Kris Pollet White Case LLP Brussels KITA seminar
Kris Pollet White & Case LLP Brussels KITA seminar Seoul, December 17, 2004 www. whitecase. com
WEEE/Ro. HS: update on latest developments / next steps Page 2
Overview This presentation is not comprehensive in terms of WEEE/Ro. HS developments, but only covers a selected number of implementation issues. 13 Ro. HS Exemption Requests Grey Area Products Marking of Products Information for Treatment Change Separate Treatment? Enforcement Expand Ro. HS? ? Page 3
13 Ro. HS exemption requests Only 11 subject of study, and consultant and most MSs seem willing to grant them: u u Pb in optical transceivers for industrial applications: withdrawn by applicant Pb in solders for electrical connection inside IC packages – Flip Chips: no further info received by application – EC lost contact details… Pb in solders for servers, storage array, network infrastructure: is considered safety critical – want to avoid breakdown Others: mercury in straight fluorescent lamps for special purposes; light bulbs; Pb in compliant pin Very High Density Medium connectors; Pb coating for thermal conduction module c-ring; Pb & Cd in optical and filter glass; Pb in solders inside microprocessors (>85% Pb); Pb in high melting temperature type solders; safety equipment for fire and rescue services Dec 10 TAC: expected vote on basis of EC proposal to amend Annex of Ro. HS Exemptions to be reviewed by July 2010; if no justification, terminate exemption (Article 5. 1. c) Page 4
13 Ro. HS exemption requests 2 special requests: not part of study § Deca BDE: Comprehensive Risk Assessment finally concluded in May ’ 04 (Ireland rapporteur) – no risk to human health or environment – majority of TAC & EC seem in favour of excluding Deca from Ro. HS ban – BUT Denmark & Sweden (? ) want to ban on basis of precautionary principle – long awaited EC proposal at Dec 10 TAC? Danish Parliament only narrowly rejected a vote to impose Deca ban Norway considering a Deca BDE ban § Pb in lead-bronze bearing shells and bushes: EC and majority of TAC seem in favour of granting because this is already exempt under the End of Life Vehicles directive Page 5
Other exemption requests § Use of non-Ro. HS compliant parts in refurbishment of « old » EEE: usually for B 2 B leasing – EC: no problem if refurbished product marketed as « refurbished » , but if product marketed as « new » ? – EC: maybe grant a time-limited exemption – MSs: maybe need a generic, not sector specific exemption; and maybe only in cases where a closed loop can be proven – EC proposal at Dec 10 TAC? § Additional requests received: as of Sept 15 cut-off date EC had received 26 additional requests – but covered only about 18 product groups – EC uses “check list” to make first selection: safety critical? scientific/technical information provided? submitted by more than one applicant? etc – EC needs to locate funding for a new consultant’s study (not before start of 2005) – will need public stakeholder consultation (Art. 5. 2) – it is likely conclusion will not be available before end 2005 – vote in TAC before July 2006? ? ? – if not, EC will probably grant “temporary exemption” or “grace period” until confirmed or rejected by vote Page 6
Grey area products § EC / TAC approach: criteria, grey area products table TAC tries for agreement on criteria (some MSs refuse) EC has received over 40 requests for clarification: is this product in or out of WEEE/Ro. HS scope? EC submits requests to TAC for comments If agreement, includes in grey products table If not, EC will try to push through its own interpretation But, MSs are not obliged to follow this ‘table’ It is likely you will have national differences § UK: pushes « due diligence » approach UK does not believe in grey products table approach – unpractical Companies should reach their own judgement in good faith, or after getting independent legal advice Page 7
Grey area products (UK approach – cont’d) Page 8
Grey area products Products examined by TAC so far (not comprehensive): RFID – Radio Frequency Identification Device: if it’s on the packaging, out of scope. If it’s on the product, in the scope. Electrical scooters in airports: not covered; but if used for leisure purposes: covered under category 7 Space products: unclear (Art 2. 1 WEEE? ) Fridges, Airco etc for caravans and motor homes: depends on whether caravans and motor homes fall under ELV Page 9
Marking of products Art. 10. 3: mark EEE with crossed-out wheeled bin § if necessary, can be printed on packaging, or on the instructions for use, or on the warranty § symbol must be visible, legible, and indelible (Annex IV) Art. 11. 2: producer clearly identifiable by mark on EEE; mark if product is put on market after 13/8/2005; EC to promote EU standards on this CENELEC draft standard pr. EN 50419 § marking must also be accessible and durable § if not possible on EEE, can be on flag on fixed supply cord, on operating instructions or warranty § if above does not apply: shall be on packaging Page 10
