KITA seminar

1. Kris PolletWhite & Case LLPBrussels KITA seminar Seoul, December 17, 2004

2. WEEE/RoHS: update on latest developments / next steps

3. Overview • This presentation is not comprehensive in terms of WEEE/RoHS developments, but only covers a selected number of implementation issues. • 13 RoHS Exemption Requests • Grey Area Products • Marking of Products • Information for Treatment • Change Separate Treatment? • Enforcement • Expand RoHS??

4. 13 RoHS exemption requests • Only 11 subject of study, and consultant and most MSs seem willing to grant them: • Pb in optical transceivers for industrial applications: withdrawn by applicant • Pb in solders for electrical connection inside IC packages – Flip Chips: no further info received by application – EC lost contact details… • Pb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 RoHS • Exemptions to be reviewed by July 2010; if no justification, terminate exemption (Article 5.1.c)

5. 13 RoHS 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 RoHS 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

6. Other exemption requests • Use of non-RoHS compliant parts in refurbishment of « old » EEE: usually for B2B 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

7. 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/RoHS 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

8. Grey area products • (UK approach – cont’d) • But can get non-binding advice from officials (who will keep a database of prior responses) • Have developed decision-tree approach to assist on this (based largely on draft TAC criteria) • If your interpretation is challenged, you will need to prove that you « took  every reasonable step » and « excercised all due diligence » to ensure compliance • Ultimately, only national courts / European Court of Justice can give a binding legal interpretation • Same due diligence defence applies in RoHS context => to be susbstantiated by supplier declarations, sample tests, etc

9. 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

10. 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 prEN 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

11. 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 non-binding

12. Information for treament • Art. 11.1 requires: • to facilitate environmentally sound maintenance, upgrade, 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 provisions) 1) the different EEE components and materials, 2) location of dangerous substances and preparationsin the form of 1) manuals, or 2) electronic means

13. 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

14. 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 > 100cm2 – 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

15. Enforcement • WEEE Art 15 & RoHS 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 • Achieving compliance is hard enough as it is (in particular with a lot of 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

16. Enforcement • But honeymoon will not last, in particular with RoHS • Assuming that it will not be strictly enforced is dangerous, and will lead to growing free rider behaviour • UK: • RoHS: DTI to enforce; will be able to 1) make test purchases, 2) carry 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

17. 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 RoHS 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…

18. Enforcement • Imposing financial penalties, or even criminal prosecution, will probably only be 2nd or 3rd options • Imposing remedial measures to achieve compliance will probably be 1st choice • BUT remedial measures could be much more costly than a financial penalty…

19. Expand RoHS?? • 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 RoHS ban??

20. Expand RoHS?? • Add new substances to RoHS 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 RoHS 6 • This draws attention to other substances • And real ban is broader anyway: 76/769 bans PCBs, azo- colourants, etc • Other EU policy initiatives could have impact: PVC, nickel, phthalates, other brominated flame retardants, etc • REACH will inevitably lead to more restrictions / bans

21. Expand RoHS?? • 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 EuP or REACH

22. Energy Using Products – update & state of play

23. Energy Using Products – EuP • 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.

24. EuP – 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.

25. EuP – 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 EuP and are intended as individual parts for end-users(e.g. battery charges) – included • Means of transport for persons and goods – excluded

26. EuP – 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.

27. EuP – Conformity Assessment • If an EuP falls in the scope of an implementing measure, then the manufacturer is required to carry out an assessment of the EuP’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.

