China Environmental and Political Issues Update Sophie Jin

Transcription

1 China Environmental and Political Issues Update Sophie Jin Copyright 2018 Holland & Knight LLP. All Rights Reserved

2 Overview I. Political Issues Update A. U.S.-China Relation B. Chinese Government Reorganization II. Update on China Environmental Law Issues A. Management of Chemicals B. Waste Management C. Emission Standard of Pollutants for Electrical Industry 2

3 I. Political Issues Update A. U.S.-China Relation B. Chinese Government Reorganization Copyright 2018 Holland & Knight LLP. All Rights Reserved

4 I. Political Issues Update A. U.S.-China Relation 1. Market Overview 2. Additional Duties on Solar Panels, Steel and Al 3. Section 301 Investigation and Determination 4

5 I. Political Issues Update A. U.S.-China Relation 1. Market Overview» China is the largest trading partner for the U.S. with $635.4 billion in total goods trade in 2017.» China is the 3rd largest market for U.S. exports.» China is the largest foreign supplier of goods to the U.S. Sources: 1. United States Census Bureau: 2. Office of the United States Trade Representative: 5

6 I. Political Issues Update A. U.S.-China Relation 1. Market Overview 6

7 I. Political Issues Update A. U.S.-China Relation 2. Additional Duties on Solar Panels, Steel and Al» Additional Duties on Imports of Solar Cells/Panels and Washing Machines Relied upon Section 201 of the Trade Act of 1974 Additional duties levied against worldwide imports of solar cells/panels and washing machines China produces 60 percent of the world s solar cells and 71 percent of the world s solar modules (largest exporter of solar cells to the U.S.)» Additional Duties on Imports of Steel and Aluminum Relied upon Section 232 of the Trade Expansion Act of percent duties on aluminum imports and 25 percent duties on steel imports Exemptions were added for Canada, Mexico, European Union, South Korea, Brazil, Argentina, and Australia 7

8 I. Political Issues Update A. U.S.-China Relation 3. Section 301 Investigation and Determination» Section 301 of the Trade Act of 1974 allows the U.S. Government to impose trade-related measures on foreign countries engaging in unfair trade practices.» Before the recent China Section 301 investigation, this provision had only been used once since 2001.» Aug. 18, 2017: U.S. Government initiated an investigation into certain acts, policies, and practices of the Government of China related to technology transfer, intellectual property, and innovation.» Findings released on March 22, 2018: China uses foreign investments to pressure technology transfer from U.S. firms China directly facilitates the investments in U.S. companies China supports cyber intrusions into U.S. companies 8

9 I. Political Issues Update A. U.S.-China Relation 3. Section 301 Investigation and Determination List 1» Effective as of July 6, 2018.» Additional ad valorem duty of 25% assessed against products of China covered under 818 tariff subheadings (i.e., 8-digit HTSUS codes).» Annual trade value is approximately $34 billion.» U.S. Government deems the measure to be appropriate in light of the harm to the U.S.» Focus on products from industrial sectors, which includes aerospace, information and communications technology, robotics, industrial machinery, new materials, and automobiles.» Generally did not include consumer goods, e.g. cellular telephones. 9

10 III. Section 301 Actions List 1 Examples of Products Covered» Aircraft tires» Nuclear reactors» Boat motors» Aircraft engines and engine parts» Air and gas compressors, which are used in various goods like refrigerators» Industrial heating equipment» Scales, mostly for weighing large industrial equipment» Cranes and other "lifting equipment"» Bulldozers, backhoes, tampers, boring machines, and other large construction vehicles» Oil and gas drilling platform parts» Dairy milkers, chicken incubators, and other livestock equipment» Machinery for foods processing, including meat processing and fruit processing» Medical equipment, such as X-rays and pacemakers» Scientific equipment such as pressure gauges and spectrometers» Parts of printers and copy machines» Machinery for making rubber or plastic goods» Ball bearings» DC and AC generators of various sizes and power levels» Lithium batteries and other batteries» Industrial ovens and furnaces» Radar and radio equipment» Parts for televisions, video-recording equipment, and similar video products» Electronic traffic signs» LEDs» Trains and rail parts» Large vehicles using both diesel and non-diesel fuel» Some cars and trucks, motorcycles, helicopters, airplanes, and spacecraft» Microscopes and telescopes» Lasers» Imaging and navigational equipment 10

