Roadblocks to trade

Scrap recyclers and traders involved in the global movement of raw materials know the risk their transactions will reach some sort of impasse is never too far out of the realm.

But in an industry where scrap metal recyclers are used to praising the merits of free trade, the use of export restrictions are often viewed with confusion, disdain or suspicion.

In light of these concerns, what follows is a review of some of the recent issues that have grabbed industry headlines, and what stakeholders are doing about them.
 

Restrictions on ferrous scrap

A top area of concern is the rising trend toward restrictions on the export of ferrous scrap from many nations. One of the widely reported examples was the restriction imposed starting in 2013 by South Africa on a number of ferrous and nonferrous metals, in which the scrap had to be offered first to domestic mills at a discount. But South Africa was not the only country to impose some sort of prohibition. Other countries that have recently imposed restrictions include Belarus, Indonesia, Kazakhstan and the Ukraine, according to the Organisation for Economic Cooperation and Development’s (OECD) Inventory of Restrictions on Trade in Raw Materials.

The Bureau of International Recycling (BIR) has decried these sorts of prohibitions to free and fair trade, and in December of 2014 the BIR welcomed OECD proposals to counter the impact of export restrictions on steelmaking. The proposals were presented at an OECD workshop held in Cape Town, South Africa, highlighting the negative impact of export restrictions.

Ross Bartley, BIR environmental and technical director, who attended the workshop, says the OECD also demonstrated new research showing the detrimental effect of export restrictions on the steelmaking industry.

“It’s a way of disadvantaging your competitors,” observes Bartley. “If you are importing raw materials, you shouldn’t also at the same time be refusing to export.” Bartley says countries with some restrictions cite a number of reasons for them.

During the Cape Town meeting, a BIR representative explained that the most common reasons given for introducing export restrictions were to strengthen the competitive position of national processing industries and to enhance government revenues.

But the BIR has expressed in a statement on its website that export restrictions introduced to protect a country’s primary and secondary raw materials supply could affect both the mining and the scrap supply sectors, and that access to cheap domestic scrap because of export restrictions could lead to uncompetitive plants remaining in operation and deter future investment.

Bartley says the meeting was intended to help partners understand the market distortions caused by export restrictions. “The industry, by considering these actions, would actually gain if they came to an agreement on reducing these impediments.”

The BIR has advocated the simultaneous multilateral removal of export restrictions, in the near future, as a way to take advantage of the oversupply of raw materials in the coming years.

In comparison to other industries, the BIR says, the steel industry is most affected by trade-restrictive measures.

“While the trend towards more export restrictions is currently the case, this OECD workshop has now made the case for multilateral action to reduce such restrictions in order to benefit the steel industry worldwide,” says Bartley.

The meeting was organised by governments participating in the OECD Steel Committee and South Africa’s Department of Trade and Industry.
 

Exports of electronic scrap

Another topic of discussion continues to be Basel Convention proceedings intending to clarify to what extent the Convention should restrict or regulate used electronics when they are moved or shipped across borders for repair, refurbishment or reuse. The issue is of interest to recyclers, says the BIR and the Institute of Scrap Recycling Industries (ISRI), based in Washington, because some member companies handle recycling, refurbishment and repair.

A small intercessional working group hosted by the Basel Convention in January 2015 in Germany furthered the development of draft technical guidelines on transboundary movements of electronic and electrical waste and used electrical and electronic equipment, in particular regarding the distinction between waste and non-waste under the Basel Convention.

Both Bartley of the BIR and Eric Harris, director of government and international affairs for ISRI, attended the meeting in which the group focused on what restrictions, if any, should apply to these types of shipments.

Bartley says the technical guidelines are intended to ensure that electronic goods shipped for repair and refurbishing are actually going to be handled that way in an environmentally safe manner. Further, Bartley says, the group wants to ensure that wastes arising during those processes will be treated in the same manner. Another concern has been the difficulty in having environmental authorities in different countries agree on whether end-of-life electronics or those being shipped presumably for reuse or repair should be considered nonhazardous waste.

“We’ve kind of moved into this gray area of used electronics that are going to be repaired and returned to the market,” says Harris. Some parties say this type of movement is covered under the convention, while others say it is outside the scope of the convention.

