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Comment by crispyambulance | Hacker News Reader

I have ordered stuff from aliexpress and got "ePackets." It always seemed strange and now it is even stranger because, apparently, the shipping costs are subsidized NOT by China but by the USPS itself (https://www.forbes.com/sites/wadeshepard/2017/11/05/how-the-...).

How did this "deal" happen? Who is getting paid, and what benefit does the USA get from this?

I mean this is just consumer shipping we're talking about, small potatoes compared to commercial B2B shipping. But still it must add up to something significant as well as being demonstrably hurtful to US-based small business.

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It's the UPU, or "Universal Postal Union" http://fortune.com/2015/03/11/united-nations-subsidy-chinese...

It's a function of the United Nations: https://en.m.wikipedia.org/wiki/Universal_Postal_Union

Basically, China is being subsidized because they qualify as "third world".

Technically, China was second world (when the terms actually meant something other than just 'rich' and 'poor'). A more accurate term might be 'developing'.

China was always the odd ball when 1st world meant Western countries and 2nd world meant USSR aligned countries. Beginning in the late 1950's China fully broke ties with Russia over ideological differences.

Huh, doesn't someone want to change that now? And who is paying for the subsidizing? This is pretty ridiculous in my opinion

When the "deal" (international postal agreements) happened, nobody could foresee a country sending 10000 packages for each package received. They guessed the balance would hang close to 1:1, with the western industrial powers (i.e. major exporters) probably sending more packages than they received.

Thus it made sense that USPS carries Chinese parcels for free, if China post carries US parcels for free in return.

Another linked Forbes article fingers the UPU, a UN agency, as the source of the rate schedules: https://www.forbes.com/sites/wadeshepard/2017/11/05/how-the-...

Wikipedia on the UPU: https://en.wikipedia.org/wiki/Universal_Postal_Union

It may be small potatoes, but international shipping certainly affects my side business. From what I can tell, China is not the only country where there's a big asymmetry between postal costs for shipping to and from the US. When I get things delivered from England (obscure bike parts, related to my hobby), the postage cost always seems like a fraction of the cost for me to ship something of similar weight to England. And shipping to Canada just went through the roof.

This is actually a really good video by Wendover Productions that explains the UPU https://m.youtube.com/watch?v=dHhkNwE7pr8

>How did this "deal" happen?

Although no expert, I do know enough to possibly answer your question. This has been going on since the 60's and to some extend the Universal Postal Union goes back to 1863[1]. At the time, when you wanted to mail a letter, it was fairly complex. You had to arrange for the details of your shipping for every route your letter took. Meaning you had to calculate for every leg of the shipment ahead of time. So they came up with these 3 points (From Wikipedia):

    There should be a uniform flat rate to mail a letter anywhere in the world
    Postal authorities should give equal treatment to foreign and domestic mail
    Each country should retain all money it has collected for international postage. [2]

The problem is that this system hasn't really been updated that often. So rates do not make sense anymore, especially not since ecommerce took off.

Along came USPS and signed a special deal with China in 2010 to increase their presence in China (well, that's the official statement anyway[3]).

That statement however leaves out a very important part. Which is that USPS lost so much money under UNU, that although they had a net loss of $29.4 million in 2012[4]. They would have "lost another $1 million or so in 2012 had Chinese shippers opted for regular mail instead of ePacket."[4].

So basically the USPS was already losing a ton of money, and this is a way of minimizing the damage.

The real issue is that the broader picture isn't really taken into consideration. Which is, that China is literally sending things for rates cheaper than Amazon which is estimated to pay USPS $2 per package[5]. Take the fact that most items are manufactured in China for cheap anyway, and you have just signed away a lot of domestic business opportunities.

[1]http://www.slate.com/articles/news_and_politics/explainer/20...

[2]https://en.wikipedia.org/wiki/Universal_Postal_Union

[3]https://about.usps.com/news/national-releases/2011/pr11_037....

[4]https://www.washingtonpost.com/news/storyline/wp/2014/09/12/...

[5]https://www.bloomberg.com/news/articles/2015-07-30/it-s-amaz...

Anyone feel free to correct or add information, it's an interesting topic.

> So basically the USPS was already losing a ton of money

The USPS isn't losing a ton of money. It is profitable.

The "loss" is that congress mandated that the USPS accumulate 75 years worth of employee retirement funds and gave them 10 years to do it. So they "lose" $5B a year because they are not able to pay that amount into a retirement fund.

Don’t knee jerk this as a political thing. They’re saying that the USPS loses money on this service. It has nothing to do with their overall profitability or Congressional action or whatever.

Once upon a time (10 to 7) years ago, it did cost 60 cents or even less to send a small international parcel using China Post. The market rate for international postage was around 80 cents retail, but eCommerce companies can get volume discount down to 68 cents, and opt for provincial eCommerce development subsidies, which brought the price of postage down to 48c.

I knew few Russians who made a non insignificant amount of money by going to China and setting up their own mail order dropshipping companies the same way locals did.

Any idea why some hobby parts clearly shipped from Shenzhen come with Vanuatu franking? I.e. is the reason Chinese companies sometimes pretend to ship from Vanuatu related to postal agreements or something else (like other trade issues)?

Postal services of UN members agree to subsidize postal services of lesser developed countries, which include China.

USA has a duty to help China to lift out of poverty.

If there were actually any such duty, the US long ago fulfilled it by investing trillions of dollars of capital into China and allowing dramatically unbalanced trade to go on for decades (resulting in trillions of dollars in trade deficits; not to mention the unfair dumping by state Chinese companies, countless economic regulations in China that are against the rules or spirit of the WTO, and so on).

The US built modern China in the exact same way the old European powers helped build up the US with vast capital inflows and trade.

All the parties have benefited. One can argue China benefited more, however the very undeveloped party in the transaction will usually benefit a lot more (again as was the case with the early US economic development in trade/investment with the British Empire or France).

And just as the US accuses Chinese entities of IP theft, this is how the US got its industries established as well. Some famous examples include the spinning mills (actually an amazing story involving memorizing how the mills work: https://en.wikipedia.org/wiki/Francis_Cabot_Lowell_(business... or https://en.wikipedia.org/wiki/Samuel_Slater) and ignoring foreign copyright (http://blog.tavbooks.com/?p=714 for some discussion or a more interesting one here showing how even then book piracy helped authors: http://www.trademarkandcopyrightlawblog.com/2017/01/charles-...)

Of course the British had smuggled out the design of Italian silk factories and rubber seeds from Brazil, breaking the Portuguese monopoly....it was ever thus.

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