The Universal Postal Union was established in 1874 and acts as a forum for postal sector stakeholders. Initially, the UPU was developed in part to give developing markets greater access by offering lower rates than developed countries. Now, the subsidized rates afforded to countries like China and Singapore are lower than shipping rates between developed economies, and often do not cover actual shipping costs. The subsidized rates may also inadvertently support counterfeiters and traffickers of contraband material which manufacture their product overseas in a developing economy and ship the product direct to its customers at a fraction of the shipping cost.
While there are legitimate concerns regarding these rate subsidies, the move by the U.S. to withdraw may threaten benefits derived from the UPU, such as intelligence sharing. The UPU recently set a requirement for its member states to develop a process by 2020 that collects parcel information on packages going through international mail. This requirement, which is similar to a Government Accountability Office recommendation for the U.S. Postal Service, aims to help Governments fight opioid trafficking as well as other illicit product sales.