AliBaba overlords. Competition is good for consumers.


competition is good, but not when one has an unfair shipping cost advantage subsidized by taxpayers from another country and the other doesn't


[flagged]


Personal attacks will get you banned here. We've warned you about this before, so please review https://news.ycombinator.com/newsguidelines.html and don't do it again.


>will likely disproportionately affect the poor and middle-class

...in China, while improving emloyment in manufacturing in USA.

Currently you have an imbalance in America's economy, where the poor and middle-class get goods from China, and the poor and middle-class in manufacturing[1] in China get the monetary reward.

Used to be that, due to local manufacturing of the goods, the same poor-and-middle-class americans would be earning back the money spent on the goods[1] by their neighbors, in effect exchanging with each other (and with local capitalists). However due to the current trade costs imbalance, a lot of the money flows out of american's pockets, but not back to them.

Will there be a price increase right around the change? Sure. But it will make local manufacturing more cost-effective, in effect spurring local employment in both production and related services, and thus looping the money expended on the goods[1] back in to the neighbor's pockets.

It's a win-win for the voters in USA.

[1] and related services, like engineering, transportation, worker catering & care, etc.


The treaty is covering parcels up to 2 kg if I read the article correctly. Industrial scale shipments are in the order of 13 tons upwards to get full container loads. These rates are admittedly dirt cheap. But this is due to over-capacities and not some parcel shipments. I would assume certain online retailers stand to profit for that discision regarding customer order from China.


This is going to put the brakes on crappy drop shippers. Good riddance.


seems like this will backfire if we ever want to access the emerging Chinese consumer market.


I find it sad how the US will be "punished" for righting a wrong, because Chinese has gotten so used to the status quo of "wrong".


Chinese will not want to buy foreign stuff. If looking at history, the British had to force opium down the Chinese in order to get them to trade tea.

The main exception is in luxury products like Gucci bags, iPhones and LV.


This has been a big part of the motivational story all along, but what would we sell to the Chinese, and how does that compare to what they sell to us (with or without unfairly subsidized shipping)?


Until about 1998 I think, a lot of motherboards were made and populated in the US.

I remember taking apart an old Cisco switch that had "Made in USA" silkscreened on the motherboard.


Yep. All of my first computers were made in the USA. Astounding quality.


If I understand correctly, this applies to packages less than four pounds.


Does your friend get anything if I pay to read the article?


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.


It helps to understand the history of the postal system, which was archaic and impractical until Sir Rowland Hill came along with The Penny Black:

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.


In terms of supply chain set-up, particularly the distribution part of it, there always is a warehouse somewhere. Even the parts you are buying from China are seeing multiple warehouses, sortation centers and cross-docking sites before they arrive at you destination.

Right now the low shipping costs for parcel-sized orders make this set-up, with stock as far from customers as it probably can, economic. Once this cost advantage is gone the last-mile performance from "local" warehouses, read warehouses on the same continent or in the same country, is winning the day.

In short, it is likely that the majoprity of the inventory is moved from China to the individual markets by someone. If this Amazon that would mean competition for seller doing drop-ship out of China. Still, even Amazon is offering FBA-services for the procurement part from China using Amazon container lines. Or it is some sort of wholeseller who is just covering the import part, maybe even up to warehousing.

I see a business opportinity for a logistics provider offering bulk-import, storage and distribution for the existing dropshippers. Workling interfaces to Shopify and co. wouldn't hurt neither.


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.


This is the removal of market manipulation (subsidies on shipping). We should see more innovation because the market can act freely now. For instance, now that China will have to pay for their full shipping, some product may increase in cost to the point where they could be manufactured and sold in the US, spurring innovation. The fewer artificial market constraints the better.

> 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.

Yeah, I don't know about that. Maybe in the US we've had a decent run of peace (with 50 years of nuclear holocaust hanging over our heads), but we've definitely dropped a lot of bombs on people. Enough that I think we can say that US democracy has not "resulted in an explosion of peace and liberty unlikely anything the world has ever seen".


