China Adjusts Paper Processing Trade Ban: HS 4801-4816 No Longer Prohibited, What’s the Impact?

China’s Ministry of Commerce and the General Administration of Customs have jointly issued an update to the list of commodities banned from processing trade involving paper products. Starting June 15, 2021, paper products imported by processing trade enterprises under tariff headings 4801-4816, and paper products processed for export under the same headings, will be removed from the prohibited catalogue. What does this shift mean for the paper industry?

Why the policy was adjusted

Customs information shows that MOFCOM and GACC had earlier issued an announcement aimed at encouraging companies to extend the processing trade value chain and curb simple processing. Effective December 1, 2020, paper and paper products under headings 4801-4816 that are imported for processing and then exported under the same headings were placed under the prohibited commodities catalogue for processing trade.

After that measure took effect, it drew broad attention and strong feedback from China’s paper sector. MOFCOM and GACC carried out several rounds of in-depth research. They found that COVID-19 had created difficulties for paper product processors, which urgently needed policy support. They also noted that some deep-processing paper enterprises use advanced production methods, meet environmental standards, and deliver higher technical content—well beyond simple cutting.

To support processing trade and keep its industrial and supply chains stable,

the authorities made a targeted adjustment to restore processing trade involving 4801-4816 paper products.

How does this affect the paper industry?

The new policy has prompted widespread discussion across the upstream and downstream chain. Paper Union Analysis noted that the change applies only to processing trade, not ordinary trade. In China’s paper industry chain, processed paper products are mainly sold and consumed domestically, with only a very small share exported directly.

In addition, the products under tariff headings 4801-4816 include newsprint, uncoated cultural paper, tissue paper, uncoated kraft paper, corrugated paper, aluminum-plastic composite paper, cigarette paper and more. Customs statistics show that total exports of 4801-4816 commodities in 2020 reached about 5.31 million tonnes, covering both ordinary trade and processing trade. Against China’s total paper output of more than 100 million tonnes, exports tied to headings 4801-4816 are relatively limited.

In summary, Paper Union Analysis concluded that the policy adjustment in Announcement No. 12 of 2021 affects only a small number of paper product processors, with very limited overall impact on the upstream and downstream of China’s paper industry.

Q: Can paper product processing trade manuals and account books filed before Announcement No. 54 of 2020 still be used?

A: If they meet the import and export rules for processing trade under tariff headings 4801-4816, the previously uncompleted manuals and account books may remain valid from the new announcement’s effective date. Modification, extension, verification and cancellation procedures can be handled as required, without filing new manuals or account books.

Q: The announcement says “imported paper products (tariff headings 4801-4816) processed and exported as paper products (tariff headings 8401-4816) are no longer included in the prohibited catalogue for processing trade.” Does the imported paper products (tariff headings 4801-4816) refer to those transferred in through deep-processing carry-over?

A: For paper products transferred in via deep-processing carry-over (tariff headings 4801-4816), they should be determined as imported materials under rules of origin, or meet the provision covering “paper products (8401-4816) processed and exported using imported pulp (4701-4706) or pulp (4701-4706) produced from imported wood chips (4401).”

Q: Can processing trade imports and exports be handled through special customs supervision zones?

A: Finished goods from processing trade can be exported to special customs supervision zones. If paper products (tariff headings 4801-4816) are imported from a special customs supervision zone under processing trade, they should be determined as imported materials under rules of origin, or meet the provision covering “paper products (8401-4816) processed and exported using imported pulp (4701-4706) or pulp (4701-4706) produced from imported wood chips (4401).”

Q: For manuals that expired before the release of MOFCOM and GACC Announcement No. 12 of 2021 and have not yet completed verification and closing, if the remaining materials have already gone through tax payment but the surplus materials have not been diverted to other uses, can a new manual be filed and tax refund and surplus material carry-over procedures be re-handled?

A: Under Announcement No. 12 of 2021 and relevant customs processing trade supervision rules, expired manuals should complete verification and cancellation procedures as required. Eligible companies may file new processing trade manuals from June 15, 2021 to conduct processing trade business.

—This article is republished from China Packaging Network (pack.cn); original link: http://news.pack.cn/show-377589.html