Contaminated Exports … From Where?

A shipping container arrives at a port and is immediately sequestered for inspection. The product that it purportedly contains is legal for import, but two decades of unfortunate experience have taught the customs and environmental authorities that the foreign shipment possibly contains materials hazardous to human health. In the case of the newly arrived container, the authorities open it, and quickly find that it does not match the shipping manifest. On that basis alone it will not be allowed to leave the port.

Alas, this is not a description of how the United States prevents tainted Chinese imports from harming the health and safety of its citizens. Instead, it is a precise description (personally witnessed) of the process used by the Chinese to prevent American hazardous waste from entering China and harming the health and safety of China’s citizens. Below, a photo of a rejected load of American scrap refrigeration compressors (hazardous due to the oils contained inside of the compressors) shipped illegally to Tianjin:

rejected-load3.JPG

This situation has been on my mind ever since the first of the many recent reports on China’s export of contaminated and low-quality products, including pharmaceuticals and personal care items, began to appear in the international media (of these reports, the best have been produced by David Barboza of the New York Times). Foreign governments and consumers are rightfully concerned about trade in these products, and they have every right to expect the Chinese government, and their own governments, to take steps to ensure consumer health and safety or – in a worst case – cut off trade. However, at the same time, I think that consumers in developed countries – and particularly Americans – have a very well-developed blind spot in regard to the export of illegal hazardous materials.

For almost five years I have covered the Chinese scrap trade, and in the course of visiting Chinese ports and scrap facilities, I have seen American scrap shipments contaminated with medical waste, household garbage, dead animals, sludge, mud, and other items not included on the shipping manifest. And these are just the shipments that DON’T contain e-waste. All of this occurs despite China’s strict laws on waste imports – many of which were implemented in reaction to American exports of hazardous materials to China.

This is not a strictly American phenomenon. European and Japanese exporters of scrap materials to China equal, and often exceed the American scrap exporters in both volume and shady dealings. Below, a photo of a suspicious container of Japanese scrap wire being inspected in Tianjin:

japanese-container-insp13.JPG

However, what makes the US shipments worth special attention is the simple fact that scrap – paper, plastic, and metal – is the top US export to China, by volume, by far.

In a March speech delivered in the northeastern port city of Dalian, a representative of China’s State Administration of Quality, Supervision, Inspection, and Quarantine [AQSIQ], China’s product quality inspection agency, reported that – of the 265,990 shipments of scrap materials that China imported in 2006 – 1.47% were disqualified. Of those, 689 were environmental disqualifications, with Russia and Kazakhstan accounting for 269 (primarily radioactive scrap steel), and the United States accounting for sixty (primarily e-scrap). However, the AQSIQ rep was careful to note that – despite the smaller number of shipments – the United States actually led in volume of environmentally disqualified materials. Under the Chinese accounting system, a single shipment might encompass thirty separate containers weighing twenty tons, each. Whatever the numbers, AQSIQ and other agencies involved in the inspection of waste shipments generally concede that the statistics on contaminated shipments are significant undercounts as a result of smuggling and thin staffing levels at the ports.

The laws violated by shipping scrap materials illegally into China are not only Chinese. The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, effective in 1992, regulates international shipments of hazardous materials, effectively prohibiting the shipment of hazardous wastes to developing countries. China and 170 countries are signatories; the United States is not.

[CORRECTION: My friend Bob Garino, Director of Commodities at the Institute of Scrap Recycling Industries, correctly points out that the US signed onto the Basel Treaty, but the United States Senate has not ratified it. Thus, the US is a signatory, but not a party to the treaty. That is, Basel is not binding toward the US or its citizens.]

How would the United States react if China’s leading exports to the United States were commonly laced with household waste, occasionally filled with hazardous waste and – to top it off – were usually shipped with fraudulent manifests? In the case of the tainted pet food shipped from China to the US, public and media indignation led to the dispatch of American inspectors to China and demands for better export controls from the Chinese.

