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March 1999

HK Enterprise Internet

Packaging Regulations

Packaging Regulations

A RULING on the treatment of solid wood packing materials (SWPM) to keep the Asian longhorn beetle out of the US will affect less than 20% of Hong Kong's exporters, according to the Hong Kong Packaging Institute. In any case, a spokesperson for the Hong Kong Exporters' Assn says, most of the cargo shipped from Hong Kong that uses SWPM is already being fumigated before export.

"Now that it has become official, it just involves an extra process of producing a certification for the exports," says Mimi Yeung, chief executive of the Hong Kong Exporters' Assn. She adds that the SWPM ruling will have limited impact on the association's 400-plus members' costs because no additional stamping fee is involved.

Earlier the US Department of Agriculture (USDA) ruled that effective from December 17 all SWPM associated with cargo from mainland China and Hong Kong must be accompanied by an official certification that it has been heat-treated, fumigated or treated with preservatives before being shipped to the US.

The US has introduced this documentation requirement to prevent the spread of the Asian longhorn beetle - a pest that threatens several US industries. According to a study conducted by the USDA, the Asian longhorn beetle was introduced to the US several years ago principally by means of SWPM from mainland China.

Hong Kong exporters were notified last September that the US ban on untreated solid wood packing material on mainland China also applied to Hong Kong. The US Animal and Plant Health Inspection Service (APHIS) has applied the ban to Hong Kong because of the "close and unique economic conditions between Hong Kong and mainland China".

About 50% of the mainland's exports to the US are shipped through Hong Kong. APHIS indicated that the ban is necessary because Hong Kong obtains the majority of its SWPM from the mainland.

US officials estimate that the ban will impact 17-20% of the total value of exports from the mainland and Hong Kong to the US (about US$12bn to US$16bn) and will primarily involve shipments of machinery, sports equipment, furniture, and optical and medical instruments.

Hong Kong-originated cargo using SWPM has to be accompanied by a certificate from one of nine companies certified to treat the wood packing material, while mainland-originated cargo using SWPM must be accompanied by the mainland's 10-P document to prove that the cargo has been fumigated.

According to Roberto Giannetta, secretary of Commercial Management, which represents the Transpacific Stabilisation Agreement (TSA) in Hong Kong, shippers will have to meet US fumigation and treatment requirements when using wood packing materials to prevent infestation, or face the consequences.

TSA, a discussion and policy-setting group of 13 leading shipping lines, has warned that even exporters who do not use SWPM have to make a statement that "this shipment contains no solid wood packing materials" on the cargo documents, such as the manifest, invoice, packing list, or bill of lading, Giannetta says.

He warns that any shipment not accompanied by an exporter's statement will be subject to inspection for SWPM, if ordered by an inspector, and will not be allowed to enter the US before completion of the inspection.

"The shipper, consignee and cargo owner shall be jointly responsible for all costs associated with inspection, separation and destruction or re-exportation of any SWPM, including costs of services of an inspector to monitor such activities," Giannetta says.

The Hong Kong Government Trade Department has informed exporters, freight forwarders, shipping lines and businesses of the nine approved companies that are certified as holders of valid pesticide permits for the use of methyl bromide for quarantine treatment. The companies are Asia Pest Control Ltd, Dicken Int'l Pest Specialists Ltd, Kingston Fumigation Services Co, Fabri-Technic Purification & Pest Control Ltd, Flick Pest Control Ltd, Hong Kong Ship's Fumigation Co Ltd, Johnson Group Pest Specialist Ltd, Pesticide Services Co Ltd and Rentokil (Hong Kong) Ltd.

An Asia Pest Control spokesperson says there has only been a slight increase in the number of fumigation orders from exporters to the US following the ruling on treatment of wood packaging materials. The company charges HK$400 per TEU and HK$500 per FEU for fumigation. Depending on the type of wood, the fumigation process can take 15-20 minutes, or up to two hours in a closed area. Dicken Int'l and Kingston Fumigation Services are part of the Asia Pest Control Ltd group and provide similar services, the spokesperson says.

Charles Wan, manager of Rentokil (Hong Kong) Ltd, says although his company has received many enquiries, no one has used its services because of the company's strict policy on fumigation. Rentokil insists on fumigating a container for 24 hours.

While Hong Kong exporters have braced themselves for greater delays because of the ruling, initial reports from the US say that the first Hong Kong shipments to the US have cleared US ports without much trouble. This is because the US has given exporters a two-month grace period from December 17 for the industry to adapt to the requirements.

However, exporters who have not been fumigating SWPM will still face delays from the time spent on learning how to comply with the ban, evaluating the costs and benefits of using SWPM versus alternative packing materials, identifying a treatment facility for SWPM, having the treatment performed, obtaining the necessary certification from the relevant agencies and facing possible detention of shipments once they reach US ports.

SM Zakir H, marketing officer of LK Machinery Co Ltd, which exports injection moulding and die-casting machinery to the US, says the firm is preparing to ship machinery to the US. "We are aware of the ruling and will pass the matter to our freight forwarders to handle," he says, adding that he is not sure how much the SWPM treatment will cost the company.

Zakir says the company, which exported five sets of machinery to the US last year, will have to study the matter carefully before it can tell what kind of impact the ruling will have on the company's US business.

Canada has followed the US with the implementation of a similar ruling on exports from Hong Kong and China.

The British Embassy in Beijing announced recently that UK import restrictions on Chinese products packed in wooden crates, aimed at keeping the Asian longhorn beetle at bay, became effective on February 15. The rules require that wooden crates and pallets originating in mainland China be stripped of bark and free of bore holes wider than 3mm. Crates bearing holes wider than the limit will have to be kiln-dried to less than 20% humidity.

An Embassy official says, "If it arrives in the UK and there are holes, the humidity level will be checked." If humidity levels are above the limit, British authorities "will have to consider how to deal with the packaging, which may include fumigation or destruction", the official says.

The European Community, which is studying the Asian longhorn beetle problem, may be next to implement controls requiring fumigation of exports involving SWPM.

Written by Johnson Wong

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