China imposes tariffs on scrap imports from the US
The trade war between the U.S. and China has escalated with the Aug. 23 addition of reciprocal tariffs on $32 billion worth of goods, which include scrap materials shipped from the United States to China.
Aug. 7, the U.S. Trade Representative’s (USTR’s) office published its final list of $16 billion in Chinese goods that would be subject to the additional 25 percent tariff. China responded soon after by announcing its intentions to begin imposing an additional tariff of 25 percent on certain goods, including scrap, imported from the U.S.
The tariffs announced by the USTR were part of the U.S. response to what it claims are China’s unfair trade practices related to the forced transfer of American technology and intellectual property. The U.S. enacted an initial round of tariffs on nearly $34 billion in Chinese goods under Section 301 of the Trade Act of 1974 July 6.
The USTR’s list of goods affected by the most recent round of tariffs contains 279 of the original 284 tariff lines that were on a proposed list announced June 15. Changes to the proposed list were made after USTR and the interagency Section 301 Committee sought and received written comments and testimony during a two-day public hearing in July. U.S. Customs and Border Protection began to collect the additional duties on the Chinese imports in question Aug. 23.
In March 2018, USTR released the findings of its Section 301 investigation into China, which found that country’s acts, policies and practices related to technology transfer, intellectual property and innovation are unreasonable and discriminatory and burden U.S. commerce. According to the investigation, China uses joint venture requirements, foreign investment restrictions and administrative review and licensing processes to require or pressure technology transfer from U.S. companies.
The country also deprives U.S. companies of the ability to set market-based terms in licensing and other technology-related negotiations and directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets to generate large-scale technology transfer, according to the USTR report. Additionally, China conducts and supports cyber intrusions into U.S. commercial computer networks to gain unauthorized access to commercially valuable business information.
The Institute of Scrap Recycling Industries (ISRI), Washington, says the tariff codes affected by China’s retaliatory measures include 3915 Plastics, 4707 Paper, 7204 Ferrous, 7404 Copper, 7503 Nickel, 7602 Aluminum, 7802 Lead, 7902 Zinc, 8002 Tin and 8104 Other base metals
In 2017, the United States exported a total of $5.6 billion worth of scrap commodities to China, according to ISRI. Through the first six months of 2018, the total value of U.S. scrap exports to China was $2.2 billion, a decrease of 24 percent from the same time frame last year, the association adds.
ISRI attempts to prevent proposals before the Basel Convention regarding plastics recycling from moving forward
The Institute of Scrap Recycling Industries (ISRI), Washington, says it is working to prevent proposals that could restrict the trade of scrap commodities from moving forward. The proposals were scheduled to go before the Basel Convention when it met in Geneva Sept. 3-6.
By way of background, ISRI says that in March at the direction of the Basel Convention Conference of Parties, an Expert Working Group began to review the legally binding annex of the convention that pertains to what is considered hazardous materials as well the annex that determines what are disposal and recycling operations. The European Commission has proposed redefining certain recycling processes as “treatment” rather than recycling.
In June, the government of Norway proposed to the Basel Convention secretariat that plastic waste and scrap be removed from Annex IX (wastes not covered in the convention) and added to Annex II (categories of wastes requiring special consideration or “other wastes”), thereby placing plastic waste and scrap within the scope of the Basel Convention. Norway’s intent is to use the Basel Convention to address the marine litter crisis, ISRI says.
If both proposals are adopted, they could reshape the recycling industry and how scrap commodities are traded, the association says. ISRI notes that global trade of plastics scrap in 2017 was approximately 9.8 million tons, with a reported value of $4.3 billion. The U.S. exported 1.84 million tons of scrap plastics in 2017 with a value of $633 million.
Under the European Commission proposal, ISRI says processes such as dismantling, sorting, crushing, compacting, pelletizing, shredding, blending and mixing would be considered “mechanical treatment” and not recycling.
Norway’s proposal would result in “administrative burdens for plastic scrap traders worldwide,” according to ISRI. “More troubling for U.S. companies that import or export plastic scrap is that it would place a severe restriction on trade given that the United States is not a party to the Basel Convention, and, thus, there are only limited exceptions to prohibitions on trade between parties and nonparties.”
ISRI says it believes “the implications of adopting Europe’s definition would completely discredit the vital role recycling plays in the international economy. Adopting Norway’s plastics proposal would do more to discourage plastics recycling than it would help curb plastic waste in the oceans, and we believe recycling is part of the solution, not the problem.”
Regarding the European Commission’s proposal, the Brussels-based Bureau of International Recycling (BIR), of which ISRI is a member, says it “intends that its members’ manual and mechanical operations—such as dismantling, sorting, compacting, pelletizing and shredding—are correctly allocated in Annex IV as recovery and recycling operations.”
ISRI, as well as other representatives of manufacturers, users, processors, transporters, converters and recyclers of plastic materials, have sent a letter dated Aug. 28 to the chairs of the Basel Convention regarding Norway’s proposal.
The letter states, “[T]he proposal will erect new barriers to the responsible shipment, collection and recycling of used plastics. These impacts will increase risks of material mismanagement, especially in countries lacking adequate recycling infrastructure, which has contributed to the growth of marine debris.”
ISRI says it is “working aggressively through multiple channels to prevent these proposals from moving forward,” adding that Europe’s definition of recycling operations is still under consideration and would only be reported to meeting participants in September.
Norway’s plastics proposal was tabled at the meeting, and Basel Convention Members, with input from observers such as ISRI, will determine whether to pursue a more formal consideration of the proposal.