Harris says the group generally agreed there should be requirements on how materials are packaged and sorted, and on the need for contracts and declarations. But the group was not able to agree on which restrictions should be maintained.

The discussion now moves to the next meeting, a Conference of the Parties set for May. One of the remaining issues concerns shippers potentially misclassifying shipments for repair and reuse when they are not.

The compromise, Harris says, is parties might agree to some restrictions with regard to packaging, handling and the presence of a legal contract for service. However, “as of today they have not been able to reach an agreement.” Harris explained that all of the material that moves under warranty servicing or for testing or leasing could potentially be impacted by the decision. Shipments could potentially be slowed, says Harris, “which is not what you want when you’re talking about repairing and remanufacturing parts and equipment that might be under warranty or going back into commerce.

“ISRI’s position is that used equipment that’s being exported for reuse and repair is really outside the scope of the Basel Convention,” adds Harris. However he notes, “we’re not opposed to making sure those shipments are legal, safe and go to facilities that can properly handle the material that might be removed during such a reuse or repair function.”

At the moment, Bartley says, some regions have fairly well established rules. “There are places where there is an understanding of the controls needed,” he says. The working group, meanwhile, hopes to prevent movements of waste electronics to countries where they will be landfilled and possibly scavenged.

“We’re trying to stop that dumping into the environment and so we’re trying to make a set of complimentary rules to cover all the possibilities, and the most difficult one is the question of broken goods going for repair,” says Bartley.
 

Port problems in the U.S.

The International Longshoremen and Warehouse Union (ILWU), which represents around 20,000 dockworkers working at 29 U.S. West Coast ports, and the Pacific Maritime Administration (PMA), which represents port managers in negotiating and administering maritime labor agreements with the ILWU, have been locked in bitter negotiations over a new contract between the two parties. The negotiations have dragged on for months and have created significant congestion at ports throughout the U.S. West Coast.

As the union continued to operate at reduced levels, the PMA, as a retaliatory measure, temporarily suspended its weekend loading and unloading operations, starting on Feb. 7-8, due to what it deemed “premium pay for diminished productivity.”

For recyclers who use Pacific Coast ports in the U.S., the contract negotiations and the slowdown has made a difficult situation even worse.

The issue was most acute at ports in Southern California, where the PMA claims that since the slowdown began the average number of shifts for qualified crane operators dropped from more than 110 per day to less than 35 per day, “resulting in tens of thousands of containers available for discharge sitting on the docks at the twin ports,” the PMA notes.

For shippers, including those shipping recyclables, the acrimonious negotiations have created significant challenges to moving cargo. An executive at one large West Coast recycling company says his business is off by 20% to 30% and is getting worse. “I have never seen the ports like this,” he points out. More problematic, he continues, is that even if the contract is resolved he expects there will still be at least two months of backlog before the situation is improved.

“It couldn’t happen at a worse time,” he continues. He notes that he has been cutting costs and laying off people, but says that even with all the cuts his losses are significant.

Some sources have indicated that the line of trucks waiting to be checked into the Los Angeles/Long Beach ports stretched for miles. The gridlock has increased costs for exporters that were able to get space on vessels.

While progress on a number of points have been accomplished, several problem spots remain, including one that has perhaps created the biggest challenge for both parties—the rights and responsibilities for providing the maintenance and repair of the chassis equipment that is used by trucks to move containers to and from the ports.

This, more than anything else, appears to be the catalyst for a recent move by union workers to conduct what the PMA claims is a deliberate slowdown of business activity at the ports.

Historically, the chassis were owned by PMA member companies, including the shipping lines. As part of earlier contracts union workers were responsible for providing the maintenance and repair of the chassis equipment. The result is the addition of union jobs to perform the inspection and repair of this equipment.

However, over the past several years the owners of the chassis equipment have sold this business to third-party firms that are not PMA members. Because of that, these new chassis owners say they and not the union have the rights and responsibilities to provide their own inspection and maintenance of the equipment. For the ILWU, this move would reduce the number of its union employees.

The authors are editors with the Recycling Today Media Group and can be reached at lmckenna@gie.net and dsandoval@gie.net.