China exempts import duties on paper recovered from the US

According to the announcement of the Customs Bureau of China's Ministry of Finance on February 18, imports of recovered paper from the United States to China will be considered for duty exemption along with a list of nearly 700 other products that were previously subject to retaliatory duties due to trade disputes between the US and China since 2018. The exemption period for import duty on paper recovered from the US to China is applied for one year, starting from March 1, 2020.

In August 2018, China announced the imposition of a 25% tariff on US revocation certificates (RCPs), after the US imposed tariffs on Chinese imports. This tax rate has been in effect since the end of 2018. In mid-2019, China warned of an additional 5 percent increase in U.S. import recall papers to 30 percent, effective Dec. 15, 2019. In mid-December 2019,  the phase one trade agreement between the US and China cut the 5% increase on US export recall papers to China.

The 25% import tariff on U.S. recalled paper is the reason why buyers in China have turned to sourcing materials from other countries such as Japan and Europe. In 2020, China expects import quotas to be only about 7 million tons, down from 10.7 million tons in 2019 and 18.2 million tons in 2018. In the first three batches of licensing in 2020, China has issued import quotas with a total of 3.21 million tons, down 42% compared to 5.53 million tons compared to the first three batches of 2019.

Due to the impact of COVID-19, China is and will have a serious shortage of recall paper (RCP) as a raw material for production in the near future, there are no collectors in the country, forced stations are closed, and there is a shortage of means of transportation due to a shortage of drivers, along with the Government's zoning to prevent the spread of the disease, while imported goods are also stagnant at seaports due to the impact of the epidemic. Domestic transportation costs (logistics) increased more than twice as high as before the epidemic, but still could not meet the demand for transporting raw materials and finished products of paper factories, the Tet holiday timetable in China was broken.

The exemption of import duties on recalled paper by the United States can be said to be a policy that will have a certain impact on China's paper industry during the impact of the COVID-19 epidemic. Currently, many paper mills in China only have enough raw materials to run until the end of February 2020.

VPPA