Changing the rules

The growing number of export restrictions implemented by government authorities around the world continues to perplex recyclers, traders and consumers who strive for open markets and fair trading conditions.

But export restrictions are just one of the legislative issues concerning the international recycling industry in recent years. Others include changing certification requirements for scrap imports and new guidelines for the transborder shipment of used electronics intended for refurbishment and reuse.

What follows is a roundup of these events and how industry stakeholders are responding, as explained and witnessed by Ross Bartley, trade and environment director of the Brussels-based Bureau of International Recycling (BIR).
 

Fighting export restrictions

One of the most widely cited cases of protectionism affecting scrap exports is the restriction imposed by South Africa beginning in 2013. This restriction calls for scrap metal generated in the country to be offered first to domestic mills at a 20 percent discount. The International Trade Administration Commission of South Africa reports on its website that the exportation of ferrous and nonferrous waste and scrap is controlled to assist the local foundries in acquiring ferrous and nonferrous waste and scrap before it is exported.

Often characterized as a policy that places competitors at a disadvantage, the restriction has been criticized widely among exporters of scrap metals yet continues to be upheld.

However, South Africa is not the only country to have devised some sort of restriction, tax or special requirement when it comes to exporting scrap metal. Bartley concedes that, despite the many arguments about their detrimental impacts to the recycling industry, export restrictions on scrap are generally on the rise.

He says metals, including scrap metals, are “a favorite target of export restrictions.” For example, he reports, some 30 countries now regulate in some way the export of iron and steel. The Organisation for Economic Co-operation and Development (OECD), with global headquarters in Paris, tracks export restrictions and reports about them in its Inventory of Restrictions on Exports of Raw Materials, available through the OECD website at www.oecd.org.

However, the BIR and other organizations are working to educate trade associations and governments around the world that there are better ways to spur domestic economic growth.

Bartley delivered a presentation as part of the International Trade Council meeting during the BIR’s recently concluded World Recycling Convention & Exhibition in Dubai, United Arab Emirates, analyzing intergovernmental strategies to encourage the removal of export restrictions. In his presentation, Bartley said of the reasons given by various countries for export restrictions, 38 percent were allegedly enacted to protect domestic industries. He pointed out the World Trade Organization (WTO) has set up rules regarding export restrictions within the General Agreement on Tariffs and Trade (GATT).

“The question is, of the countries that are putting in trade barriers, are they consistent with the rules or not.”

Bartley said WTO member countries are obligated to follow these rules, and some may have to remove restrictions, in steps if necessary.

He pointed to Russia, which upon joining the WTO in 2012 had agreed to wind down its export restrictions on certain materials. The country has adhered to this agreement.

“The results of the discussions we had with our members in Russia were that Russia is complying with its agreement and reducing export restrictions in a stepwise way,” he said.

Bartley says, however, that even as the OECD continues to gather information about trade restrictions, “the number of export restrictions continues to increase.”

The OECD also has focused on investigating the reasons behind the export restrictions, finding that, in many cases, alternative policies would better accomplish the given intents.

Bartley says export restrictions have detrimental effects on the recycling industry in the medium to long term.

Governments may be pressured to enact export restrictions, he says, by mainstream industries seeking lower cost infeed materials. However, Bartley continues, these “beggar they neighbor” policies, ultimately serve to strengthen one economy at the expense of others.

Instead, he argues, countries should work to keep markets open and to tackle barriers along the way, which is admittedly difficult to do in protectionist-leaning environments. “It’s a bad idea for countries to bring in export restrictions.

It’s not the best way to deal with the problem that they’re claiming they’re trying to address,” Bartley says.

He adds that the OECD continues to address the issue of export restrictions by making governments aware of the alternatives, which can include the use of multilateral trade agreements, such as the WTO’s environmental goods agreement, as well as bilateral trade agreements set up to remove restrictions for the benefit of the two countries involved.

He says national trade organizations should support these kinds of activities. The situation requires outreach to promote the use of alternative policies and to apply the WTO rules that exist, something the BIR Secretariat continues to do.

At the national level, Bartley says, countries should see to it that they enforce WTO rules.