Marking of products If standard is not ready by 13/8/2005? § legal requirement to mark remains valid § use the draft standard, § or any other marking that complies with Art’s 10. 3 & 11. 2 CENELEC standard will in any case remain voluntary and nonbinding Page 11
Information for treament Art. 11. 1 requires: § to facilitate environmentally refurbishment, and recycling § Member States must ensure that the following measures are taken: § producers to provide reuse and treatment info for 1) each type of new EEE, 2) within one year after placing on market § information shall include (only to allow compliance with directive sound maintenance, upgrade, provisions) 1) the different EEE components and materials, 2) location of dangerous substances and preparationsin the form of 1) manuals, or 2) electronic means Page 12
Information for treatment Most MSs have not dealt with this in detail yet UK: seems to take a cautious approach § producers are allowed only to respond to info requests when they arise § producers can ‘reasonably’ be asked to provide info on location of items and substances covered by Environment Agency’s guidance on treatment, or on dangerous substances or components in general Ireland: preparatory Task Force recommends: § producers should “facilitate” development of guidance documents on recycling, materials handling, waste classification Page 13
Change Separate Treatment? WEEE Art. 6 & Annex II lay down selective treatment requirements Would involve manual removal of components, substances = very costly For minimal or no environmental gain? NL University of Delft eco-efficiency research questions several Annex II requirements LCD’s > 100 cm 2 – very low eco-efficiency Electrolyte capacitors – very low eco-efficiency BUT: PCBs in mobile phones can be treated in smelters which enables recycling of precious metals (profitable!) Research results have twice been presented to TAC members Initial reaction appears to have been positive Page 14
Enforcement WEEE Art 15 & Ro. HS Art 8 MSs to determine penalties that are effective, proportionate & dissuasive WEEE Art 16 MSs to ensure that inspection & monitoring enable proper implementation of diretive to be verified A certain ‘honeymoon’ or ‘grace period’ will probably be observed by most regulators lot of Achieving compliance is hard enough as it is (in particular with a guidance still missing), so « let’s not rock the boat too quickly » National enforcement structures/agencies still need to be established, appointed, or organised in most MSs Page 15
Enforcement But honeymoon will not last, in particular with Ro. HS lead Assuming that it will not be strictly enforced is dangerous, and will to growing free rider behaviour UK: carry Ro. HS: DTI to enforce; will be able to 1) make test purchases, 2) out tests, 3) request compliance documents, 4) issue remedial compliance measures in case of breach WEEE: various regional agencies (Environment Agency for England & Wales; powers have not been fixed yet Steven Andrews (DTI): national enforcement authorities will exchange information on non-compliant products Page 16
Enforcement Ireland Task Force recommendation: Enforcement must be priority, penalties must be real deterrent, inspectors must be properly trained, need clear and consistent methodology, focus on Ro. HS compliance Denmark Has an established structure (Chemicals Inspectorate) that enforces existing Pb ban, with developed working methods Netherlands Established structure, existing working methods, and a track record… Page 17
Enforcement Imposing financial penalties, or even criminal prosecution, will probably only be 2 nd or 3 rd options Imposing remedial measures to achieve compliance will probably be 1 st choice BUT remedial measures could be much more costly than a financial penalty… Page 18
Expand Ro. HS? ? Art. 6 Review Before 13 February 2005 Present proposal for including categories 8 & 9 into scope Study need to adapt the substance ban, on basis of precautionary principle Deadline will be missed No apparent room for not including cat’s 8 & 9 Proposal to EP & Council: will take 1 -2 years to adopt Include new substances in Ro. HS ban? ? Page 19
Expand Ro. HS? ? Add new substances to Ro. HS ban? Current majority approach: await/allow compliance with 6 substance ban first So: too early to expand? Several elements may play a role: Substance declarations (Green Sheet, JIG) cover a much wider number of substances than Ro. HS 6 This draws attention to other substances And real ban is broader anyway: 76/769 bans PCBs, azocolourants, etc Other EU policy initiatives could have impact: PVC, nickel, phthalates, other brominated flame retardants, etc REACH will inevitably lead to more restrictions / bans Page 20
