The agreement sets rates for sending packages between 192 countries.

But the US says discounted prices for countries like China are putting its businesses at a massive disadvantage.

It says it will pull out of the agreement next month unless the specialised body, the Universal Postal Union (UPU), reaches a deal this week.

Should this happen, the US will become the first country ever to withdraw, and it's unclear what impact this will have on international trade and commerce.

"It is really a nightmare scenario," UPU secretary-general, Bishar Hussein, told a news conference on Tuesday.

How does the system currently work?

International mailing rates are governed by the UPU, a unit of the United Nations that traces its roots back to 1874.

The current deal is signed by 192 countries, and sets the cost of delivery between the postal operator of the origin country and the postal operator of the destination country.

Each nation is placed into one of four categories based on their economic and postal development.

The most industrialised countries, like the US, are placed in Group 1 while the least developed fall under Group 4. Higher rates are set for wealthier nations, and lower rates for poorer countries.

The system is reviewed every four years during a quadrennial congress, and the UPU says it ultimately aims for every country to fall under the same rules.

Why is the US opposed to the current system?

Several countries have expressed their opposition, but last October the US became the first to threaten withdrawal.

It argues that China, a major global exporter, is now the biggest beneficiary of the system because it is a major economic power but still pays lower rates than the US.

US firms say that, as a result, it can cost significantly more to post an item within the US than shipping it from abroad. Officials say this is unfair to US manufacturers and facilitates the shipment of counterfeit goods.

 White House trade adviser Peter Navarro (left) says the UPU's system is "broken"

The US wants changes to the postal treaty to allow countries to set their own rates for parcels weighing under 2kg (4.4lb). They are already allowed to do so for bigger packages.

During talks on Tuesday, President Donald Trump's hardline trade adviser Peter Navarro called for changes to the system "that everyone in this room knows is broken".

"The mission here today is to retool this system for the brave new world of e-commerce," he told delegates on Tuesday.

What happens now?

The three-day conference will end on Thursday, and unless a deal is reached, the US says it will make good on its threat to withdraw.

The process of withdrawing from the treaty will take at least a year, and would require the US to set up its own bilateral agreements with countries around the world.

During talks, the US has signalled that it is willing to accept a two-phased option allowing it to impose new rates immediately, while giving other countries five years to do the same.

UPU director general Bishar Abdirahman Hussein has warned of "major disruption" if the US were to withdraw

Mr Navarro said Washington could quit without any problems, and UPU spokesperson David Dadge told the BBC that the UN body had a plan of action should the US decide to withdraw.

Speaking to reporters, Mr Hussein warned that "major disruption is on the way if we don't solve the problem today".

He said every country would have to "figure out how to send mail to the United States".