In China, unlike in the United States, the government has publicly proclaimed an interest in promoting quality and legal exports; the United States government has never taken such a step in regard to the scrap trade. Ratification of the Basel Convention Treaty would be a fine first step. But in lieu of that, the Bush administration could take the honorable approach, and address the decades-long practice of illegally shipping American wastes to China.

22 thoughts on “Contaminated Exports … From Where?

  1. “American scrap shipments”

    Is that too generous a generalization? Who is shipping these containers? Is it a push or pull process?

  2. Micah –

    Fair questions. “American scrap shipments” comprise 77 export categories with names such as “High Grade De-Inking Waste Paper and Paper Board” (101,830 mt shipped to China in 2006), Shredded Steel Scrap (407,624 mt shipped to China in 2006), and Titanium Waste and Scrap (466.07 mt shipped to China in 2006). In total, 14,556,006.96 million mt, total, of these 77 categories were shipped to China in 2006 (though, due to a thriving smuggling trade, and large amounts of trans-shipping through Hong Kong, the actual figures are probably much higher).

    The containers are shipped by two main groups: American scrap processors; and brokers (many of whom are Taiwanese) who purchase the containers from American processors and then ship them under their names.

    As for the push/pull questions: there is no question that there is a strong market in China for American scrap recyclables, legal or not. And there is no question that American scrap recyclers are anxious to find international markets for scrap recyclables that either cannot be recycled in the US, can only be recycled at great expense in the US, or can only be recycled with a smaller profit margin in the US. However, the fact that there are willing buyers in China doesn’t, it seems to me, absolve the American shippers.

  3. China has a habit of turning a blind I on all these types of problems until it becomes a problem in the eyes of the world or they need a “stick” to beat back with. CCIC is to blame. The chinese broker or buyer is to blame. The U.S. supplier is most likely loading exactly what they were told to load where they were told to load it (in the nose)
    My company does NOT condone this practice, we even take significant steps to avoid doing this, but the Chinese seem to exaserbate the issue by “looking the other way” for 95% of the time and then enforcing the letter of the law when it becomes an issue for some political reason.
    In my ever so humble opinion, make laws that are reasonable and enforceable and the ENFORCE them!

  4. Randy,

    I hadn’t heard from you in a week or two … something told me that this post would change all of that. How was your Fourth?

    We mostly see eye to eye on this issue, I think. But I do think the US exporters who work with brokers get off too easy in all of this. I agree with you – most US shippers load exactly what they are asked to load. Yet that’s not exactly a compliment – shouldn’t shippers at least be aware of the laws involved? In either case, removing the whole issue of e-scrap here, few brokers are going to ask US suppliers to top off shipments with some of the garbage that I’ve seen in scrap shipments over the last few years. Down south it’s widely known that US scrap paper shipments are among the most contaminated (I won’t go into the whole co-mingling issue here), and that’s inexcusable and totally embarrassing. On the ISRI paper trade mission a few years ago, we visited at least two large consumers who criticized the amount of garbage in US shipments.

    No question, the Chinese look the other way (especially on non-ferrous). But I don’t think that lets the US off the hook, especially now that we’re starting to criticize the Chinese for shipping hazardous products to OUR shores. You are 100% right that political circumstances tend to shape enforcement, which is why US shippers better clean up. AQSIQ is starting to crack down on US food shipments that used to enter China without a problem; scrap shipments would be the logical and easy next scapegoat, if AQSIQ is looking for one, and I bet they are. There’s a whole lot of face loss with this product quality issue right now, and they’d like to level the playing field, believe me.

    At some point, I’d really love for ISRI to have an open discussion about these issues. I think it’s important, and will become more so. Scrap is the largest export by volume to China, and it is in the interest of the industry to run a clean ship, regardless of what the Chinese are doing.

    Talk to you very soon, my friend.