11 I. Political Issues Update A. U.S.-China Relation 3. Section 301 Investigation and Determination List 2» Effective as of August 23, 2018.» Additional ad valorem duty of 25% assessed against products of China covering 279 tariff subheadings (i.e., 8-digit HTSUS codes).» Annual trade value is approximately $16 billion.» Designed to target industries included in the Made in China 2025 Plan and avoid consumer goods. 11

12 III. Section 301 Actions List 2 Examples of Products Covered» Lubricating oils» Polymers used in things such as clear plastic wrap and Styrofoam coolers» Resins and other industrial chemicals» Plastic tubes and pipes» Plates, sheets, film, foil, and strips of various plastics and polymers» Bridges or bridge parts made of iron or steel» Engines for industrial equipment» Agricultural equipment such as irrigation systems and seeders» Tractors» Specialty motor vehicles» Thermometers» Speedometers» Measuring equipment for everything from electrical currents to liquid supply 12

13 I. Political Issues Update A. U.S.-China Relation 3. Section 301 Investigation and Determination List 3» July 17, 2018 Proposed additional ad valorem duty of 10% to be assessed against products of China covering 6,031 tariff subheadings.» August 1, 2018 President asked Executive Agencies to consider raising the ad valorem duty from 10% to 25%.» On September 17, 2018, the U.S. Government announced $200 billion worth of Chinese products covered by 5,745 subheadings.» Starting September 24, 2018, the additional tariffs became effective, and initially would be in the amount of 10 percent.» Starting January 1, 2019, the level of the additional tariffs will increase to 25 percent. 13

14 III. Section 301 Actions List 3 - Examples of the Many Consumer Products:» Car parts» Appliances» Televisions» Batteries» Computer components» Network routers» Components in telephones» Chemicals» Machines» Semiconductor assemblies» Items made from steel and aluminum» Minerals 14

15 VI. Section 301 Summary Schedule for Section 301 Actions 15

16 I. Political Issues Update 16

17 I. Political Issues Update A. U.S.-China Relation 3. Section 301 Investigation and Determination China s Retaliation» The Chinese Government has retaliated at each step: In response to List 1, China imposed 25% duties on $34 billion worth of U.S. imports. In response to List 2, China imposed 25% duties on an additional $16 billion worth of U.S. imports. In response to the proposed List 3, China imposed 10% and 5% tariffs on $60 billion worth of U.S. imports. 17

18 V. Customs-Based Elimination or Mitigation Strategies for Section 301 Duties A. U.S.-China Relation 3. Section 301 Investigation and Determination Mitigating the Impact of Section 301» Exemption Significantly, the notice does NOT indicate that there will be an exclusion process similar to Section 301 List 1 and 2.» Tariff classification» Country of origin» Valuation 18

19 I. Political Issues Update B. Chinese Government Reorganization» On March 17, 2018, the National People's Congress approved the government restructure plan, which consists about two dozen of institutional changes on the national level.» In the environmental protection and product management areas, a couple of institutional changes are notable and may have significant impact on industry compliance: Environmental rule-making and enforcement authorities are concentrated into the new Ministry of Ecology and Environment (MEE) [ 生态环境部 ]. The new General Administration of Market Supervision (GAMS) [ 国家市场监督管理总局 ] will be created to consolidate market inspection of products. 19

20 I. Political Issues Update B. Chinese Government Reorganization» The Ministry of Ecology and Environment ( MEE ) On April 16, the name of Ministry of Environment Protection ( MEP ) has been officially changed to the MEE. The MEE is mainly a replacement and expansion of the original MEP. In addition, it takes over the responsibilities below from other government agencies: the responsibilities of addressing climate change and reducing emissions (i.e. CO 2 ) from the National Development and Reform Commission the responsibilities of preventing underground water contamination from the Ministry of Land and Resources the responsibilities of developing water function zoning plans, administering setting up of drainage outlet, water environment protection from the Ministry of Water Resources the responsibilities of agricultural non-point source pollution control from the Ministry of Agriculture the responsibilities of protecting ocean environment from the State Oceanic Administration environmental protection responsibilities in South Water to North Diversion areas from South Water to North Diversion Project Construction Commission Office 20

21 I. Political Issues Update B. Chinese Government Reorganization» General Administration of Market Supervision ( GAMS ) GAMS is a combination of the State Administration for Industry and Commerce ( SAIC ), General Administration of Quality Supervision, Inspection and Quarantine ( AQSIQ ), China Food and Drug Administration ( CFDA ), and the State Council s Antitrust Commission Office. In addition to the above-mentioned agencies, it also takes over the functions of price supervision and inspections and antitrust enforcement from the National Development and Reform Commission the functions of antitrust enforcement regarding business concentration from the Ministry of Commerce the administration of the Certification and Accreditation Administration the administration of the Standardization Administration of China 21

