Having just returned on Saturday evening from several days of meetings in Beijing with Chinese and U.S. government officials as well as with our industry association counterparts in paper, plastics and metals, we wanted to share with you what we learned.
Guidance based on what we learned is also provided here to help ease some of the problems we anticipate with the implementation of China's new rules affecting our industry.
China is facing a serious environmental crisis, and the Chinese Government has made cleaning up the country’s environment – and creating a “Beautiful China” – its number one priority. Their focus is not on any one industry, but across all sectors of the country’s economy regardless of the impact on jobs and production. A wide-ranging series of actions – including closures, aggressive enforcement and the tightening of environmental controls – are being implemented in industries as far ranging as agriculture coal, oil and recycling.
What is clear from our meetings last week is that:
- These actions are coming from the highest level of the Chinese Government, and the agencies being forced to develop (MEP) and implement (AQSIQ) these new rules (including the ban and the carried waste thresholds) are being told to do so as quickly as possible without the time and resources needed to get it right.
- The Chinese philosophy that “if you need something corrected, you go overboard and later correct” is very much in play here. This was repeated to us several times.
- The Chinese are struggling to distinguish between what is waste (that they do not want in their country at any cost) and valuable resources, i.e., scrap (that they understand is needed as feedstock for Chinese manufacturing). And in their rush to meet President Xi Jinping’s directive to develop rules to prevent “foreign waste” from entering their country, they have created terms and standards inconsistent with the global trade. During our meetings it was clear that there is little understanding within the Chinese government of the chaos they have created.
- In meeting with AQSIQ in particular, it is clear that they are not prepared for the implementation of the ban for mixed paper and residential plastics scheduled to start on January 1as they could not answer questions as to the meaning of the terms. Thus, the likelihood of individual inspectors at the ports understanding what they are inspecting – and what they are looking for – is very low.
- The Chinese Government is listening to what ISRI is saying, which is the reason for the albeit modest improvement in the carried waste threshold proposed last month. However, they have limited time and ability to take in all the comments.
- There is a working group of officials from the U.S., Canadian, UK, EU, Australian, New Zealand, and Japanese Embassies in Beijing coordinating strategy and speaking to the Chinese government on behalf of our industry. We briefed this group last week and were very pleased with the concerns expressed by each and their joint commitment to provide support.
We attempted during our meetings to get clarifications to the Chinese Government’s definition of “carried waste,” the specific scope of paper and plastics to be banned and the specific timing that these actions will come into force. For “carried waste,” it is very clear they do not want imported trash but are confused as to how to define what is trash and what is not. Beyond that, the government does not know the answers to our questions, which included very specific examples of grades that are typically exported to China. Furthermore, they have not fully prepared for the implementation of the regulations, and we believe even more confusion and inconsistency is yet to come.
Here is what we recommend to members preparing shipments for export to China:
- Keep trash/waste out. Do not load dirt, wood, concrete, rocks or anything else that doesn’t belong in the container, as these will likely result in a rejection. This includes not scooping material from the bottom up – use other means wherever possible to load containers. Also, make sure that cardboard or aluminum cans, even though they are recyclable, aren’t in loads that aren’t cardboard or aluminum cans. Don’t give the inspectors an easy way to reject your load. Be extra vigilant when loading! We can’t stress this enough.
- Include more photos. Take more photos than what is required, and make sure they capture clean floors, properly sorted material, clean handling and loading, and quality/cleanliness of the material. Document the condition and contents of all shipments before export.
- Be prepared for rejections. We anticipate a greater number of rejections of material before and after shipping, and it will not necessarily be related to scrap quality but unfortunately on misunderstandings by inspection officials as to what they are looking for.
To the extent possible, please keep records of your experience, including the reasons given for any rejections and share with ISRI. The more data we gather, the more we are armed to sort through these problems directly with the Chinese Government (you and your companies’ names will not be shared).
Furthermore, we are concerned that what China is doing may set off a wave of copycat rules in other countries, so it is in all of our best interests to go above and beyond – to demonstrate our industry’s commitment to responsible recycling and to differentiate ourselves from those market players that continue to be the lowest common denominator in terms of the supply of scrap to the global market. We plan on making this the focus of a discussion at the ISRI Board meeting next month in DC that all members are welcome to participate in so as to help develop a more comprehensive and forward looking strategy for ISRI and the industry. Please consider joining us.
As to next steps, comments to the World Trade Organization are due this week. Based on what we now know, we are rewriting our comments to include very specific information about the industry, including specifics on the various grades of scrap traded globally, suggestions on quality standards and detailed questions to try to get as much clarity and guidance as possible. Members are welcome to also submit comments by the December 15 deadline. There is a specific process to do this, so please feel free to reach out to Adina Renee Adler for guidance if you are interested in doing so.
And we are here to help. ISRI has resources to support the changes that you may need to incorporate in order to continue trading with China. Please let us know if we can help in any way.