> I think we can say that US democracy has not "resulted in an explosion of peace and liberty unlikely anything the world has ever seen".

But we have. Name any other period in world history that has seen the same spread of freedom and peace. There is nothing that comes close.

> The fewer artificial market constraints the better.

The Postal Treaty, and free trade and globalization in general, is a removal of artificial market constraints. Now we will return to artificial constraints at international borders.


> But we have. Name any other period in world history that has seen the same spread of freedom and peace. There is nothing that comes close.

I count the middle east and south east Asia as part of the world, and no what we spread there was not freedom and peace, it was/is decades of war and destruction.

I think you're referencing the cold war and the lack of direct conflict between major superpowers in the 20th century. That was a direct result of mutually assured destruction and the industrialization of the military. It was not caused by democracy. It was also replaced by a number of proxy wars. Again, not peace and freedom.


> I count the middle east and south east Asia as part of the world, and no what we spread there was not freedom and peace, it was/is decades of war and destruction.

I didn't say all the world had freedom and peace, but that it has spread far more than ever before. And it has. Again, name any other era that remotely compares.

> I think you're referencing the cold war

The Cold War has been over since, effectively, 1989, almost 30 years ago. Yet the world is, by some people's measures, more peaceful now than at any time in history. As simple examples, there is almost no international war anywhere. The entire North and South American continents, and Europe east of Ukraine, are at peace.

> It was not caused by democracy

The victors of WWII put mechanisms in place expressly to prevent more wars, including the UN and the EU, institutions designed to apply democracy to international relations. People can always make up reasons, since it's impossible to prove, but the results are what they intended. Further, with the spread of democracy in Europe, for example, the threat of war - which tore apart Europe for centuries before democracy became almost universal there post-WWII, war between European powers is now unthinkable. The exception is the sole non-democratic power, Russia.

Looking around the world, democracies don't tend to start wars or invade their neighbors - there is no chance of war between the U.S., Canada, European countries, Japan, etc. etc. All democracies. In East Asia, almost all threats of war are between the non-democratic power, China, and others. Japan and S. Korea, for example, have no interest in it and work out their issues peacefully.


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.

https://www.npr.org/sections/money/2018/08/01/634737852/epis...


I really liked that podcast as well. If I remember correctly, one take away from the podcast that is relevant to a lot of comments below was that the U.S. used to get a net benefit from the weird international mail system. It was more recently that the import/export by direct mail balance shifted to make it a net loss to the U.S. Though it didn't sound like who the net winners and losers would be was strongly considered when the system was designed.


Yeah, it was a great episode.

Generally speaking, I’m in favor of the US exiting this treaty, it really does seem like a clear distortion of the retail shipping market.

But I think it’s going to worryingly contribute to the dynamic where other nations, with quite a bit of justification in this case, see the US as playing a “heads I win, tails you lose” game with the world.

I also think people are fooling themselves if they think high-wage, low-skill manufacturing jobs are going to come back to the US because of this. Those jobs are gone, and automation is going to keep them from coming back.

This will mainly help highly automated manufacturing shops in the US, and online resellers with warehouses in the US.

Basically, I see this bringing more Amazon warehouse jobs, not many more much-mythologized blue-collar manufacturing jobs.


Thats the first mention of how u.s. used to get a net benefit as recently as 3 years ago, and how little it lost since then.


I came to the comments to post this exact podcast! It's a great listen.

Such a good feeling when a seemingly crazy conspiracy story turns out to be pretty much spot on the money.


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.


That's not just subsidies, but also how trade routes have been optimized. China, the US and every other country, have non-symmetric mail dispatch systems, optimized for the China->wherever route, with mass dispatch from China branching out to everywhere else. The reverse wherever->China is how much shipments cost over non-optimized routes around the world.

Stopping the subsidies won't stop the differences in volume and optimization (but it can be argued that subsidies no longer make any sense).