Expand Ro. HS? ? Which substances could be targeted first? Berylium (Berylium Oxide) – been mentioned in press reports – some recyclers already remove it – is considered as toxic as lead Arsenic – is even more toxic than lead Bismuth – heavy metal TBBPA – Tetra Bromo Bisphenol A – brominated flame retardant – currently undergoing comprehensive risk assessment However, since hazardousness/toxicity of these substances is usually known, they are only used if really needed, i. e. in critical applications If banned, you would probably need a lot of exemptions Restrictions may emerge through Eu. P or REACH Page 21
Energy Using Products – update & state of play Page 22
Energy Using Products – Eu. P Commission proposal for a Directive on establishing a framework for the setting of Eco-design requirements for Energy-Using Products – August 2003: § The proposal aims to improve the environmental performance of energy-using products. § The proposal aims to facilitate free movement of goods across the EU. § The proposal does not introduce directly applicable requirements for specific products. § The proposal establishes a framework: i. e. defines criteria and conditions for setting requirements regarding environmentally relevant product characteristics (such as energy consumption), through implementing measures to be adopted by the Commission on the basis of this framework. Page 23
Eu. P – Procedure First reading: § The European Parliament proposed amendments in April 2004 § The Council reached Political Agreement in June 2004 § The Council adopted a Common Position in November 2004 Second reading: § The European Parliament will examine the Common Position and present its second reading text in spring 2005 Final adoption: § The Directive is expected to be adopted at EU level in the second half of 2005 The following analysis has been conducted on the basis of the text of the Common Position adopted in November 2004. Page 24
Eu. P – Definition & Scope I “Energy-using products”: products that, in order to operate as they are intended to operate, require some energy input, such as electricity, fossil fuels and renewable energy sources. Examples: electrical and electronic devices or heating equipment Parts that require energy input, are intended to be incorporated into an Eu. P and are intended as individual parts for end-users(e. g. battery charges) – included Means of transport for persons and goods – excluded Page 25
Eu. P – Definition & Scope II Eco-label: Products that have been awarded an Eco-label will be considered as compliant insofar as the Eco-label meets the requirements of the implementing measure. EMAS: The EMAS system can be used to demonstrate compliance. EMAS does not however grant presumption of compliance. Page 26
Eu. P – Conformity Assessment If an Eu. P falls in the scope of an implementing measure, then the manufacturer is required to carry out an assessment of the Eu. P’s conformity with the requirements provided by this implementing measure. Manufacturers will be able to choose between the “internal design control” set out in Annex IV of the Directive and the management system under Annex V. Page 27
Eu. P – Implementing Measures I Once the Eu. P Directive is adopted, the Commission will enact implementing measures on specific grounds and environmental aspects (e. g. energy consumption, waste generation, water consumption, extension of lifetime). Implementing measures will be enacted after impact assessment and after consultation with Member States and interested parties. The Commission will be assisted by a regulatory Committee. Page 28
Eu. P – Implementing Measures II Criteria according to which an Eu. P can be covered under an IM: § More than 200, 000 units of the Eu. P to be traded in the EU in a year § Significant environmental impact within the EU § Potential that the Eu. P’s environmental impact will improve after application of the implementing measure without entailing excessive costs – e. g. v If no other relevant EU legislation exists v If market forces fail to make an environmental improvement v If Eu. Ps available on the market with similar functionality have very different environmental performance Page 29
Eu. P – Implementing Measures III Other parameters to be taken into account when drafting an IM: § Life cycle of the Eu. P § Impact assessment carried out on the environment, consumers and manufacturers § Voluntary agreements by the industry and other self-regulation § Consultation with stakeholders § The European Climate Change Programme § Member States’ existing environmental legislation Page 30
