T R A D E A N D E N V I R O N M E N T
A TEACHING CASE:
THE BASEL BAN AND BATTERIES
We learned the hard way that lead, when used improperly, is an unforgiving, toxic contaminant capable of creating health crises of the highest magnitude. But […it] clearly seems to be a metal we can’t do without.
Steve Voynick, freelance writer, Leadville, Colorado
Serious global concern about shifting environmental risk from the rich to the poor produced a proposal to ban the North-to-South waste trade, even for recycling. Fears of sham or “dirty” recovery operations, or inadequate technical capacity for environmentally sound management, led the parties of the Basel Convention to amend their 1989 agreement to restrict such trade. But as the ban awaits ratification, opposition to it is growing. Some countries are claiming it will violate their sovereignty and their trading rights under the World Trade Organization (WTO/GATT) agreement. This case uses the example of a thriving “used lead acid battery” (ULAB) recycling business in the Philippines to draw out these trade & environment issues. The important lesson is that society has yet to resolve fundamental questions about the relationships between multilateral environmental agreements (MEAs) and the international trade rules.
Introduction to the Case
Management personnel at Philippines Recyclers, Inc. (PRI) in Manila are worried that the Basel Ban on waste trading from OECD-to-non-OECD countries is going to kill their profit margin. A subsidiary of RAMCAR, they have manufactured lead acid batteries since 1919, and are the largest battery producer and lead refiner in all of Southeast Asia, officially licensed by the Philippine government. The company also recycles used lead acid batteries (ULABs), a good percentage of which they import from industrialized countries, in order to recover the lead.
The Philippines neither mines sufficient primary lead, nor yet collects adequate quantities of used batteries domestically, to meet their growing national demands for the heavy metal. The main source of the rising lead demand in the Philippines is due to a very rapidly increasing demand for automobiles, all of which have lead acid batteries. Between the years 1990-1996, registration of new vehicles increased almost 80% in the Philippines, when, by contrast, this number remained steady in both the USA and Japan, and even declined in Western Europe during the same time period (Hoffman and Wilson 2000). Thus this developing nation depends upon the secondary materials market and hazardous waste imports as feedstock for their manufacturing needs, particularly lead.
Government officials, businessmen, and environmentalists are all paying close attention to recent developments in the Basel Convention (The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal, 1989). A majority of the parties to this multilateral environmental agreement (MEA), now with 151 members, agreed to a new ban, which is now in the process of ratification (30 of the required 62 ratifications are completed). When, and if, it enters into force, the Basel Ban will most likely curtail OECD country exports of used lead acid batteries (ULABs) to non-OECD countries like the Philippines. It is conceivable that the Philippines government could bring a complaint of trade discrimination to the World Trade Organization, against OECD used battery suppliers who comply with the Basel Ban. Such a case would produce a unique and difficult confrontation between the global trade rules and global environmental rules, yielding unpredictable results.
Battery Recycling for Lead Recovery: The Business
Known and used by man since the earliest times, lead is usually derived from the naturally-occurring mineral galena (lead sulfide PbS). The Romans built extensive plumbing and water supply systems with it, and also made dinnerware from it. Fourteenth century firearms were made more effective by the use of lead bullets. Moveable lead-tin type made the print revolution possible, and leaded crystal is more brilliant and beautiful than regular glass. Modern use began in the mid-19th century with the invention of storage batteries, demand for which expanded dramatically with the growth of automobile sales. In recent times we have used lead in gasoline to improve performance, in paints to increase durability, in tins cans to seal them, for x-rays and in computers as dense protective shielding (Voynick 1999).
Demand for lead stagnated during the last 3 years in both the United States and Europe, but globally it rose 2.5%, primarily due to rapid development in Asia. The main use is for lead-acid storage batteries, destined for cars, ships, and planes, and other electrical systems, including large telecommunications services. Much of the existing demand is met through the recycling of secondary materials (Cahners 2001).