22 II. Update on China Environmental Law Issues A. Management of Chemicals B. Waste Management C. Emission Standard of Pollutants for Electrical Industry Copyright 2018 Holland & Knight LLP. All Rights Reserved

23 II. Update on China Environmental Law Issues A. Management of Chemicals 1. Prioritized Chemicals 2. Toxic Chemicals 3. Supply Chain of Chemicals 23

24 II. Update on China Environmental Law Issues A. Management of Chemicals 1. Prioritized Chemicals» On December 28, 2017, the MEE released a Catalogue on Chemicals of Control Priority (First Batch). 22 chemicals on the list» The Risk Control Policies and Measures on Chemicals of Control Priority. Will be included in pollution discharge permit. Certain national standards will be revised to restrict their use. Will be encouraged to be replaced. Companies using or discharging these chemicals will be subject to mandatory clean production reviews. Companies using or discharging these chemicals are required to disclose corporation information, including information regarding use or discharge of these chemicals. 24

25 II. Update on China Environmental Law Issues A. Management of Chemicals 2. Toxic Chemicals» On December 20, 2017, the MEE released a Catalogue on Highly Restricted Toxic Chemicals, which became effective on January 1, types of chemicals with 38 CAS numbers. Import or export of chemicals requires MEE s approval. Overlap with the catalogue on prioritized chemicals Implement obligations under international treaties: Stockholm Convention on Persistent Organic Pollutants Minamata Convention on Mercury Rotterdam Convention 25

26 II. Update on China Environmental Law Issues A. Management of Chemicals 3. Supply Chain of Chemicals» On June 27, 2018, the State Council issued the Three Year Action Plan on Safeguarding the Blue Sky. New chemical parks are prohibited from being established in key areas, e.g. Beijing, Shanghai and Shanxi. Existing chemical parks are required to be rectified. Industrial parks are required to go through rectifications to reduce pollution.» In 2017 and 2018, Thousands of chemical companies were ordered to be closed. Some were moved into chemical or industrial parks. Some were moved from one park to another one. 26

27 II. Update on China Environmental Law Issues B. Waste Management 1. Exporting Solid Waste to China 2. Hazardous Waste 3. Waste Enforcement 27

28 II. Update on China Environmental Law Issues B. Waste Management 1. Exporting Solid Waste to China» Law on the Prevention and Control of Environmental Pollution by Solid Waste (the Solid Waste Law ) was enacted in 1995 by the National People s Congress and became effective in It has gone through multiple amendments. The most recent amendment happened on November 7, 2016.» Three catalogs: Catalog of Solid Waste that Can Be Used as Raw Materials without Import Restrictions E.g. waste metal and wood Catalog of Solid Waste that Can Be Used as Raw Materials under Restricted Import Permit E.g. metal and electrical appliance scraps for the purpose of recycling Aluminum Catalog of Solid Waste Prohibited from Importation E.g. waste chemicals and batteries 28

29 II. Update on China Environmental Law Issues B. Waste Management 1. Exporting Solid Waste to China» On July 18, 2017, the State Council issued an Implementation Plan Regarding Ban on Import of Foreign Waste and Administrative Reform of Solid Waste Import. By the end of 2017, waste that are considered to have significant negative effect on the environment and have received strong oppositions from Chinese citizens are banned. By the end of 2019, import of solid waste that can be replaced by domestic resources will be gradually prohibited.» On June 16, 2018, the State Council released an Opinion on Strengthening Ecological and Environmental Protection and Winning the Fight Against Pollution Prevention. By the end of 2020, zero import of solid waste can be basically achieved. 29

30 II. Update on China Environmental Law Issues B. Waste Management 1. Exporting Solid Waste to China» On August 16, 2017, five government agencies announced Catalogs of Import Waste (2017) Starting from December 31, 2017, 24 types of solid waste were moved from Restricted Catalog to Prohibited Catalog, including waste plastics and paper.» On April 13, 2018, four government agencies announced an adjustment to the catalogs. Starting from December 31, 2018, 16 types of solid waste will be moved from Restricted Catalog to Prohibited Catalog, including metal and electrical appliance scraps for the purpose of recycling Aluminum and waste plastics. Starting from December 31, 2019, another 16 types of solid waste will be moved into Prohibited Catalog, including waste wood and stainless steel.» On July 11, 2018, the MEE released an amendment to China s Solid Waste Law seeking public opinions. The MEE s proposed amendment to Solid Waste Law bans import of any solid waste. 30