28. EuP – Implementing Measures I • Once the EuP 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.

29. EuP – Implementing Measures II • Criteria according to which an EuP can be covered under an IM: • More than 200,000 units of the EuP to be traded in the EU in a year • Significant environmental impact within the EU • Potential that the EuP’s environmental impact will improve after application of the implementing measure without entailing excessive costs – e.g. • If no other relevant EU legislation exists • If market forces fail to make an environmental improvement • If EuPs available on the market with similar functionality have very different environmental performance

30. EuP – Implementing Measures III • Other parameters to be taken into account when drafting an IM: • Life cycle of the EuP • 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

31. EuP – Implementing Measures IV • Criteria to be met by the IM: • The IM must not significantly worsen the use and functionality of the EuP • The IM must not adversely affect health, safety or the environment • The IM must not significantly increase the lifecycle cost of the EuP • The IM must not significantly worsen the manufacturers’ 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

32. EuP – 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.

33. EuP – 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 EuPs 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

34. EuP – 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 EuPs Directive are adopted)

35. EuP – 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 EuP Directive 5 years after its adoption • Member States will: • Transpose the EuP Directive within 2 years after its adoption • Determine penalties for non-compliance of the EuP Directive

36. EuP – 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 and manufacturers (partly accepted – Consultation Forum)

37. EuP – 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

38. EuP – Common Position v COM(2003)453 I • Compared to the Commission proposal of August 2003, the Common Position: • Specifies 200,000 units/year of the EuP traded in the EU • Clarifies “potential for improvement” adding: • No EU legislation • Market forces failure • Similar EuP with different environmental performance

39. EuP – Common Position v COM(2003)453 II • Includes a longer list of parameters to be taken into account adding: • The ECCP • Existing legislation in Member States • Proprietary technology • 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 EuP’s with high potential of GHG reduction (ECCP)

40. EuP – Final adoption • 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

41. EuP – Summary of Provisions • Certain EuP’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

42. EuP – Reactions in the industry I • Business federations: • IM only if market forces fail • Clarify link with WEEE, RoHS and IPP • Ensure involvement of stakeholders • Ensure enforceability of generic requirements • Orgalime (mechanical, electrical, electronic and metalworking industries): • Priority to voluntary measures • Proper involvement of industry • Against mandatory Life-Cycle Analysis

43. EuP – Reactions in the industry II • UEAPME (crafts and SMEs employers in Europe): • Against an over-ambitious approach • Difficult for small enterprises to conduct Life-Cycle Analysis • Environmental NGOs: • Weak & generic • Against single framework Directive on ecodesign both for electrical and electronic equipment and for energy efficiency requirements

44. Registration, Evaluation, and Authorisation of Chemicals “REACH”: latest developments

45. Background • 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 • To apply to the manufacture, import, placing on the market or use of substances, on their own, in preparations or in articles • 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

46. Main Elements of REACH System • Registration • Evaluation • Autorisation • Reduced requirement for articles • Creation of a European Chemicals Agency

47. The Story So Far • Internet consultations on draft text (May/July 2003) • Commission proposal (October 29, 2003) • 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 • Council first reading began in November 2003. Intensive work programme for proposal under Dutch Presidency - Political Agreement expected April 2005 (?) • 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)

48. Competitiveness Council 25-26/11/04 • Agreement that costs of REACH for business, especially for Small and Medium-Sized Enterprises (SMEs), are too high. • 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 • 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 data-sharing, except for vertebrate testing. • Agreement on more information requirements for low volume substances. Industry dissatisfied with this proposal (cost of registration) • Council will express firmer approval after experts have completed further work on details (AHWG).

49. Council Approach: efficient and fast-track • Ad hoc working group (AHWG) of representatives of national Competitiveness and Environment Ministries. • 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. • Second stage: AHWG focus on identifying issues for policy debates. Major proposals for cross-cutting tabled by Member States. • Workshop October 25-27, 2004 to review 36 impact studies published so far on costs and benefits (EU2004REACH report). • « Footnote paper » expected by end of 2004

50. European Parliament: confused procedure • Resumed work in October 2004. 9 separate Committees expected to issue their Opinions. • Rapporteur Sacconi has expressed his support for Commission proposal and urged representatives of Member States not to make significant changes. • Inter-Committee stakeholder hearing (ENVI/ IMCO/ ITRE) on January 19, 2005 • Sacconi’s second report expected by mid-February 2005 • Environment Committee vote to take place during summer 2005 (?) • EP plenary 1st reading vote not expected before end 2005