Eu. P – Implementing Measures IV Criteria to be met by the IM: § The IM must not significantly worsen the use and functionality of the Eu. P § The IM must not adversely affect health, safety or the environment § The IM must not significantly increase the lifecycle cost of the Eu. P § The IM must not significantly worsen competitiveness within or outside the EU § The IM must not indirectly require the adoption of proprietary technology by manufacturers § The IM must not impose excessive administrative costs to the manufacturers’ Page 31
Eu. P – Ecodesign Requirements Ecodesign requirements will be introduced through the implementing measures according to Annex I and Annex II of the Directive. § Annex I – generic ecodesign: requirements aiming to improve the overall performance of a product § Annex II – specific ecodesign: requirements on a selected environmental aspect of the product, such as energy consumption during its use The Directive also allows for the adoption of no ecodesign requirements for specific cases. If necessary, the Commission will adopt guidelines to accompany the ecodesign requirements. Page 32
Eu. P – Working Plan To be prepared by the Commission: § After consultation with the Consultation Forum (Member States & industry) § Within 2 years after the adoption of the Eu. Ps Directive What is the working plan? § An indicative list of product groups § Implementing measures to be adopted on the basis of this indicative list § Three-year time span § List to be amended periodically Page 33
Eu. P – Other Directives affected Directives amended § 92/42/EEC § 96/57/EC § 2000/55/EC Directives repealed § 78/170/EEC § 86/594/EEC (existing national implementing measures will apply until IM under the Eu. Ps Directive are adopted) Page 34
Eu. P – Final Provisions The Commission will be assisted by a regulatory Committee A Consultation Forum with Member States’ representatives and industry will advise the Commission The Commission will review the Eu. P Directive 5 years after its adoption Member States will: § Transpose the Eu. P Directive within 2 years after its adoption § Determine penalties for non-compliance of the Eu. P Directive Page 35
Eu. P – European Parliament I Amendments proposed in April 2004 included: § Legal basis: introduce environmental basis in addition to internal market (not accepted) § Preliminary list of which products should be affected first included heating, electric motor systems, lighting, domestic appliances, office equipment, consumer electronics and HVAC systems § More information available to consumers on appliances by the manufacturer as well as instructions § Ecodesign board: environmental NGOs, consumers manufacturers (partly accepted – Consultation Forum) Page 36 and
Eu. P – European Parliament II The Council’s Common Position included 23 out of the 78 proposed amendments: § Common Position to be formally sent to the EP on 12 December § Draft recommendations to be discussed in the Environment Committee before 17 February § Vote in the Committee on 14 -15 March § Second reading text to be voted in plenary in April Page 37
Eu. P – Common Position v COM(2003)453 I Compared to the Commission proposal of August 2003, the Common Position: 1. Specifies 200, 000 units/year of the Eu. P traded in the EU 2. Clarifies “potential for improvement” adding: 1. No EU legislation 2. Market forces failure 3. Similar Eu. P with different environmental performance Page 38
Eu. P – Common Position v COM(2003)453 II § Includes a longer list of parameters to be taken into account adding: v The ECCP v Existing legislation in Member States v Proprietary technology v Administrative costs to manufacturers § Creates Consultation Forum § Provides that Working Plan with priority list will be adopted within 2 years after the adoption of the framework § Sets that priority measures will be adopted on Eu. P’s with high potential of GHG reduction (ECCP) Page 39
Eu. P – Final adoption is expected no earlier than summer 2005 The proposed Directive lays down a framework no immediate legislation would need to be adopted However, within the next few years, product groups will be selected on the basis of specific criteria legislative requirements to be adopted as a result Page 40
Eu. P – Summary of Provisions § § Certain Eu. P’s to be designed according to certain requirements These requirements to be set out in future implementing measures (IM) IM to be decided by regulatory committee of Member State officials IM to cover only products sold in more than 200, 000 units per year in the EU § Motor vehicles to be excluded § Products that conform to European or international standards to be considered compliant § Manufacturers of sub-components to provide information on the environmental impact of parts § Commission to set working plan to develop IM § Voluntary initiatives by the industry to be taken into account when preparing IM Page 41
