Trade disputes around the world and recycled material-specific laws being enacted by the People’s Republic of China are likely to continue to influence where scrap products flow globally, according to presenters at the ISRI2019 scrap recycling convention.
A session at the convention, which took place in Los Angeles in April, examined the global trade situation via a panel that included Jeffrey Weiss of the Washington-based law firm Venable LLP; Doug Palmer, senior trade reporter with Arlington, Virginia-based Politico; and Andy Wahl of Atlanta recycling firm TAV Holdings Inc. The session was moderated by Institute of Scrap Recycling Industries (ISRI) Assistant Vice President of International Affairs Adina Renee Adler.
Wahl remarked that “offshore manufacturing is at the root of scrap flows,” which ties in both to trade disputes and China’s barriers placed against secondary commodities. Wahl announced that ISRI was planning trade missions to both Indonesia and Malaysia in recognition of the changing patterns.
In 2018 and 2019, said Wahl, “scrap is finding other homes,” including in those two countries. He added that “China still has the need for metals,” and that a lot of the scrap being shipped to Malaysia and other ASEAN (Association of Southeast Asian Nations) destinations “is getting cleaned up and shipped as upgraded material to China.”
In the meantime, however, China’s government is demanding new licenses from overseas recyclers and has announced an intention to impose quotas or limitations on scrap imports with a goal of excluding scrap imports completely at the start of 2020.
Wahl and Adler said ISRI is working with counterparts in Chinese trade associations to convince the government that clean, imported scrap metals should be allowed in as “furnace-ready materials.” They said secondary scrap commodities continue to suffer from being labeled as “foreign garbage” by Chinese media reports and environmental regulators.
Weiss and Palmer provided a look at the broader trade disputes that have affected global trade, with a focus on steel and aluminum tariffs and the seeming battle of wills between the Trump administration and China’s government.
Weiss said the Section 232 national security tariffs on imported steel and aluminum had resulted in more than 4,600 requests for exclusions or exemptions. Of those, he said more than 4,000 had been granted while only about 630 have been denied.
Also having an impact on scrap flows and steel production will be the final form and potential passage of the United States Mexico and Canada Agreement (USMCA), designed to replace NAFTA.
Weiss said the Trump administration has proposed raising the U.S. content for vehicles that can be labeled as “Made in the U.S.A.” from 62.5 percent to 75 percent. The content rule changes also include a requirement that 70 percent of the steel and aluminum in such vehicles must have been produced in the U.S.
Palmer said President Trump has expressed ongoing concerns about other nations “cheating” and “beating the U.S.” in the trade arena. Subsequently, he said, President Trump has imposed tariffs, “but hasn’t influenced many nations to open their markets to more U.S. goods.”
The president and some of his trade advisors have voiced their displeasure with the World Trade Organization (WTO), and President Trump showed his disdain for multi-national trade pacts by backing out of the Trans-Pacific Partnership almost immediately after taking office. That pact, Palmer noted, “was supported by Republicans and even originated during the [George W.] Bush administration.”
ISRI2019, the annual convention of the Washington-based Institute of Scrap Recycling Industries (ISRI), was April 8-11 at the Los Angeles Convention Center in Los Angeles.