  5. China is a Nation filled with problems, and no solutions in the forseeable future. If you can’t tell all that from your time here, find your receipts because your time and money was wasted.

  6. “Anouymous” needs a better spell checker, and has some pent up emotions dangerously close to the surface.

  7. Experience of China has seriously warped Anouymous who should stop wasting more time and money and get himself back home.

    Adam’s report of the facts are correct, and US exporters and their freight forwarders should be held accountable for violating Chinese and international law. Moreover, misdeclaring the contents of export shipments is against US law.

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  9. So, rambling on about getting a residency permit renewed, air pollution in Beijing, mystery meat, hating air con and electric rates threatening a cheap budget. Other than yet another blogful of self-promotion, what’s your point?

  10. And it’s not just the US complaining (harping?) about contaminated imports from China as any knowledge of the problem will reveal. Even the Kiwi responsible for the blog you’ve quoted may also know that local health authorities have issued public warning and are pulling Chinese toothpaste from the racks of discount stores in New Zealand.

  11. Well, illegal is illegal and contaminated is contaminated no matter who does it. But viewed in the context of the recent spate of unsafe Chinese imports, it is difficult to see how this post won’t be viewed as just another example of “America does it too!”-ism. The “real” story is American hypocrisy, not product safety in China. Just like the real story of the Scooter commutation is Clinton hypocrisy, not the rule of law. I’m not saying that this is the point that Adam was trying to make — but that is probably what most people will take away from it.

  12. Fantastic and fascinating post. I would love it if you would do a follow-up explaining (speculating?) why Americans seem to have so much trouble getting this right. I have an idea on this, based on very limited experience, and I am wondering if you think it holds water more broadly. My theory is that American to do this stuff right costs a pretty penny to get started and rather than believing this is necessary and as a way to avoid paying all fees, etc., Americans want so much to believe their Chinese “partners” that everything will be okay so they just go along. In other words, I think it is a combination of stupidity and cheapness, more than evil intent. I am not saying one is better than the other, I am just trying to figure out what is going on so that remedies can be discerned.

  13. I agree with China Law Blog that Americans place too high a compliant faith in their Asian and more recently Chinese partners. Again and again Westerners in general and Americans in particular willingly suspend common sense, their experience of life and accumulated business acumen to enter the twilight zone of belief that things are done differently in China and so a local is needed to work things out. All too many also believe that a partnership is intrinsically a win-win situation and are then hurt and surprised to discover the local partner or agent advances themself at the expense of the partnership. Is this simply American stupidity? No, I think this is willful naivety on the part of a culture (American) that looks to quick, easy answers and business guided by the quarterly returns, overseen by expat managers having no experience or education of the local culture.

  14. China Law Blog: I will indeed do a follow-up post. Likely before mid-week (I’m on deadline until then). For now, a brief answer to your question. In general, the scrap industry isn’t terribly complicated, and most operators know the limited number of options available for processing difficult materials such as those that I discuss in the post. So, if a Taiwanese broker offers to buy tainted material from an American processor, more often than not the processor can deduce what possible low-cost means are available to the Mainland Chinese who will ultimately receive that material. And those means are not unknown to the scrap processors or even the general public – they’ve been widely discussed in the media for years. In my experience, most of the processors who export hazardous materials do so knowing – generally – that they will be handled in a manner that they wouldn’t accept in their home communities. Anyway, more on this in the very near future …

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  16. Hi Guys,
    Sorry for the mistakes , english is not my primary language.
    I ship scrap every day to China and been doing this for several years.
    What Adam is saying is absolutely true…
    Here’s the plain truth : all the nice and clean scrap
    is being ship to local or domestic processors and the price offered is the same or better in many cases than the one offered in China .
    And the dirty , soiled , or too expensive to treat locally
    is being ship to China.
    Now whoever wants to argue , well go do your homework before you open your mouths.

  17. Peter –

    You make an excellent point here: the best scrap stays in its source country, despite being offered at the same price. Thanks for your post!

    Adam

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