The 1994 NAFTA Agreement and the Postage Paradox: An Unequal Playing Field that remains current day

Fun fact: The North American Free Trade Agreement (NAFTA), established in 1994, is said to be a cornerstone of economic relations between the United States, Canada, and Mexico. However, its impact on international postage rates and labor markets has created significant disparities, particularly for American businesses that has continued for thirty years now.

The Postage Paradox

One often overlooked aspect of NAFTA is its influence on international postage rates.

Have you ever noticed items from China ship for a penny on ebay, but American sellers pay over $3.50 to ship the same item?

While the agreement itself did not set specific postage rates, it played a pivotal role in shaping trade relationships and, by extension, international shipping costs.

American businesses have long grappled with high postage rates, making the U.S one of the most expensive countries for shipping. Yet, despite the exponential growth of e-commerce and global trade, these rates have remained largely unchanged proportionately with American businesses paying far more to mail essentially the same item.

Interestingly, China enjoys significantly lower postage rates due to an outdated provision of the Universal Postal Union (UPU), a specialized agency of the United Nations responsible for establishing international postal policies. The UPU classifies countries into four groups based on their level of economic development. When the system was established, China was classified as a ‘transition’ economy, which entitled it to exceedingly lower postage rates.

China’s Advantage: Low Postage Rates and Labor Costs

The low postage rates that China enjoys have given Chinese companies a competitive edge, enabling them to ship goods to consumers around the world at lower costs than their American counterparts. This discrepancy is often referred to as the ‘postage paradox.’

Moreover, American businesses also face stiff competition from China’s labor market. China, known for its low labor costs, has been criticized for poor working conditions and alleged use of forced labor from “people in cages” and sweat shop factories. These practices allow Chinese manufacturers to produce goods at a fraction of the cost compared to American manufacturers, further skewing the competition on top of ridiculously cheap shipping. 

This way, China freely competes and effectively steals sales from artisans shipping within their own city, down to their own street as its become cheaper, (due to these treaties) to simply buy from China. 

As a result, crafters and artisans are competing with a powerful force that has unfair advantages right in their back yards.

As an artisan, it also terrifies me and other artists like me who are affected by the face that Chinese manufacturing doesn’t have to abide by copyright law because it is not law in their country.

This means an artisan’s products can be copied, severely under-sold, and then shipped for practically nothing, and the American artisan and small business is left utterly defenseless as their previously believed protected livelihood is stolen in broad daylight.

The need for awareness

It’s clear that the current situation puts American businesses at a severe disadvantage. The unequal postage rates and the vast disparity in labor costs, and no intellectual enforcement create an uneven playing field.

I would hope that there is a revision very soon to the trade agreements that led to this reality.

What I wish my fellow shoppers to do is to think about this situation when they walk into big box stores to purchase items that are literally shipped directly from China.

Is it an item that could have been hand-made locally?

Are you skipping over small business which is already competing with the unfair advantages inherent to trade deals with China, only to choose China yet again off the big box shelf?