I'm sure I am missing something, but surely every container ship that leaves china with a huge pile of mail has to return again to collect more - can't they just take stuff with them?


I don't know anything specific, but a few things come to mind.

First, it's not necessarily the case that these ships are traveling in direct A → B → A... routes, they could be going from China to the US to South America then back to China, carrying some proportion of finished goods and raw materials along each leg.

Second, having to fill up the containers with something at the origin, and unload all that something at the destination, are both huge logistics efforts to manage. Not at all 'free'.


Is a good question, and I don't have an informed answer, but I wonder the same. Maybe the ships leave the US full of exports bound for other destinations in a global "round robin" style route or something along those lines? Or perhaps it's just much faster without the added mass? Would love to hear more about this from someone informed on the topic.


Actually, I'm pretty sure there's a surplus of containers (as well as pallets and other such materials).


Packages are mostly airmail. Nobody will wait two months for the delivery of their cable they bought online.


Not true. Look at the growing popularity of sites like Wish


This asymmetry also prevents you from doing a return when your $2 cable is broken or doesn't match the description.


Yup. I figure that anything I need to return / repair has at least $40-50 in overhead. The current shipping situation amplifies however good/bad the deal you got was.


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.


>This will benefit the likes of Amazon more than anyone else.

A _huge_ chunk of Amazon is low effort Chinese clone / drop shipped crap or straight up forgery. I don't feel sorry for /r/entrepreneur denizens' loss.

It will help the kind of small business with core competencies revolving around producing things and hurt the kind of small business with core competencies revolving around buying things on Alibaba and selling them on Amazon.

People who actually wanted to do things well often couldn't even afford to ship their product for the entire price of product + shipping for lots of dropshipped things under the old ways. I'm happy that the class of business that monetizes outdated shipping policy are going away.


> People who actually wanted to do things well...

You think intermediaries (e.g. dropshippers) can't add value to a supply chain? I don't know why you'd be so uncaring about /r/entrepreneurs when these are generally just people trying to get by as best they can. Having said that, this treaty withdrawal is still a good idea.


  You think intermediaries (e.g. dropshippers)
  can't add value to a supply chain?
These days, don't Chinese companies mostly list the products on Ebay and Amazon themselves? Just today I ordered something on Ebay and got a paypal receipt for my payment to 覃尚田.

I don't see what value an extra intermediary adds in that situation?


Dropshippers add range and access to market segments the manufacturer, or wholesellers, cannot ofer. These dropshippers are able to go after small customers with low order volumes. So they indirectly add value by increasing revenue.

they also cut out other middlemen like wholesellers and brick-and-mortar retailers. Done well, and at scale, this could be one of the more serious thrats for Amazon in the future.


> These days, don't Chinese companies mostly list the products on Ebay and Amazon themselves?

Yes, it's pretty standard to find the same company with store-fronts on AliExpress, Ebay and Amazon. It's sometimes worth checking for differences in prices though due to lag in updating each catalogue.


Faster shipping, added support, ease of returns. I am sure there are many other ways those "useless middlemen" could also add value.


Absolutely intermediaries in supply chains can add value.

can being the operative word. Amazon, New Egg, WalMart et al. opening themselves up to a certain sort of very low effort intermediaries sucks quality out of their platforms and makes online shopping a minefield of avoiding knockoffs (sometimes with Amazon impossible, to the extent where there are certain things you just shouldn't buy) and fake or paid-for reviews.

Fixing artificially low shipping won't kill this sort of behavior but it will make it easier and more profitable to compete against.


If they provide some level of stocking and quality control, they can. Dropshippers arbitrating between amazon and aliexpress don't really provide much of that.


What about insurance brokers? Or travel brokers? They don't have stock. Intermediaries (sort of) inherently create quality control via having a better perspective on the market than any single supplier can, and through pressuring individual suppliers via their own large-scale buying/selling activities.

