* U.S. says low postage rates subsidise Chinese imports
* Washington sets deadline for October
* No country has ever quit 192-member postal agency (Recasts after press conference)
By Stephanie Nebehay
GENEVA, Sept 24 (Reuters) - A threat by Donald Trump to pull the United States out of the global postal system could lead to a "nightmare scenario" of mail going undelivered, packages piling up and American stamps no longer being recognised abroad, the U.N. postal agency said.
The Universal Postal Union (UPU) has been holding an emergency meeting in Geneva to persuade Washington not to follow through on a threat to quit the agency, which sets rules to ensure mail gets delivered around the globe.
The Trump administration says it wants to charge other countries more than UPU rules now permit to have letters and packages delivered in the United States. It has set a deadline of next month for rates to be raised or it will quit.
"It is really a nightmare scenario," the UPU's secretary-general, Bishar Hussein, told a news conference, noting that no country had ever left since the agency was founded nearly 150 years ago. It now has 192 members.
"If the United States leaves, you'll get those piles, because somehow every country has to figure out how to send mail to the United States.... A major disruption is on the way if we don’t solve the problem today."
Were the United States to quit the UPU, U.S. stamps would no longer be valid abroad, he said. He said he was "very optimistic" that a compromise could be reached.
The UPU is one of the oldest international organisations, set up in 1874 to ensure that mail could be delivered anywhere on earth. It establishes a system for calculating the fees, known as "terminal dues", that countries collect from each other to deliver mail that arrives from abroad.
Washington says the fees are too low, which unfairly benefits exporters from countries such as China, who can send goods ordered online to U.S. customers while the U.S. Postal Service bears part of the cost of delivering them.
White House trade adviser Peter Navarro, who heads the U.S. delegation, called for fixing a 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 the three-day talks.
Navarro, speaking to journalists, said: “In an age of e-commerce the United States is being forced to heavily subsidise small parcels coming into our country. Many are from China but this is not strictly a China problem."
He said the system meant the U.S. Postal Service was effectively spending $300 million-$500 million to subsidise the cost of delivering imports, including counterfeit goods and drugs mailed to the United States from China.
Other countries that receive more mail than they send, including Brazil, Canada, Norway and South Africa, were also being hit, he said. Countries should be allowed to set their own rates, which he said "might cause some very short-term disruptions" but was "the clearest, cleanest, fairest and quickest path to a reform that is long overdue".
Democrats Abroad, the arm of the Democratic Party for Americans overseas, has warned of chaos and urged members to lobby Congress against the proposal by the Republican administration to quit the body.
"If the withdrawal goes forward, postal mail service to the United States will be thrown into disarray and the USPS expects postal service to and from the States to be massively disrupted," the group said in a statement.
Navarro said Washington could quit without problems.
"We have prepared for a seamless transition. There will be absolutely no disruption in military mail, election mail, or holiday mail," he said. (Additional reporting by Marina Depetris Editing by Peter Graff)