Eu. P – Reactions in the industry I Business federations: § § IM only if market forces fail Clarify link with WEEE, Ro. HS and IPP Ensure involvement of stakeholders Ensure enforceability of generic requirements Orgalime (mechanical, electronic and metalworking industries): § Priority to voluntary measures § Proper involvement of industry § Against mandatory Life-Cycle Analysis Page 42
Eu. P – Reactions in the industry II UEAPME (crafts and SMEs employers in Europe): 1. Against an over-ambitious approach 2. Difficult for small enterprises to conduct Life-Cycle Analysis Environmental NGOs: 1. Weak & generic 2. Against single framework Directive on ecodesign both for electrical and electronic equipment and for energy efficiency requirements Page 43
Registration, Evaluation, and Authorisation of Chemicals “REACH”: latest developments Page 44
Background ü A single system to replace over 40 existing legal measures for gathering information, assessing risks to human health and the environment and authorizing or restricting the marketing and use of individual chemicals produced or supplied in the EU ü To apply to the manufacture, import, placing on the market or use of substances, on their own, in preparations or in articles ü If a substance does not fulfil the registration requirements set forth in the REACH proposal, its marketing in the EU will be prohibited: no data = no marketing Page 45
Main Elements of REACH System ü Registration ü Evaluation ü Autorisation ü Reduced requirement for articles ü Creation of a European Chemicals Agency Page 46
The Story So Far ü Internet consultations on draft text (May/July 2003) ü Commission proposal (October 29, 2003) ü First European Parliament report late 2003 (Environment Committee - Rapporteur Guido Sacconi, PSE, I). Second Sacconi report expected in February 2005 - First reading opinion expected by end 2005 ü Council first reading began in November 2003. Intensive work programme for proposal under Dutch Presidency - Political Agreement expected April 2005 (? ) ü Dialogue with Stakeholders has continued and continues. Stakeholder workshops held November 2003 and April 2004: Memorandum of Understanding between UNICE/CEFIC and Commission (results expected in March 2005) Page 47
Competitiveness Council 25 -26/11/04 ü Agreement that costs of REACH for business, especially for Small and Medium-Sized Enterprises (SMEs), are too high. ü Recommends that Commission take steps to reduce bureaucracy involved in implementation of REACH to a minimum and urges effective cooperation between companies on data-sharing ü Agreement on UK/Hungary proposal to introduce mandatory cost and data sharing in REACH registration stage: obligation to compensate firms which are forced to surrender commercial data for joint registrations. Industry disagrees with mandatory datasharing, except for vertebrate testing. ü Agreement on more information requirements for low volume substances. Industry dissatisfied with this proposal (cost of registration) ü Council will express firmer approval after experts have completed further work on details (AHWG). Page 48
Council Approach: efficient and fast-track ü Ad hoc working group (AHWG) of representatives of national Competitiveness and Environment Ministries. ü First stage: high-level reading of proposal to improve understanding, during which Commission explained text article by article and answered questions from Member States. Ccompleted mid-March 2004. ü Second stage: AHWG focus on identifying issues for policy debates. Major proposals for cross-cutting tabled by Member States. ü Workshop October 25 -27, 2004 to review 36 impact studies published so far on costs and benefits (EU 2004 REACH report). ü « Footnote paper » expected by end of 2004 Page 49
European Parliament: confused procedure 1. Resumed work in October 2004. 9 separate Committees expected to issue their Opinions. 2. Rapporteur Sacconi has expressed his support for Commission proposal and urged representatives of Member States not to make significant changes. 3. Inter-Committee stakeholder hearing (ENVI/ IMCO/ ITRE) on January 19, 2005 4. Sacconi’s second report expected by mid-February 2005 5. Environment Committee vote to take place during summer 2005 (? ) 6. EP plenary 1 st reading vote not expected before end 2005 Page 50
Further Impact Studies 1. Further specific studies on cost-effectiveness of REACH 2. Inclusive process, involving chemicals industry, downstream users, trade unions and NGOs 3. Transparent process of investigation and validation 4. Results expected in March 2005 5. EU industry hopes consultations will lead to redrafting of proposal. Commission does not plan to change proposal (? ) 6. Identification of issues for further investigation 1. Substance withdrawal and chemicals supply chain 2. Impact on innovation 3. Impact on New Member States Page 51