E.g. if a dropshipper is selling mobile phone covers at scale, and stops using supplier x because the poor quality is affecting the dropshipper's brand, this puts more pressure on the supplier than if individual end-users stopped buying their products. Same applies to all brokers. They glean great power over suppliers in this fashion, while improving the experience for end-users (prime example: Amazon).


That isn't what happens though. Quality control with foreign suppliers is very difficult. A bad supplier with a bad name will disappear and come back with a new name. The shops are small and there are an enormous amount of them so there is very little what you might call reputation capital. Find people with experience sourcing products in China and get them to tell you stories.


Nobody forbids /r/entrepreneur denizens to go to China and open his own dropship outfit there. And in fact, many of them did. You will be surprised that all those aliexpress stores that have product description in perfect Russian, German, and French are shops ran by Russian citizens in China, mostly elderly women.


Which isn’t a bad thing. Maybe we’ll see less spam drop shipped items on Amazon finally. eBay too.


The things you see on Amazon are bought by the container-load from China and sent to Amazon's warehouses for fulfilment. This change will encourage that sort of business because it'll no longer be worthwhile sending direct from China (as the likes of dx.com and aliexpress do now).


While Amazon won't tell us, I think you are incorrect. A huge fraction of the cheap clone items you see listed are not in Amazon warehouses but are shipped direct from China. Fully half of my Amazon purchases over the past year have been direct shipped from China, to the point where now I check Alibaba first before purchasing something from Amazon if the item is unimportant enough that I don't care about the risk of getting a cheap counterfeit.


AliExpress is doing that too. I'm in Spain, and I literally just received an SMS for a shipment from "SINOTRANS" which is what AliExpress uses to ship in bulk from China then fulfill locally.


Aliexpress is the consumer-facing side of Alibaba, which is the 5th largest internet company by revenue. The fact they're doing this isn't at all surprising.


I was more referencing the non amazon distributed items, ones shipped and sold by third party.


I'm low income for where I live and buy a lot of basic $1-$5 clothes from China that would be $20-$30 equivalent in USA. This is going to hurt me directly. It's not like I'm buying food, housing, electricity from China, but having good quality fashionable clothes for very cheap when I can't afford anything except Goodwill here is beneficial for professionalism at my job, and overall satisfaction about myself.

Trump should focus on putting more money in our pockets rather than making things more expensive and hoping the pipe dream of any manufacturing is coming back to US is a reality.


Please don't take offense, but these subsidies are paid for by our taxes and I have no interest in paying to help you dress nice.

Also, if you're really buying clothes from China for $1-$5 you're almost certainly supporting child labor.


Subsidies? No, it's called free trade and efficient shipping. If I'm buying clothes anywhere else and it says made in China (most), I'm probably supporting child labor. I'm skipping the retailer charging $12 for the same thing I get for $1.88. What kind of country do I live in where I'm not allowed to dress cheap but well to go to work? What the absolute f*?

I walk to work, so I don't want to subsidize your commute or travel by roads, and I don't fly often so I'd rather not subsidize the FAA as well.


That 90% discount is because your/our tax dollars make it cheaper for China to ship here than for a business like the one you work at or might get a job at or even start in the future to ship to China or other countries.

I agree that we shouldn't pretend that we can make everything domestically--but we also cannot allow our economy and basic goods--by virtue of subsidies, no less--to atrophy while we become dependent on the parasitic influence of the PRC. China is not a free country, they are a aggressive totalitarian regime and it is a shame that the US will soon be 100% dependent on them for every good we buy.


Shop around, you can find much cheaper clothes than you quoted in the US.


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 [...]

Well its a 144 year old treaty so probably Ulysses S. Grant and the 43rd Congress.


It may still cost less. At least shipping a big thick book form Germany to the US was cheaper than shipping the same book within the US.


> 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.


You’re paying the costs, just indirectly via taxes and artificially higher US shipping costs.


Incorrect, I live in Australia.