Over the last decade or so, a new market has arisen for used lead acid batteries (ULABs), a market which has extended internationally. Industrialized countries produce, use, regulate and then collect batteries from both commercial and individual consumers. Several developing countries have entered the business of buying these ULABs in bulk, shipping them across oceans or wide territories, and recycling them for lead recovery. The Philippines is one such country with business which not only provides all the lead needed by their developing nation, but also generates both jobs and significant export earnings (Hoffman and Wilson 2000).
The formal, officially recognized, sector of the battery manufacturing and recycling business is primarily represented by only one company, Philippines Recyclers, Inc. in Manila, a subsidiary of RAMCAR, where about 150 employees work at the Bulacan site. A modern plant, purchased as a complete package from the United States in the early 1990s, it provides about 75% of the licensed battery recycling capacity in the Philippines. Economies of scale currently demand imported batteries to meet economic viability. The balance of the formal sector is comprised of about a dozen known smaller lead smelters, who together employ an additional 150 people, and produce about 12,000 tons of lead currently costing about $3 millon/year. By contrast, the same amount of lead in the form of imported primary mined materials would cost more than twice that figure.
The formal sector, however, did not produce these results alone, but in full cooperation with a huge informal sector: unlicensed, unregulated, and unaccounted for mini-operations of battery reconditioners, cottage smelters, and backyard recyclers. The numbers of people deriving their incomes from this activity is extremely difficult to gauge, but educated estimates reach to 6000 Filipinos. In tropical climates, lead acid batteries tend to wear down fairly quickly, but can be “reconditioned” temporarily to provide extended service. When the cells are finally spent, the acid is then dumped, the plastic casings recycled, and the lead resmelted and sold to the formal sector, most often PRI.
Human exposures to lead can be especially high in the informal sector, where people lack understanding of its toxicity and control precautions. Lacking effective zoning which separates the industrial from the domestic, many homes and eating establishments show high lead contamination. Yet even the official industrial manufacturers have an uneven record of environmental performance, as lead is not easy to manage safely.
The Environmental and Human Health Hazards
Early symptoms of lead poisoning mimic general malaise or common illnesses, and thus it is not usually diagnosed correctly. In adults, if not treated, lead poisoning can cause irritability, poor muscle coordination, nerve damage, higher blood pressure, and problems hearing and seeing well. Reproductive difficulties (low sperm counts) and disturbed pregnancies may also develop. Some historians and medical researchers attribute the demise of the Roman Empire to lead poisoning, as samples of ancient Roman bones contained lead levels high enough to cause male sterility and mental instability (Voynick 1999).
In children, lead poisoning can cause brain damage and retardation, anemia, liver and kidney damage, hearing loss, hyperactivity, and even death. In spite of tremendous progress towards limiting lead contamination and exposures in the United States over the last couple of decades, the Environmental Protection Agency (EPA) still names lead as the most serious environmental health threat to children, worse than the effects of radon, pesticides, and asbestos combined. Young children are especially vulnerable, because they are growing rapidly, and quickly absorb the toxin. The currently mandated “safe” level of lead for children is only 10 micrograms per deciliter (g/dl)of blood, with 20 g/dl the official toxicity level (U.S. EPA website).
Filipinos working in informal battery recycling and repair facilities show increased lead levels in their blood, significantly higher than the World Health Organization’s permissible exposure limits. In addition, because families and living quarters are not separated from the workplace in most instances, children of battery workers in Manila have been tested at almost 50 g/dl, a disastrous level (Suplido & Ong). Worker health and safety on the job in these small scale operations is usually ignored, unprotected by special clothing or goggles, hard hats or ventilators.
Battery reconditioners and smelters in the Philippines are located on busy streets, next to food vendors, and populated areas. The general public health and the environment both suffer from sulfuric acid dumped in streams, into the sewer system, or out onto the soil. Owners of small smelting furnace stacks generally do not filter the exhaust gases, or contain nor treat their residue slag. Even PRI, the formal plant, has had to struggle to maintain a good performance record, particularly with worker exposure, and soil, water, and air contamination surrounding the plant. However, recent progress at PRI earned them an ISO 14000 certification for their environmental management system (a program of the International Standards Organization).
