Recycling concerns listed on USTR China report

The Office of the United States Trade Representative (USTR), in a 70-page report on the People’s Republic of China’s World Trade Organization (WTO) status issued to Congress in mid-January, has included sections on recycled materials and remanufactured products.

The Washington-based USTR, part of the executive branch, has been issuing such reports annually since 2002, the year after China signed on to the WTO agreement. According to the Washington-based Institute of Scrap Recycling Industries (ISRI), however, this year’s report increases the agency’s attention to the complaints of the recycling industry, compared with last year’s document.

In a five-paragraph section in the 2020 review titled “Import Ban on Recyclable Materials,” USTR writes, “Since 2017, China has issued numerous measures that limit or ban imports of most scrap and recovered materials, such as certain types of plastic, paper and metals,” a circumstance well-known to recyclers in North America and beyond.

Acknowledging the move by China’s Ministry of Ecology and Environment (MEEE) to reclassify some scrap materials from banned “waste” to importable “resources,” USTR adds that MEEE initially “failed to provide a definition, scope or timeline for implementation.”

In the case of some nonferrous and ferrous scrap grades, some of this initial lack of guidance has been addressed. Overseas recyclers of paper and plastic, however, continue to have limited access to the Chinese market.

The USTR report spells out the harm to the U.S. recycling sector by writing, “U.S. exports to China of the scrap and recovered materials covered by the Chinese measures in effect in 2020 totaled $479 million in 2016, the year before China started to pursue its more restrictive policies. Since then, U.S. stakeholders have reported significant negative impacts on their exports. In 2018, total U.S. exports of scrap materials to China were reduced by one third, with some of these materials experiencing a complete cessation of trade.”

The agency also points to barriers on the import of used and remanufactured goods. “China prohibits the importation of remanufactured products, which it typically classifies as used goods. China also maintains restrictions that prevent remanufacturing process inputs (known as cores) from being imported into China’s customs territory, except special economic zones. These import prohibitions and restrictions undermine the development of industries in many sectors in China because companies in these industries are unable to purchase high-quality, lower-cost remanufactured products produced outside of China,” writes USTR.

Scrap trade restrictions imposed by China have been creating impacts for several years as noted by USTR and often are the topic of discussion when recyclers gather. In a mid-January online event held by the Brussels-based Bureau of International Recycling (BIR), panelists offered updates on the current status of scrap trade into Chinese ports.

The 2020 USTR report on China’s WTO obligations was prepared during the term of Donald J. Trump. To what extent the Joe Biden administration will change the content or tone of the annual reports is uncertain. However, a recent CNBC report indicates his pick to lead USTR, former USTR lawyer Katherine Tai, “will likely carry on a tough line against China.”

A former Trump administration trade negotiator characterizes the Connecticut-born Tai to CNBC by saying, “She is not a pushover and is going to have the ability to stand up for U.S. interests against countries like China, [and] her substantive expertise will allow her to make sure USTR holds its own in the interagency debate on trade issues, which can be quite vigorous.”

The full 70-page USTR report on trade with China can be found on this web page.