The United Nations agency regulating postal systems worldwide agreed on Wednesday to reforms to prevent the the United States pulling out of the organization, largely over a dispute with China.

President Donald Trump's administration had argued that the US Postal Service subsidized deliveries from other countries, especially China, and last year threatened to withdraw from the Universal Postal Union (UPU) this year.

UPU Director General Bishar Hussein warned on Tuesday that a US exit from the 193-member agency would be a "nightmare scenario" that would disrupt global mail delivery.

Under a compromise reached in an emergency session on Wednesday, nations agreed to a phased-in deal over five years that will allow countries importing high volumes of mail and packages to "self-declare" rates they charge for distributing foreign mail from January 2021. The United States will be able to self-declare rates as of the end of June next year.

China to pay more

The United States had complained about the decades-old system under which the US Postal Service was reimbursed for the final deliveries of "bulky letters and small parcels" sent from abroad.

The current system charges sender countries where the postage is paid for delivery in destination countries, yet developing countries including China pay lower rates than industrialized countries.

Trump's trade adviser, Peter Navarro, said that under the current system the US Postal Service was effectively subsidizing $300-$500 million (€274-€456 million) to deliver imports, including goods mailed to the United States from China. The issue has gained greater importance with the growing e-commerce market.

"China is certainly going to pay more for the privilege of shipping to our market," Navarro told reporters. "We'll buy less stuff from China and more stuff from other countries," he added.

End-customers may pay more

The US Chamber of Commerce praised the deal.

"The administration deserves a tremendous amount of credit for their leadership in tackling an antiquated, market-distorting global pricing arrangement that for too long has seen the United States footing the bill to deliver the rest of world's mail," said Sean Heather, the chamber's senior vice president for International Regulatory Affairs, in a statement.

UPU Director Hussein told reporters that he was pleased to reach a compromise on the rate issue that had been weighing on the organization for "a very long time."

But he conceded some end-customers would have to pay more.

"Once a country declares their rate, exporting countries will have to factor that cost, it means that cost will be transferred to the person sending that item ... When you are in a country and you buy items overseas, the end-customer will definitely have to pay a higher price."

cw/se (AFP, AP, Reuters)

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