The Philippines is not unique in its difficulties in managing lead properly, other developing countries like India, Brazil, and Mexico experience very similar situations (BNA 1997 & Shanoff 2002), where waste management has not kept pace with modern development. Many industrialized countries also have a history of unacceptable human exposures and toxic environments. In the United States, scientists estimate that most major cities have at least one abandoned lead battery recycling site, seriously contaminated with lead, waste acid, plastic battery casings, and other toxic metals and additives. While these await superfund clean-up, the Center for Disease Control still ranks lead as the number-one hazardous substance in America where one in 11 children has lead blood levels that are unhealthy (Nedwed & Clifford 1997). France, among other nations, faces similar legacies (BNA 1999). The difference is that most industrialized countries currently have functional systems of battery collection in place, along with effective regulation of lead recovery operations. Some operate successful battery manufacturing and recycling facilities, for example, in Belgium and the Netherlands (Quirijnen 1999).
In recent years, however, much of the recycling of batteries has moved overseas, to developing countries without equivalent governmental control. Parties to the Basel Convention say that it is out of concern for this financial, technical, and regulatory disparity among countries that they agreed to ban international toxic waste shipments from rich countries to poorer ones. Ban supporters claim countries must not be forced to make a choice between poverty and poison, and that industrialized countries have an ethical responsibility to manage their own toxic wastes (Lipman 2002).
The Basel Convention and the Ban
Global trade in toxic wastes accelerated during the 1980s, driven by high potential profits made possible through the combination of: 1) dramatic increases in waste generation; 2) the public NIMBY (not-in-my-backyard) syndrome that blocks new disposal facilities in Western nations, and 3) very different regulatory climates for waste management among countries. Although the majority of cases of transboundary waste movements are between industrialized countries, a significant percentage are North-to-South trade. A few infamous waste dumping incidents, such as the New York garbage barge, the Khian Sea, and Koko, Nigeria, demonstrated a serious potential for wholesale unethical transfer of environmental risk to vulnerable groups (Strohm 1993).
In response to these new developments, the international community negotiated an agreement, signed in Basel, Switzerland in 1989, which limited waste trading. The fundamental provisions of the Basel Convention seek to impose a “prior informed consent” (PIC) regime on waste trading, using designated “authorizing agencies”, labeling forms, and packaging and transportation safety standards. The Convention allows any sovereign nation to ban waste imports, (now over 100 nations do so) and requires all members to respect such bans. In addition, waste exporting is prohibited to states that are not parties to the Convention, to Antarctica, and if there is “reason to believe” the waste will not be handled in an environmentally sound manner (Krueger 1999). However, Article 11 rather inconsistently permits nations (including non-parties) to enter into bilateral arrangements outside the Basel Convention, as long as these are consistent with the general spirit of Basel.
The politics underlying the negotiations split between those who would completely ban the waste trade (most Third World nations, environmentalists, and other members of the international community), and those who saw waste trading as a normal and appropriate extension of market forces between consenting nations (generally the developed nations, some economists, and the waste disposal industry). Monitoring the waste trade so that it was done properly was the goal of this latter group, whose desires prevailed at the initial signing of the original agreement. Many African nations, upset with the outcome of the Basel negotiations, withdrew and wrote and signed their own Bamako Convention the following year, which banned any waste imports into Africa.
Ban supporters did not give up, however, and continued to press for various iterations of a ban on waste trading, including wastes destined for recycling. They claimed there had been too many incidents of sham recycling where, for example, toxic substances ended up on roads as baserock, or simply dumped in piles. The sophisticated technology required to safely recycle hazardous wastes and toxic materials was too often missing, or inadequately maintained, resulting in high threats to worker and public health. Monitoring and inspections at the international level, and within other sovereign countries, was not realistic either financially or politically. Finally the Conference of the Parties (COP-3) in Geneva in 1995 adopted Decision III/1, which proposed a ban on the trading of hazardous wastes (listed by the technical working group) from Annex VII countries (primarily OECD countries) to non-Annex VII countries (all other parties to the Convention) for either disposal or recovery, recycling, or reuse. As an amendment to the Basel Convention, it will require ratification of 62 parties in order to enter into force. As of summer of 2002, only 30 Parties have ratified the Decision.