This kinda reminds me of the conversation I had with my brother in law regarding the likes of SingAir, Emirates, and Qatar and just how much better they are when compared to US carriers that charge more on the same route despite providing an inferior product comparatively. He started on about how those air carriers are government subsidised, it's not fair, and I shouldn't be flying with them because of that. I told him I didn't care about the underlying business model, I want new aircraft, well trained staff, good quality food as well as service. Every one of those government subsidised carriers over deliver on every one of those metrics when compared to their US equivalents.

Sure, some people will take a stand because they feel the need to do so. But in general I don't believe most people care how their goods and services are subsidised, only that they believe they've received a better deal when compared to similar offerings from other providers.


Those airlines don't provide a better product for a lower cost, they are selling you a higher-end product and billing part of it to their own citizens. That's what government subsidy means.


Yes, I understand what government subsidies are and how they work. But if I'm not the one subsidising the product then I don't understand how me benefiting from that is a bad thing for me personally.

The US subsidises gasoline quite aggressively when compared to other countries around the world. You can see this in fuel costs; routinely US gasoline used to be cheaper by the gallon than Australian gasoline was by the litre. I've never once heard an American complain that their fuel is too cheap despite the fact that their taxes and government are directly responsible for said low cost.


Our gas is too cheap due to subsidies and/or due to inadequately accounting for the costs of externalities like pollution or wear/tear on roads. Or, more precisely, the lack of political will to acknowledge that discrepancy.


What subsidies for gasoline? Here we constantly fight over taxes on gasoline.


I think he just means that in relative terms gas taxes are lower in the US - but you’re right, there is no subsidy.


Perhaps not today, but an argument could be made that a whole lot of tax money has been spent over the last several decades to make sure that middle east oil came to the US.


Very little of it came to the US; the money was spent to assure low world oil prices, not to assure that Middle East oil came to the US.


Does the tree that falls in the forest with no one around to hear it, still make a sound?

For the person you’re replying to, it seems clear that the most important thing about the word “cost” is how much they personally pay — third parties are irrelevant.

“Sound”. “Cost”. The meanings of words are not as precisely identical as our subjective feelings tell us.


As a consumer in Australia, how do you benefit from cheap shipping from China to the US?


No, because those costs are paid regardless of how many packages you receive from China.

So sure, people living in the US are paying those costs "as a whole", but you don't pay any additional cost when you order a package.

It's like how driving on public roads is free, in the common sense of the word, even though of course the costs are still "paid" somehow, by somebody.


Aren't we still paying for shipping through taxes, since the USPS is a public institution?


No. The USPS is in the constitution because the Framer’s thought it was important to put there. But it is completley self-funded at this stage.


I call bullshit... They receive $100 million in tax dollars per year to subsidize blind and overseas citizens. They also get $18 billion per year in tax benefits. That is not self-funded by any stretch.

https://www.politifact.com/georgia/statements/2013/jul/24/am... http://fortune.com/2015/03/27/us-postal-service/


They are self funded except that every year they have another multi-billion dollar loss.


They have a multi-billion dollar loss because the GOP Congress passed legislation requiring them to pre-pay their employee retirement health benefits instead of funding it on a pay-as-you-go basis.

Given that the USPS is a government established and run service, thus backed by the USG in terms of its liabilities, the idea that somehow the USPS is "saving" this health benefit money somewhere is ludicrous.

It's just as stupid as the SS "trust fund" and "lockbox", which is nothing more than a paper shuffle of US treasuries from one drawer in a filing cabinet to another.


Is having the funds to pay for retiree benefits a terrible thing? In CA, most of our pensions for public employees can barely even meet current payments.

I agree about the mess of the social security paper shuffle though


> What will be the unintended consequences I wonder?

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


Most imported goods are not shipped as parcels, they come as ocean or air freight.


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


Unintended consequence: eBay stock plummets tomorrow. (Maybe.)


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.

This does not require having to leave the treaty.


It does require having to leave the treaty - if the UPU Congress refuses to reclassify China. The threat to leave, is meant to apply enough pressure to finally get that reclassification accomplished. They've been intentionally dragging their feet on this matter over time and they only meet under normal circumstances every four years (they can of course hold emergency sessions).

