China Implements New Non-Tariff Barriers on Scrap Metal, Fruit

American exporters are confronting new non-tariff barriers in China, even on products that were already targets of higher tariffs in retaliation for U.S. tariffs. For instance, China's customs officials decided that the China Certification and Inspection Corporation North America was not adequately enforcing its higher purity standards on scrap metal, and on May 3, said that CCIC cannot issue any certificates for the next month.

"The impact is enormous," said Randy Goodman, executive vice president of scrap metal trading firm Greenland America. Because CCIC approves shipments to load before it issues certificates, he estimated there are 5,000 to 10,000 shipping containers of scrap copper, brass and aluminum on the water right now that cannot enter their intended ports of destination in China. Certificates are not issued until after a complete bill of lading is received, and that may not be done until the shipment has been on the water for a week or two, he said. In addition to the shipments on the water, Goodman said there is scrap metal that is now stuck in American ports, metal that is with trucking firms headed to ports, as well as loads that have not yet left the scrap metal yard -- all had already been approved for loading, and had Chinese customers.

For the shipments that must be resold to Japan, South Korea, India or Taiwan, "on the back of a napkin I think it’s going to cost about $10,000 per container," for costs associated with moving the loads to other ships, reconsigning and so on, he said. And that figure doesn't include the fact that other buyers are likely to pay less than Chinese buyers would, because they have smaller markets, and there is too much material available.

The highest-purity grades -- No. 1 and bear bright copper -- will find new homes more easily, whether overseas or domestically. But No. 2 copper, which is 96 percent copper, will be difficult to sell. "There’s only one [company] in the United States that’s a regular buyer of No. 2 copper, and they’re backed up three months before this hit," Goodman said.

Goodman said China's announcement was a total shock, with no hints it was coming. "There's got to be a political aspect to this, with the trade war," he said, but some of it is a consequence of different inspectors in different places not seeing eye to eye on how to implement the higher purity standards. Shipments will drop in May as a result, he said, because it is difficult to quickly find new buyers outside China.

Meanwhile, Reuters reported that at least on some kinds of fruit, China is insisting on inspecting every shipment of fresh fruit, rather than sample checks on about 30 percent of shipments. While some fruit exporters said they have not seen a change, Chinese sources told Reuters that fruit was facing weeklong quarantines, and some apples had been sent back.