Riding the waves Shipping waste from Europe to China

by Willem Canneman The shipment of waste from Europe to China is undergoing considerable change. Will Europe be in a position to meet China’s need for commodities within its evolving regulatory framework? The flow of container shipments from Shanghai, China, now the busiest harbour in the world, to Rotterdam, the Netherlands, the second harbour of the world, is substantial. More than 500,000 containers per year (over 1300 per day) are transported between these two harbours, one way: Shanghai to Rotterdam. While containers from China are mostly filled with newly made electronics, textiles and toys, containers on the ‘return trip’ are of far less value. Their contents tend to include significant quantities of waste materials: over one third tends to be scrap metals and plastics (including electrical and electronic waste (WEEE)), and just under one third is waste paper; the remaining third is often empty! Putting this in economic terms, the value of shipments from China to the Netherlands is annually more than €23 billion, which includes computer equipment worth €9 billion. Dutch exports back, however, have a value of only around €3 billion per year. Of course, there are significant differences in value between the different categories of waste exported. For example, 1000 kg of waste paper has a value in today’s market of about €100 whereas 1000 kg of copper costs more than €5000. Consequently, waste paper is only 5% of the total value of exports from Europe to China whereas metals scrap is more than 20%. There is an urgent need for commodities in China in this field as resources there are too limited for the extended production of a wide range of goods. Within this context, it is also interesting to note the big difference in transportation costs: from Shanghai to Rotterdam the cost of transportation per container is about US $1600, but the return journey is only $350 (or even less). This is caused by the need for containers back in China to carry the large number of exports. As a result of the relatively inexpensive transportation costs, coupled with the higher value of metal-containing WEEE scrap, the first conclusion to draw from this situation is that the export of WEEE from Europe looks set to increase considerably. And policy makers in Europe and elsewhere have recognized this trend. International waste shipment regulations There are numerous bi- and multi-lateral agreements on waste shipment regulations. In particular, these include the Basel Convention on the control of transboundary movements of hazardous wastes and their disposal, which was adopted in 1989 (see www.basel.int), and other important regulations that stem from decisions of the OECD. In brief, the OECD’s Control System is based on two types of control procedures (see www.oecd.org for more information): Green Control Procedure: for wastes that present low risk for human health and the environment and, therefore, are not subject to any other controls than those normally applied in commercial transactions Amber Control Procedure: for wastes presenting sufficient risk to justify their control. The OECD Decisions C(2001)107 and C(2004)120 for shipments of green-listed waste, i.e. waste covered by the Green Control Procedure, are especially set up for waste that can be recovered. In addition to these regulations, indeed drawing upon them, the European Union (EU) has developed a new and stronger regulation on the transboundary shipments of waste, the implications of which will be the primary focus of this article. The EU Waste Shipment Regulation Europe’s new Waste Shipment Regulation (WSR) came into force on 12 July 2007 (and can be downloaded at http://ec.europa.eu/environment/waste/shipments/legis.htm). The WSR seeks to develop a stronger regime for waste transport, banning certain types of waste exports, establishing greater enforcement measures and streamlining existing procedures. It aims to ensure that waste is handled in an environmentally sound manner throughout the shipping process, including recovery or disposal in the country of destination. Taking enforcement measures as an example, it requires Member States to carry out inspections and spot checks; this allows for physical checks on shipments – such as opening up containers – to be carried out; it also obliges Member States to report to the EC on their legislation and penalties on illegal waste shipments. Furthermore, the WSR extends beyond the Basel Convention and the OECD decisions by including provisions on the shipment of waste between Member States. It provides the basis for the type of requirements with which shipments must comply and the type of information that must accompany such shipments. Green-listed waste, for example, is subject to less stringent information requirements than hazardous waste or waste for disposal within the EU. The WSR lays down criteria for the type of waste shipment that is banned to non-EU countries and the notification procedure and information requirements. Conditions are also provided for taking back illegal waste shipments or shipments which cannot be completed and the financial assurances for returned shipments. Banning certain types of waste exports An important feature of the WSR is the ban on exports of hazardous waste from the EU to developing countries. This is based on the amendment made to the United Nations Basel Convention, also known as the ‘Basel ban’. Also significant is the blanket ban on exports of waste for disposal to countries outside the EU and the European Free Trade Association (EFTA); this includes China. One application of the regulation will be to prevent large amounts of WEEE being shipped to and dumped in developing countries. Recent proposals on criminal sanctions for environmental crimes and measures to support law enforcement authorities in European ports will also contribute to this objective. And a provision in the WSR requiring Member States to co-operate with one another to facilitate the prevention and detection of illegal shipments should help to reduce the number of illegal shipments being transported between Member States. A case of stronger enforcement. Containers such as these photographed in Rotterdam might previously be deemed to contain used cathode ray tubes (CRTs). Under the new legislation, the contents can be termed waste and are therefore subject to more stringent environmental export controls. Source: VROM-Inspection, the Environmental Enforcement Authority of The Dutch Government. Click here to enlarge image Despite its increased requirements the new regulation seems to be clearer and simpler than the one it replaces. For example, it reduces the number of waste shipment procedures and paves the way for notifications to be sent via electronic means. Implementing the new regulations While the new regulation seems to be clearer than the old, exporting waste remains a complex process. There are three levels of controls for exporters. Is the exportation prohibited or not? Should the export be notified to authorities? Notification is giving notice to authorities of the content of the exportation and seeking prior