RAND PAUL, Anited States Senate WASHINGTON, DC 20510 May 8, 2018 The Honorable Steven Mnuchin U.S. Department of Treasury 1500 Pennsylvania Avenue N.W. Washington, DC 20220 Dear Secretary Mnuchin, I write today to commend your selection as Chairman of President Donald Trump's Task Force on the United States Postal Service (USPS). As a member of the Senate Committee on Homeland Security and Governmental Affairs, which is the committee of jurisdiction over postal matters, | am particularly interested in the Administration’s view on USPS’s cost attribution practices as well as its role in competitive commercial markets, and I am looking forward to reviewing the Task Foree’s work and recommendations in these areas. Accordingly, I would respectfully request that you attend to two specific issues relating to international mail: 1. Pricing under the “terminal dues” system ‘As you may know, international mail is exchanged between countries and delivered under the auspices of a treaty known as the Universal Postal Union (UPU). Under the UPU’s “terminal dues” system, USPS is required to deliver foreign packages at rates far lower than those available to domestic shippers. A recent guest columnist for the Wall Street Journal’s opinion section indicated that his product—a travel beverage tumbler known as the Mighty Mug—costs his firm $6.30 to ship via USPS within the United States, while a similar item can be mailed to the U.S. from China for just $1.40.' Not only does this arrangement severely distort the marketplace and place domestic shippers at a distinct disadvantage, it foregoes substantial USPS revenue: in March 2017, the Postal Regulatory Commission estimated that USPS lost $134.5 million on inbound packages in 2016 alone. Moreover, if USPS were to charge foreign merchants the same rates as they charge domestic shippers, they could potentially ean an additional $1 billion annually. + "This Subsidy for China Is Dumb as a Post”, Wall Street Journal, Feb. 6, 2018 yost-1517963275 2 postal Regulatory Commission, Annual Compliance Determination Report, Fiscal Year 2016, March 28, 2017 httos://www.pre.gov/sites/default/files/reports/Annual%20Compliance%20Determination%20Report% 2C9620Fscal 1016.002. International trafficking, parcel security, and Advanced Electronic Data Furthermore, under the UPU, foreign postal services are not required to follow the same customs and security processes that are imposed on other international shippers. A recent Senate Permanent Subcommittee on Investigations (PSI) report? on vulnerabilities in the international mail system concluded that “the federal government's policies and procedures are inadequate to prevent the use of the international mail system to ship illegal synthetic opioids into the United States.” The report notes that, due to the customs and security exemptions under the UPU for foreign postal services, “... 318,891,780 packages entered the United States with no associated {advanced electronic data, or AED] on the sender’s name and address, the recipient’s name and address, or the contents of the package. With no AED, [Customs and Border Protection] was unable to target any of these packages for further inspection before they entered the United States.” Although they are not enumerated in the President’s Executive Order, I believe these two issues—one artificial market distortion and one glaring security vulnerability—are worthy of the Task Force’s time and serutiny Therefore, I respectfully request that you: 1. designate an official from the Department of State who is familiar with the UPU and the international mail system to serve on the Task Force; and 2. advise me of the steps that the Treasury Department, in conjunction with the Department of State, intends to take in order to correct the competitive disadvantages inherent in the terminal dues system; and 3. include among the Task Force’s recommendations any and all Executive Branch actions and/or legislative reforms you believe would resolve these concems about the integrity and safety of the international mail marketplace. Again, thank you for your time and consideration, Sincerely, and) Gow Rand Paul, M.D. United States Senator 3 Senate Permanent Subcommittee on Investigations, Combatting the Opioid Crisis: Exploiting Vulnerabilities in international Mail, January 25, 2018