Adjustment to Prohibited Commodities in Paper Product Processing Trade: How Will the Paper Industry Be Affected?

Recently, the Ministry of Commerce and the General Administration of Customs jointly issued an announcement stating that the prohibited categories of commodities for paper product processing trade have been adjusted. From June 15, 2021, processing trade enterprises' import of paper products (tariff headings 4801-4816) and processing and export of paper products (tariff headings 4801-4816) are no longer included in the catalogue of prohibited commodities for processing trade. So what impact will this have on the paper industry?

Background and purpose of the policy adjustment

According to a release by Customs, the Ministry of Commerce and the General Administration of Customs previously issued an announcement: in order to encourage enterprises to extend the processing trade industry chain and restrict simple processing, from December 1, 2020, "importing 4801-4816 for processing and exporting 4801-4816 paper and paper products" was placed under the catalogue management of prohibited commodities for processing trade.

Since the policy took effect, it has attracted widespread attention and strong reaction in the domestic paper industry. The Ministry of Commerce and the General Administration of Customs conducted multiple in-depth investigations and learned that, affected by the COVID-19 pandemic, paper product processing enterprises currently face certain difficulties and urgently need policy-level support; at the same time, some deep-processing paper product enterprises have advanced production processes, meet environmental requirements and possess high technical content, rather than being simple cutting.

In order to support the development of processing trade and stabilize the processing trade industry chain and supply chain,

the processing trade involving 4801-4816 paper products is specially adjusted and restored.

What impact on the paper industry?

The new policy has triggered a flurry of discussion across the industry up and down the chain. Paper Union Analysis said this policy adjustment only targets the processing trade level and does not involve ordinary trade. And from the perspective of the paper industry chain model, the paper products processed and produced in China are mainly sold and consumed domestically, and the proportion directly exported is very small.

Second, the commodities involved under tariff headings 4801-4816 are mainly newsprint, uncoated cultural paper, tissue paper, uncoated kraft paper, corrugated paper, aluminum-plastic composite paper and cigarette paper. According to customs statistics, total exports of commodities under 4801-4816 in the whole of 2020 were about 5.31 million tons, including ordinary trade and processing trade. Compared with the domestic papermaking total of over 100 million tons, the export scale of commodities under tariff headings 4801-4816 is relatively limited.

In summary, Paper Union Analysis believes the policy adjustment mentioned in Announcement No. 12 of 2021 affects only a small number of paper product processing enterprises, and its overall impact on the upstream and downstream of the domestic paper industry is very limited.

Q: Can the relevant paper product processing trade manuals and account books handled before the issuance of Announcement No. 54 of 2020 continue to be used?

A: If they comply with the import and export provisions for processing trade under tariff headings 4801-4816, then from the date the new announcement takes effect the previously unexecuted manuals and account books may continue to be used, and relevant procedures such as modification, extension and verification and cancellation may be handled in accordance with the provisions, without the need to re-file new manuals or account books.

Q: Does the "imported paper products (tariff headings 4801-4816)" in the announcement's statement that "imported paper products (tariff headings 4801-4816) for processing and export of paper products (tariff headings 8401-4816) are no longer included in the catalogue of prohibited commodities for processing trade" include those transferred in through deep-processing carry-over?

A: If the paper products transferred in through deep-processing carry-over (tariff headings 4801-4816) are, under the rules of origin, determined to be imported materials, or comply with the provision of "paper products (8401-4816) processed and exported using imported pulp (4701-4706) or pulp (4701-4706) produced using imported wood chips (4401)," then they are covered.

Q: Can processing trade import and export be handled through special customs supervision zones?

A: Processed finished goods for processing trade may be exported to special customs supervision zones. If paper products (tariff headings 4801-4816) are imported from a special customs supervision zone in the form of processing trade, they should, under the rules of origin, be determined to be imported materials, or comply with the provision of "paper products (8401-4816) processed and exported using imported pulp (4701-4706) or pulp (4701-4706) produced using imported wood chips (4401)."

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

A: According to Announcement No. 12 of 2021 of the Ministry of Commerce and the General Administration of Customs and the relevant provisions on customs processing trade supervision, the previously expired manuals shall have the relevant verification and cancellation procedures completed in accordance with the provisions; if they meet the conditions, enterprises may file new processing trade manuals from June 15, 2021 to carry out processing trade business.

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