Unlike domestic rate changes, the Postal Service’s rate changes for international postal services are not reviewed by the Postal Rate Commission (PRC) and the delivery of outbound international mail is not covered by the Private Express Statutes (PES). To provide worldwide mail service, the Postal Service uses the domestic mail system as an integral part of the UPU international distribution network. However, when the Postal Service issued regulations suspending the restrictions for “extremely urgent letters” in 1979, private U.S. carriers used that suspension to expand a practice called “international remailing.” Through remailing, U.S. mailers bypassed the Postal Service, using private carriers to deposit U.S. outbound nonexpedited international letter mail directly into foreign postal systems either (1) for return to the United States and delivery by the Postal Service at rates below domestic postage (known as “ABA remail”); (2) for delivery within the destination country at rates below U.S. international postage (known as “ABB remail”); or (3) for distribution and delivery to other countries, also at rates below U.S. international postage (known as “ABC” remail). 3.) The Postal Service Said It Plans to Compete More “Aggressively” in the International Mail Market

The Postal Service believes that it needs to be a competitor in the international mail market for two reasons. The Postal Service and Its Competitors Have Long Faced Contentious Legal and Regulatory Issues Regarding International Mail Delivery

The Postal Service’s efforts to compete for increased shares of the international mail markets have raised issues for both the Service and its competitors. Specifically, the Postal Service is attempting to overcome what it considers to be statutory and regulatory barriers that limit its ability to compete for international mail business. The Postal Service Allegedly Gained From Its Role in the Universal Postal Union at the Expense of Its Competitors

According to ACCA, the Postal Service has benefited from (1) its official role as a national postal administration and (2) its exclusive access to foreign postal administrations through UPU, by receiving special treatment from customs services under both United States and foreign laws. The Postal Service also defends its responsibility as the U.S. representative in the UPU on the basis of its statutory and treaty obligations. The Postal Service said that it does not price its services below costs. ACCA also believes that the Postal Service has made inappropriate comparisons of Service and Federal Express market shares and misstated its overall share of the international mail market.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Postal Service's (USPS) participation in the international mail market, focusing on: (1) USPS responsibility for delivering and receiving international mail; (2) the competition for international mail delivery and USPS plans to increase its competitiveness; (3) legal or regulatory issues arising out of the competition in international mail services.

What GAO Found

GAO found that: (1) USPS and other Universal Postal Union (UPU) members provide a worldwide mail delivery network even to remote locations; (2) USPS is concerned that it is losing international mail market share to private carriers whose services are more dependable, faster, and cheaper than USPS service; (3) some foreign postal services also compete in the United States for certain outbound international bulk business mail; (4) USPS has developed an aggressive strategy to regain market share that includes new services, service improvements, and market-based prices; (5) USPS officials believe that the statutory requirement that it use U.S. flag carriers at Department of Transportation-set rates limits its ability to compete for international mail; (6) competitors believe that USPS unfairly benefits from its federal status, exclusive access to foreign postal administrations, and status as the sole U.S. UPU representative; (7) competitors believe that certain USPS pricing practices violate laws and regulations and the Postal Rate Commission should set international mail rates just as it does domestic rates; (8) although competitors believe that USPS status as the sole UPU representative is unconstitutional, USPS believes it is justified by its statutory and treaty obligations that are not shared by its domestic competitors; and (9) the USPS role in the international mail market is similar to the issues surrounding USPS competitiveness in the domestic market.