31 II. Update on China Environmental Law Issues B. Waste Management 1. Exporting Solid Waste to China» Effect of policy change 2017 Approved import of waste decreased by 35% Actual import of waste decreased by 9.2% First half of 2018 Amount of imported waste decreased by 56.3% Dollar value of imported waste decreased by 28.9%» Enforcement By mid-september, 2018, the Customs has investigated 387 criminal cases. 31

32 II. Update on China Environmental Law Issues B. Waste Management 2. Hazardous Waste» On December 21, 2017, the MEE released a revised version of Administrative Measures on Hazardous Waste Transfer seeking public opinions version has not been updated to reflect new development. Mandatory environmental pollution liability insurance Electronic hazardous waste transfer record Liabilities are not clear. Generators: choosing licensed disposing company, different packaging; providing information to transporter; labeling requirements; reporting responsibilities; emergency plans; Transporters. Disposing companies. The current process takes a long time. Transfer of hazardous waste within a province doesn t require government s approval, but only filings. 32

33 II. Update on China Environmental Law Issues B. Waste Management 2. Hazardous Waste» On December 22, 2017, the MEE released a revised version of Administrative Measures on Issuing Business License on Hazardous Waste» Starting from March 1, 2018, standards on import of solid waste requires the hazardous waste contained is no more than 0.01%.» On May 30, 2018, the MEE issued two revised standards seeking public opinions GB Identification Standards for Hazardous Waste HJ/T 298 Technical Specifications on Identification for Hazardous Waste» More standards will be revised. 33

34 II. Update on China Environmental Law Issues B. Waste Management 3. Solid Waste Enforcement» On May 10, 2018, the MEE released a Notice on Restraining Illegal Transfer and Dumping of Solid Waste and Strengthening Overall Supervision of Hazardous Waste. Investigating illegal dumping of solid waste Investigating sources and whereabouts of hazardous waste and industrial waste Evaluating capacities of handling hazardous waste and solid waste» In May and June, 2018, the MEE started 2018 Clearing Waste Actions. A team of experts inspected 2796 waste storage locations in 11 provinces along Yangtze River. First rectification ending in July, 2018: illegal dumping and storage of general industrial waste. Second rectification ending September, 2018: illegal collection, storage, disposal and management of hazardous waste. 34

35 II. Update on China Environmental Law Issues C. Emission Standard of Pollutants for Electrical Industry» Two Drafts Seeking Public Opinions First Draft: October 8, 2015 Second Draft: March 12, 2018» Scope: facilities producing special electronic materials electrical units printed circuit boards semiconductor devices display devices and photoelectron components electron terminals products» Other companies or facilities in the electrical industry shall refer to this standard. 35

36 II. Update on China Environmental Law Issues C. Emission Standard of Pollutants for Electrical Industry» Effective Date: New facilities: January 1, 2019 Existing facilities: January 1, 2021 Replace Integrated Wastewater Discharge Standard, Integrated Emission Standard of Air Pollutants, etc.» Water Pollutants Discharge 21 types of water pollutants Including direct or indirect discharge of water pollutants outside of enterprise boundaries» Air Pollutants Emission 18 types of air pollutants Organized emissions v. unorganized emissions VOC control standards are included» Monitoring Requirements 36

37 Contact Information Hongjun Zhang, Ph.D. Sophie Jin» Partner» » Washington, D.C.» Attorney» » Washington, D.C. 37

38 Hongjun Zhang Ph.D. Hongjun Zhang, Ph.D. advises clients on a broad range legal issues including compliance and government relation matters in China such as environmental protection, energy efficiency, chemical management and product stewardship. Prior to entering private practice, Dr. Zhang was a legislative director in China's National People's Congress. In this position, he was responsible for drafting national laws and policy documents and overseeing national and local government implementation of the laws. In his early years in the Chinese government, Dr. Zhang also served as program and compliance officer in China's State Environmental Protection Administration (SEPA), now the Ministry of Environmental Protection (MEP).» Hongjun Zhang» Partner» Hongjun.zhang@h klaw.com» » Washington D.C. Practice Education Bar Admission Environment China Practice International and Cross Border Transactions Harvard Law, LL.M. Peking Law, Ph.D. Peking Univ., M.S. Peking Univ., B.S. New York 38

39 Thank You!