It's the exact same problem the US has had with the WTO, it has refused to do anything about China's dramatic state sponsored dumping for more than a decade. These are global bodies that are invalidating themselves by refusing to normalize rules for China now that they're a massive economic power.


I heavily dislike that america just leaves treaties it does not like instead of improving them. Most smaller countries cannot use the same method.

If my country for instance were to do thay nobody would ship there any more because the billing system would be too complex and expensive and the market is just too small.


In the article they make it clear that they’ve indicated they intend to leave, in a year’s time as required by the treaty, if negotiations to bring China out of its old developing nation status don’t succeed.


> Most smaller countries cannot use the same method.

Sure, but America can, so why shouldn’t it?


The more it does things like that, the more the rest of the world moves on without it.


Might is right.


there are a multitude of other ways, ways which are completely oblivious to the current administration as well as its supporters.


There have been efforts and negotiations to get the UPU to reclassify China from developing nation status for quite a while now, to no avail. This is the final gambit in those negotiations.

It’s best if you don’t let your hatred of an administration color your perceptions such that you choose not to look at facts.


Can you cite those efforts and negotiations? I want to read more.


If there were such ways, why isn't your country doing them?


You are of course correct that in general the US for the last 2-3 decades has been at best schizophrenic about multilateral institutions it was originally instrumental in setting up, and at worst actively hostile.

But in this case, my understanding is that the US did attempt to renegotiate the postal treaty recently, rather than abandon it, without much success.

The exit isn’t finalized, so this could be seen as an (admittedly very formal) gambit in the larger overall negotiation process.


This has been going on for quite a long time. WTO constantly ask China to explain and China keep coming up with explanation / excuses, depending on how you view it.

So something needs to be done, either China truly opens up its market, or continue this trade war disputes for decades to come. ( Which might turn into a real war )


True, but speaking of the WTO, how hard has the US really tried there? A lot of people with economic power in the US benefit from being able to play labor arbitrage with China.


Relevant quote from the article:

“The process of withdrawing from the treaty takes at least a year and the White House said it would be willing to remain in the UPU if negotiations were successful.”

The UPU has not reclassified China despite years of pressure to do so, and this is the only leverage left to a country in the treaty to force that to happen.


> This is why sometime this year people who receive such mail will be billed additional fees increasing slowly over the next few years.

Why are the people receiving the mail being billed extra when it is the sender failing compliance?

Shouldn't this be rolled into "shipping and handling" that the sender has to deal with?


How would you bill the sender for this? The item is already in your local postal system by the time you know it is non-compliant. It’s a choice between not delivering the packages, having the rest of the postal system subsidise them or ask the recipient to make up the difference.


IIRC, there is a way to do something similar in with the USPS, even if it is just a simple letter. Fill out a form, and the receiver gets a bill for the postage due. Something similar happens if you post a letter that cannot (for whatever reason) be returned: The receiver gets a bill they must pay before they can have the package.

I think that they figure the sender probably knows they are getting a lot of mail since the bulk of it is items ordered. They can know they are non-compliant by having standards on how many "free" packages one can receive and/or sending a notice when one is getting close to the limit.


Because the cost of international mail is fixed under the treaty, so there is no way to charge fees to senders in other countries.


> This is why sometime this year people who receive such mail will be billed additional fees increasing slowly over the next few years.

Interesting, got a source for that?



Yeah, not a word about "people who receive such mail will be billed additional fees". It mentions that the sender in China will be charged more over time.

Quite a difference.


From all the people I have talked to about this especially makers who order alot from China, it was my understanding that this is what the post office will do. It is probably also the only thing they can do and they already have a system in place to collect such fees.


How will the Swiss Post Office charge the sender in China a higher fee? It is much easier to charge a fee to the receiver who is in Switzerland.


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.


That this level of physical inefficiency is a sound business model well illustrates how unfair this shipping subsidy is.

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