Industry Consortium Studies of Supply-Chain and Innovation ü Working Group meets about once a month - includes industry stakeholders, trade unions, environmental NGOs and Commission officials. ü High-level Group (includes Commissioners and representatives of Council, EP, industry, trade unions and environmental NGOs - First meeting January 2005, after substantive requests have been received). ü Supply-chain and innovation studies carried out by KPMG consultants for industry-consortium (expected March 2005) § Automotive industry § Hi-tech electronics § Inorganic materials (REACH Alliance) § Flexible packaging Commission staff (JRC/IPTS) carry out study of New Member States Page 52
Further developments EC Interim Strategy: RIPs and SPORT Reach Implementation Projects – RIPs First EC attempt to identify implementation problems & draw up guidance to deal with them Stakeholders involved (e. g. DUCC) Strategic Partnership On Reach Testing – SPORT For 9 substances go through registration/evauation procedure Purpose: test the procedure, not the substance Involvement of independent facilitators & all necessary actors Started Sept 04 – end July 05 Page 53
2005 Timeline January 19, 2005: EP Inter-Committee stakeholder hearing February 2005: Sacconi report issued March 2005: Industry consortium impact studies ready April 2005: Council political agreement? Summer 2005: EP Environment Committee vote July-August 2005: SPORT results available 2 nd half 2005: EP plenary 1 st reading vote Page 54
Specific requirements for articles The Commission has softened its proposal since the Internet Consultation ü Registration of any substance incorporated in an article when: § total amount present is over 1 metric ton per year and per article type; § classified as hazardous under Directive 67/548/EEC; § intended to be released during normal and foreseeable conditions of use. ü Notification is required for substances in articles: § supplied in quantities over 1 metric ton per year and per article type; § classified as hazardous; § likely to be released during normal and foreseeable conditions of use (unintended); § quantity released may adversely affect human health or the environment; § Agency may decide on the basis of the notification that full registration is required for such substances. Page 55
Specific requirements for articles 1. Article 6 of REACH and discrimination against non-EU producers of articles : 1. EC claims that obligations for substances in imported articles are slightly easier than for articles produced in the EU; 2. importer of an article only has to consider substances classified as dangerous which may be released during use; 3. Article 6 becomes applicable only 11 years and 3 months after REACH comes into force; 4. EC guidance document on Substances in Articles will be developed. Page 56
Council position on articles ü Council questions workability and enforceability in particular where companies should be aware that dangerous substances are likely to be released from articles. ü Some Member States point out that producers of articles in the EU may suffer competitive disadvantages in relation to importers of articles from non-EU producers. ü Proposal to limit to only very high concern substances used in articles (CMRs, PBTs and v. Pv. Bs) ü Discussion in AHWG to combine the information requirement limited to only substances of very high concern in articles with the extension of the “right to know” to professional customers. Page 57
Case study: car industry ü Manufacturers or importers, rather than the public authorities, responsible for ensuring that substances, and in certain instances substances in articles, are safe to use ü Information up and down the supply chain: responsibility is shared between chemical manufacturers and downstream users (DU) ü Car manufacturers consider as a DU / But in case a car manufacturer actually produces a substance/preparation, then he would be considered a producer and would have to abide with all the obligations provided for producers ü Cars and car components which contain substances classified as hazardous have to be registered in quantities of 1 metric ton or more ü Consortia of companies which collaborate to collect and supply data is encouraged ü Duty to ensure that it is handled according to the chemical manufacturer’s recommended risk management measures Page 58
Case study: car industry ü Clarifications are necessary: § “intended to be released under normal and reasonably foreseeable conditions of use” in Article 6. 1(c) § likely to be released…even if that release is not an intended function of the article” in Article 6. 2(c) v v v Does it cover accidental leakage of substances (for instance during a car crash)? Are car crashes excluded from “reasonably foreseeable condition of use”? How to assess whether the quantity released may be of concern to human health or the environment ? ü KPMG impact study would be important to address these issues (expected March 2005) Page 59
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