Rallying for free & fair trade

The European Parliament’s plenary vote in January accepted 154 amendments and rejected seven in the Waste Shipment Regulation (WSR) Act that was tabled in November 2021.

The rules sought to restrict exports of certain recyclables, including metallic scrap, to non-OECD (Organization for Economic Cooperation and Development) countries, allowing them to be sold only to destinations that can sustainably process these resources. Shipments to OECD countries will continue, provided they create no environmental issues in the destination countries.

At loggerheads

The Brussels-based European Steel Association (Eurofer) hailed the revision, calling it a sustainable approach toward exports to third countries, but the association says some loopholes need to be addressed to avoid circumvention of these rules. Eurofer says it is necessary to strengthen monitoring systems applicable to most exports to OECD countries.

However, the European recycling industry fears the move potentially could restrict its free access to markets, which could be counterproductive.

German recycling groups Bundesverband Sekundärrohstoffe und Entsorgung (BVSE) and Verband Deutscher Metallhändler (VDM) state in a position paper that the statistics presented by Eurofer are warped. BVSE and VDM note that the steel association is comparing data from two different time frames, adding that Eurofer’s data highlight scrap export trends in 2021 relative to 2005, while the share of raw material in crude steel production is for 2020.

The Bureau of International Recycling (BIR), Brussels, supports the call for disposal facilities to be environmentally sound but also indicates raw materials from recycling should continue to move toward manufacturing industries freely for a global circular economy. Though the European Parliament has recognized the need for more recycling and material utilization within the EU, it has yet to address how to pay for it, the BIR adds.

“These regulations represent a thinly disguised back-door protectionism that puts our industry in danger while severely disrupting the global circular economy,” BIR President Tom Bird says in a statement.

He continues, “It should be blatantly clear to everybody that the trade of vital raw materials, such as recycled metals, should not be restricted, and BIR as an organization remains fully committed to ensuring exactly that—free trade of recyclables in a global circular economy.” 

Why free trade is crucial

The Brussels-based European Recycling Industries Confederation (EuRIC) points out trade restrictions that curb access to international markets will lower the supply of recycled steel scrap within the EU, affecting the strategic autonomy of European circular value chains.

Citing a past export duty implemented in Russia in 2021, EuRIC Secretary General Emmanuel Katrakis tells Davis Index the move decreased the collection rate in that country as the prospects for the outputs were limited artificially by the legislation. Moreover, if the industry lacks competitiveness, it will be unable to invest in more technologies to process more volumes and deliver the quantity and quality needed in domestic and international markets, slowing down the transition toward green steel.

According to EuRIC’s position paper, the region recycles roughly 100 million metric tons of ferrous scrap every year. Katrakis notes the EU uses around 80 percent of the total steel scrap in the region to produce steel, while the remaining 20 percent is exported to countries such as the U.S. and Turkey, which have strong electric arc furnace (EAF) production capabilities.

India, with its steel capacity expansion plans, also is a major market for European recycling companies. But these protectionist measures could affect its secondary metals production, according to Dhawal Shah, managing director of Metco Marketing India, who spoke at the Material Recycling Association of India conference Feb. 4 in Kochi, Kerala, in India. He added that India sources 30 percent of its feedstock from the EU and the amendments in the WSR could make a significant dent.

Katrakis says European recyclers’ global competitiveness also would be reduced if they are unable to export excess materials. For nonferrous metals, he adds, exports must gain more importance because producers in the region have announced production cuts.

EuRIC is pushing public authorities to provide more support to industrial value chains in Europe. Moreover, government support has become crucial in curbing the negative impact as much as possible arising out of surging energy prices. 

Harm to recyclers?

New EU measures include audit requirements for all waste exports outside the EU. Evaluation of environmental soundness of facilities abroad per European legislation, including best available techniques as an extension of the monitoring and safeguard procedures for exports to OECD nations, are part of the rules. Ex ante controls at the country level for environmentally sound waste management (ESM) are more stringent for exports to non-OECD nations.

To ensure easier implementation, EuRIC has proposed modifying audit requirements to benchmark on the international standards dealing with ESM. Rules also should consider the OECD’s competence in defining rules to guarantee ESM, which is essential to ensuring additional requirements are set in coordination with OECD member countries.

For metal scrap or recovered paper, it remains essential to preserve access to non-OECD countries to avoid a full regionalization of trade that will be substantially detrimental to the competitiveness of the European recycling industry.

Katrakis says EuRIC also opposes the proposed restriction of high-quality processed metal scrap exports, considering no environmental or human protection reason is given for the rule because these products are valuable and save on CO2 and energy.

EuRIC says the ENVI Committee has not called for setting mandatory recycled-content goals for all materials, which is instrumental to ensuring demand for recycled materials in Europe remains sufficiently high to absorb volumes in the case of export restrictions and to boost investments into circular value chains.

Katrakis says a distinction must be made in measures to favor processed commodities that have a positive market value and meet set quality requirements. Failure to do so could lead to a collapse of Europe’s recycling industry and even its economy.

He adds that adopting unreasonable export limits for processed metals also would give primary raw materials a competitive edge in domestic and foreign markets, increasing carbon emissions and reducing environmental and public health protection, a clear violation of the EU’s international commitments made as part of the Paris Climate Agreement to lower global CO2 emissions.

Green steelmaking in Europe

The European Commission has made a case for the retention of critical resources for the domestic industry as well as for responsible processing while laying the groundwork for the revision. Instead of export restrictions, Katrakis says a transition to EAF-based steelmaking operations with industry support would help to retain raw materials for recycling in the region. Approximately 40 percent of Europe’s steel is currently produced through EAFs compared with 70 percent in the U.S. and Turkey.

Mayuri Phadnis is editor, Europe, and an analyst covering the ferrous market for Davis Index and can be reached at mayuri.phadnis@davisindex.com.