written permission before export Is the material put on the OECD’s green list or not? And it must be remembered that in principle it is the responsibility of exporters to check conditions of receiving countries. As explained later, this is not always a straightforward matter. Assisting exporters and other stakeholders in working within the regulations are Correspondent’ Guidelines published by the EU. The guidelines aim to provide a common understanding for EU Member States. While they are not legally binding, it is common practice for the European Court of Justice (ECJ) to use this kind of guidelines when it comes to a case, so ‘not legally binding’ does not mean that these EC guidelines have no force! (See box for more on the ECJ.) To date six Correspondents’ Guidelines have been issued: see http://ec.europa.eu/environment/waste/shipments/guidance.htm. One of the Guidelines so far available focuses on WEEE, providing rules on the distinction between EEE and WEEE, testing and packaging, controls and documents, and the classification of waste for recovery. A key point is the distinction between used equipment and waste in practice. The Guideline states that equipment is waste if one of the following conditions is fulfilled: Not complete/ Essential parts missing Physical damage Insufficient packaging Appearance damaged With hazardous constituent parts Destined for disposal and not reuse Old and outdated. Practical implementation problems While there are positive aspects to this evolving legislation, problems with the WSR have already been identified. The first problem is that the WSR only applies to commercial firms which are registered in an EU Member State. As a result, controls/bans that are in place when a cargo is shipped from the EU may not apply to shipments from other non-EU countries such as the US, Japan, etc. The next problem is the transposition of the Regulation in to each Member State. If the WSR is not clear on a particular matter then clearly that issue may be interpreted differently by other Member States. And it can be seen that the amount of information provided by each Member State to a stakeholder wishing to export varies. The Bureau of International Recycling (BIR) advises exporters to check first with their own Government, since the situation may be ambiguous. As for notification to the authorities, a prior written permission has to be obtained, as it is not always clear how the exported goods are classified in the receiving country. At the time of writing (during the fourth quarter of 2007), some 140 non-OECD countries had not replied to a ‘Prior written notification and consent’ issued by the respective EU–27 Competent Authority. (The list of EU–27 Competent Authorities can be downloaded from: http://ec.europa.eu/environment/waste/shipments/pdf/list_competent_authorities.pdf.) As a consequence, these 140 countries face all imports of recyclables from the EU–27 being subject to controls which hamper trade. Governments which function poorly de-facto inhibit trade. Concluding remarks Securing and exchanging reliable information is crucial to the process of exporting waste. And the commercial implications of this conclusion are paramount. Whilst the export of ‘green-listed’ waste for recovery outside the OECD is covered by another EC regulation – namely Commission Regulation (EC) No 1418/2007 of 29 November 2007 which deals specifically with the trade of non-hazardous waste to non-OECD countries and which entered into force on 18 December 2007 – there are numerous non-hazardous wastes (recyclables) affected by WSR, including iron and steel scrap, copper scrap, paper, and second-hand clothing. These are commodities for industry. Most of these materials are positively priced which means that if a company does not purchase them they do not get them. The key to opening trade with the EU Member States is in the hands of the non-OECD country governments as they should know what non-hazardous recyclables their national industries may need. The governments may respond to the EU Commission at any time to make their wishes known or to revise their current position. Exporting companies in the EU need to inform their customers in the non-OECD countries of this regulation. Willem Canneman is president of NVMP (Dutch WEEE system), the Netherlands China’s regulatory framework WEEE legislation in China is evolving. The official ban on WEEE imports to China has been in place since 2000, but Chinese authorities have noticed that the environmental situation is has not improved in recent years – there is still a major problem with illegal WEEE imports. As from 23 August 2006 China’s version of the EU RoHS directive (Restriction of Hazardous Substances) went into force (the so called China ROHS). Based on this legislation the recently published Management Measures for the control of Environmental Pollution by Electronic Waste can be the start for more Chinese WEEE regulations. The real problem, however, is, as heard from official spokespersons of the Chinese government, the enforcement of this legislation in practice. An unusual move from the European Court of Justice In special cases when reviewing the application of European law, a local court of justice can ask the European Court of Justice (ECJ) for a preliminary judgement. On 21 June 2007 the ECJ took a decision that has consequences for waste shipments not only to China but to all countries. The ruling was made following a request by the Rotterdam Court in a case concerning shipment of cable waste from Spain to China in 2004. The shipment had been blocked by the Dutch Environmental Inspection in Rotterdam harbour. Waste exported outside the EU for recovery must be notified to national authorities if it does not feature on official waste lists. Notification means that prior written permission has to be obtained before export. The cable materials had two components (PVC and copper) that feature separately on the OECD’s green list of waste materials. Whilst European legislation stated that both PVC and copper waste can pass freely without notification, the ECJ stated that a single type of waste that is the result of a durable combination of two main materials, both of which are included on the ‘green list’ of waste, cannot come under that list unless it is expressly mentioned there. Furthermore, the ECJ ruled that the only circumstance in which notification is not needed for the cable waste would be if such wire comes from electronic equipment, since this type of waste is explicitly mentioned on the green list. During the case the European Commission stated that decisions on whether legal notifications are needed should be made on a case by case basis. This was rejected by the ECJ, which considered such an approach is likely to lead to legal uncertainty as the Dutch government stated. This new judgement will change how exports are handled in Rotterdam because exporters must be aware that material composed of greenlist substances is not automatically free for exportation. And it will impact on both European exporters and Chinese recyclers. [The complete text of the Judgement can be downloaded from: http://curia.europa.eu.]