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In an announcement by the General Administration of Customs (English and Chinese) on May 3, the U.S. operations of CCIC North America were suspended for one month beginning on May 4, which was confirmed in a letter from CCIC to its customers. As a result no inspections can be arranged or certificates issued during this period.  The Chinese Government will accept shipments that were shipped with CCIC certificates dated prior to May 3, although they will be subject to 100% inspections and are not guaranteed entry.  There is no doubt that these measures will severely impact U.S. scrap exports to China.  

 

The General Administration of Customs intends to further strengthen inspection and supervision procedures for the import of "wastes as raw materials." According to the Notice, the following steps are being taken as a result of the failure of "multiple shipments" arriving at Chinese ports to meet the government's environmental protection standards:

 

·         Beginning May 4, all shipments arriving from the U.S. will be required to be 100% opened for inspection.  Shipments containing the following materials will be subject to 100% examination with “lab testing analysis:” “thermosetting plastic waste and scrap of plastics, metal scrap containing powdery substance, and waste paper carrying special paper that is hard to identify (such as silicone oil paper, wax-dipped paper, thermosensitive paper, moisture-proof paper, etc.), and waste paper mixed with suspected hazardous materials."

 

·         CCIC NA has been suspended from performing inspections and issuing certificates for scrap materials bound for China effective tomorrow and continuing through June 4.

 

o   CCICNA has been placed on an "Class A risk early alert measure." This penalty is aligned with AQSIQ regulations issued late last year that became effective February 1 and includes new guidelines for holding exporters and inspectors responsible for shipments that fail to meet quality standards.

 

o   Those same AQSIQ regulations also allow independent inspection companies to apply for a Chinese government license to issue pre-shipment inspection certification for scrap exports.  Unfortunately, we believe there have been no licenses issued to any inspection company outside of CCICNA since February 1st, thus the penalty has been placed on the industry's only option for pre-shipment inspection and thus effectively shuts down trade.

 

·         Port inspectors are directed to carefully review inspection and shipping documents to verify, among other information, that the pre-shipment inspection certificate was issued before shipping, proper pre-shipment inspection was conducted, and all addresses and other information is accurate.

 

 

First and foremost, the root cause of this situation appears to be in the manner in which CCIC issues the certificates. According to the Customs notice, there is a concern that "the date of the pre-shipment certificate is found to be later than the shipping date" and customs authorities are being directed to "carefully review” the “pre-shipment certificates, shipping documents and other related papers." For this reason, we believe that containers that received CCIC approval prior to May 4 but that have not yet obtained their certificate will encounter difficulty at port of entry. While it is entirely a business decision, exporters may wish to consider diverting cargoes already on the water to other countries.
 
Furthermore, all cargoes, including those that have received CCIC pre-shipment inspection certificates, will be required to be 100% opened for inspection. Shipments containing “thermosetting plastic waste and scrap of plastics, metal scrap containing powdery substance, and waste paper carrying special paper that is hard to identify (such as silicone oil paper, wax-dipped paper, thermosensitive paper, moisture-proof paper, etc.), and waste paper mixed with suspected hazardous materials" will be subject to 100% examination with “lab testing analysis." These inspections are "to strictly follow the national environmental protection standards," which are the strict quality standards with the 0.5% "carried waste" tolerance that went into effect on March 1. If, for any reason, you suspect that your shipment may not meet these requirements, please consider an alternative solution to that cargo arriving at a Chinese port as you may risk losing your AQSIQ license.

 

These materials are still very much in demand by Chinese customers. ReMA believes that many of them have operations in other countries. We encourage members to work closely with customers to find solutions that will allow contracts to be fulfilled.
 
We believe demand for American high-quality scrap remains strong worldwide. Considering this measure is compounding the already changing market landscape in China due to the import prohibitions and strict quality standards, there are significant business opportunities for U.S. exporters in other regions of the world worth exploring.
 
In addition, ReMA has learned that as CCIC's U.S. operations also perform inspections in Mexico, those operations are also at a halt. CCIC's Canadian operations have been warned that they will face suspension if they process material originating from the United States. Please consider not using these markets as an alternative route to China.
 
In the meantime, ISRI recommends not loading containers for China until this is resolved. ReMA was told shippers of any cargo that is rejected by Chinese customs authorities, especially during this time, could risk losing their AQSIQ export license. This is a huge, long-term risk for our members that we wish to avoid. Given the severity of this situation, ReMA is working closely with BIR and other counterpart organizations around the world to track and address this issue.

ISRI Action

We are working aggressively to gain information and provide it to our members in a timely fashion.  We hope to find a way to resolve this situation as quickly as possible and in a way that minimizes the impact on our members. We are in touch with officials from the Chinese Government and the U.S. Government in the hopes that a resolution can be sought out during their ongoing trade negotiations.