The Case Against China’s Escalating Import Bans

While the original bans laid out in China’s notification to the World Trade Organization (WTO) on July 18th puts 18 percent of US to China waste and scrap exports by volume at risk (about $532 million worth), a complete ban, as drafted by China’s State Council, would jeopardize the entire $5.2 billion trade between the two countries.

 

The US won’t be the only country to suffer as China consumes 22 percent of the world’s waste and scrap exports worth about $24 billion dollars – more than twice the amount Germany, the second largest importer, accepts (nearly $10 billion).

 

While repercussions will be felt globally, countries that will likely be hit the hardest include the world’s top waste and scrap exporters: the US ($18 billion total), Germany ($9 billion), Japan ($6.5 billion), the United Kingdom ($6.5 billion), and the Netherlands ($5 billion).

 

The global scrap plastic and recovered paper (RCP) trades will receive a disproportionate blow as 57 percent ($4.2 billion) of the world’s recycled plastic and 51 percent ($5.3 billion) of scrap paper goes to China. China also imports 31 percent ($11.3 billion) of global nonferrous metal scrap and 28 percent ($1.8 billion) of electronic scrap.

 

The Institute of Scrap Recycling Industries (ISRI) and other industry insiders have made their complaints known:

 

Many have said the timeline is impractical if not impossible. China’s plans to fully implement outright bans and replace foreign material with domestically produced resources by 2019 leaves many countries with no other option than to landfill much of their recycled feedstock. While alternative markets, such as Southeast Asia, India, and Latin America are expanding, finding international sources for all displaced materials will be difficult.

 

The unworkable timeline not only puts commodities at risk, but may displace about 134,000 US workers directly and indirectly supported by the US-China waste and scrap trade. There is simply not enough time to create or expand other sectors and transition this portion of the recycling workforce. Moreover, $3 billion in federal, state, and local tax revenue generated via US waste and scrap exports will disappear.

 

And some aren’t buying into China’s claims that the outright ban is primarily concerned with human health and environmental damage. According to Adam Minter, a Bloomberg journalist and reporter on waste and scrap trade, “China’s government has long played up stories about foreign waste, partly to deflect attention from unmanageable garbage problems at home.”

 

This narrative is largely responsible for drumming up public support in China for the ban and ignores the fact that thousands of small-scale Chinese processors disregard compliance standards on a regular basis. In some cases, mills were caught dumping byproducts of disassembled electronic waste into nearby rivers. Unlike their counterparts, the vast majority of US exporters met or exceeded Chinese contamination standards, leading industry experts to believe pollution is largely the result of the mismanagement of imports.

 

Additionally, China’s bans may only worsen environmental conditions, as import restrictions will force Chinese producers to substitute higher quality US materials with more contaminated materials collected domestically or virgin raw materials. While virgin commodities require greater energy inputs and overburden finite resources, China’s domestic materials will require more processing by mills that already employ “poor operational, labor, and environmental standards.”

 

Conclusion

 

China’s new import policies don’t have to be the global economic disruption they’re turning out to be. For one, they need to clarify ambiguous regulations and allow far more time for foreign economies to establish alternative markets. Second, China should partner with other countries to find solutions together for recycling both domestically and abroad – a vague WTO notification isn’t enough.

 

China may not heed the industry’s concerns. Therefore, in the meantime, recycling enterprises seeking to overcome these turbulent times should band together. If you generate, handle, or process recyclables and would like to strengthen your position in this uncertain market, please contact our industry veterans at Berg Mill Supply.

 

As we have done in the past, Berg Mill continues to work hard on creating solutions to overcome fluctuating commodity markets, including opening markets in other countries, forging strategic alliances, and improving domestic processing capabilities.

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