If someone in China sends a packet to the US via China Post, China Post are responsible for getting it to the US, while USPS are responsible for getting it from wherever it lands in the US to the recipient. An agreement made between all national postal services via the Universal Postal Union determines how much China Post have to pay the USPS for this final leg, a fee called the "terminal due".
The UPU agreement on terminal dues sets a sliding scale based on the sending country's level of economic development - less developed economies pay less, while more developed economies pay more. The logic behind this is fairly obvious, in helping less-developed economies to fully participate in the international mail system.
The problem for the USPS is that they are obliged to handle large volumes of mail originating in China, but the terminal dues for lightweight items are substantially below their cost of delivery. The handling of these items is effectively cross-subsidised by USPS customers.
The US is demanding that terminal dues should be set at a flat rate based on domestic postal costs, with the possibility of direct subsidies for less developed postal systems. This would partly (though not completely) reduce the competitive advantage for Chinese e-commerce sellers.
The UPU agreement on terminal dues sets a sliding scale based on the sending country's level of economic development - less developed economies pay less, while more developed economies pay more. The logic behind this is fairly obvious, in helping less-developed economies to fully participate in the international mail system.
The problem for the USPS is that they are obliged to handle large volumes of mail originating in China, but the terminal dues for lightweight items are substantially below their cost of delivery. The handling of these items is effectively cross-subsidised by USPS customers.
The US is demanding that terminal dues should be set at a flat rate based on domestic postal costs, with the possibility of direct subsidies for less developed postal systems. This would partly (though not completely) reduce the competitive advantage for Chinese e-commerce sellers.