“Perhaps there might be room for more rulemaking if people better understood the long-term problems of export restrictions,” he says.
 

India's rule change

Another legislative issue in recent weeks has been India’s revision of its rules regarding preshipment inspections and certification of scrap shipments. Bartley explains the revisions are based on providing assurance that scrap shipments are free of explosive or combustible components and radioactive materials.

In May India’s Directorate General of Foreign Trade (DGFT) released the new rules involving the preshipment inspection and certification of scrap metals entering the country, which have been published in the DGFT’s Public Notice No. 12/2015-20.

However, the May announcement followed the DGFT’s initial April rule-change announcement to the same effect, which caught many exporters and inspection agencies off guard.

Recycling organizations, including the Washington-based Institute of Scrap Recycling Industries (ISRI), the BIR and the Metal Recycling Association of India (MRAI), raised concerns about the hastily published changes, and those requirements were subsequently postponed and revised by the Indian government.

The resulting May 18, 2015, public notice gives the new rules for preshipment inspection agencies (PSIA) to apply for recognition by an Inter-Ministerial Committee, a status that will need to be renewed every three years. The PSIA also were required to reapply to the DGFT by June 8, 2015.

The notice also includes details of the preshipment inspection certificate, which has to be provided to DGFT along with photographs or a video clip of the PSIA inspector at the place of inspection, the testing instrument(s), the loading of each container, the container number and the container’s sealing.

Bartley points out that the DGFT maintains a list of about 40 accredited PSIA outside of India and describes why the initial April announcement of the change caught many companies unawares. “There wasn’t enough advanced warning of the change,” he says, explaining that it added practical, technical and legal concerns for PSIA.

The April introduction of the rules also raised questions about the certification details of containers already in transit or those that had been inspected but were not yet loaded.

“Quite a number of agencies stopped doing the preshipment inspections because they had problems in complying with the new rules,” Bartley says.

Another issue brought into question by the April announcement of the revised requirements was that PSIA needed more time to reapply for accreditation.

The earlier revision also specified that inspections be recorded on video, a requirement that was later changed.

“The practicalities of it might have been difficult, but it was also an issue of the time,” Bartley says.

The latest iteration, which was to be effective July 1, overcomes these practical, intermediate problems, he says.

One question that remains, however, is the issue of allowing self-inspection by larger shredder operators already using their own monitoring systems for radioactive materials. Additionally, Bartley says, it’s unlikely that shredded scrap would contain explosives. He says the largest shredder operators are well-accustomed to monitoring shredded scrap for radioactivity.

“The question is, is that sufficient assurance for the major shredder companies that they could certify their shredded material has been checked and will comply with the quality requirement?” Bartley asks.

He says the situation calls for future discussions among the Indian authorities and the various trade associations.
 

Transboundary shipments

Another relevant legislative event taking place in recent months were meetings of the Conference of the Parties (COP) to the Rotterdam, Stockholm and Basel conventions, which took place in Geneva in May. The meetings were held back to back from May 4-15, 2015, and included joint sessions among the conferences.

Of particular relevance to the recycling industry, Bartley says, were the Basel and Stockholm conventions, which focused on the control of transboundary shipments and disposal of hazardous wastes and persistent organic pollutants, respectively.

Bartley, who was present at the meetings, says an interim guideline for the transboundary movement of used electronic equipment was adopted at the event but not before some dramatic discussions took place. He describes how the Stockholm Convention, for the first time ever, resulted in a vote rather than in a consensus agreement. At issue was banning and phasing out a specific chemical as a persistent organic pollutant, with two countries opposing the ban, 90 countries in favor and eight abstentions.

“It shows how important these issues are to the majority of countries,” according to Bartley.

Similarly, the final meeting of the Basel Convention nearly ended in a vote.

“What happens with one convention can affect the mood and the way they deal with issues in another convention,” he says.

Ultimately, the guideline was approved on an interim basis, he says.

Bartley says lasting effects from the Stockholm and Basel conventions could have profound implications for the recycling industry. “The chemicals legislation and the waste and recycling legislation are coming much closer together,” he says.

The author is managing editor of Recycling Today Global Edition, a sister publication to Recycling Today, and can be reached at lmckenna@gie.net.