The Philippines is a full party to the Basel Convention, but has not yet approved the Ban amendment. Waste (or Used) lead acid batteries (ULABs) are classified as hazardous under the Basel Convention’s Annex VIII (BNA 2001, 2002). If and when the Ban enters into force, industrialized nations who are parties to the Basel Convention would presumably stop exporting hazardous materials to developing countries either for final disposal or recycling, thus ULABs would no longer legally travel to the Philippines from these suppliers. The EU has already passed legislation implementing the Basel Ban. The United States has signed the Basel Convention, but not yet fully ratified it, nor passed domestic implementing legislation. Thus they are not parties to the Convention, and have no official involvement with the ban amendment.
Although the South traditionally called environmental concerns “a rich man’s concern,” demanding development aid, technology transfer, and debt relief as higher priorities, the waste trade struck a different nerve. Fear of large-scale dumping by the North, combined with other political forces and timing, lead the South to sharply reject the waste trade, calling it “toxic terrorism” and “an affront to African dignity” (Strohm 1993). This position twist is now turning back again, as some developing nations want to import hazardous feedstock for recycling. Thus the South remains split on the Basel Ban, with some developing country WTO members supporting it strongly, and others opposing it strongly.
The Trade and Environment Conflict?
If the Philippine Government, in consultation with their industry, decided to assert their rights under the international trading rules and bring a complaint to the World Trade Organization’s (WTO) dispute settlement mechanism, what issues would that panel need to consider? How should that panel decide? What are the arguments on each side of the question? Consult your special confidential instructions, outside resources, and each other to prepare to present the case to a simulated WTO panel for a decision.
International Lead and Zinc Study Group: www.ilzsg.org
International Council on Mining and Metals: www.icme.com
International Chamber of Commerce: www.iccwbo.org
Bureau of International Recycling: www.bir.org
The European Commission: http://europa.eu.int
Organization for Economic Cooperation and Development (OECD): www.oecd.org
Group of 77: www.g77.org
United Nations Commission on Trade and Development: www.unctad.org
World Trade Organization: www.wto.org
Basel Convention Secretariat: www.basel.int
Basel Action Network: www.ban.org
Greenpeace, Toxic Campaign: www.greenpeace.org/~toxics
World Wildlife Federation, Global Toxic Initiative: www.worldwildlife.org/toxics/globaltoxics
International Institute for Sustainable Development: www.iisd.org
U.S. EPA website: www.epa.gov/superfund/programs/lead
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BNA, Inc. August 20, 1997. Brazil: CONAMA Authorizes Importation of Used lead Acid Batteries for Recycling. International Environment Reporter 20:17.
BNA, Inc. June 20, 2001. Dismantling of Ships, Disposal of POPs, Plastics, Batteries Discussed at Basel Talks. International Environment Reporter 24:13, pg 503.
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Lipman, Zada 2002. A Dirty Dilemma: The Hazardous Waste Trade. Harvard International Review 23:4, pp 67-71.
Nash, Gary 2000. ICME Viewpoint: WTO Rules and the Trade and Environment Interface. The OECD Observer, Paris, summer, pp 31-33.
Nedwed, Tim and Dennis A. Clifford 1997. A Survey of Lead Battery Recycling Sites and Soil Remediation Processes. Waste Management 17:4, pp 257-269.
Puckett, Jim 2000. The Basel Treaty’s Ban on Hazardous Waste Exports: An Unfinished Success Story. International Environment Reporter, 23:25 Dec 6, pp 984-989.
Quirijnen, L. 1999. How to Implement Efficient Local Lead-Acid Battery Recycling. Journal of Power Sources 78:1-2, pp 267-269.
Shanoff, Barry 2002. Mexico: Not Ready for Prime Crime. Waste Age 33:3, March, pp 14-16.
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Strohm, Laura 1993. The Environmental Politics of the International Waste Trade. Journal of Environment and Development 2:2, summer, pp 129-153.
Suplido, M.L. and C.N. Ong 2000. Lead Exposure among Small-Scale Battery Recyclers, Automobile Radiator Mechanics, and Their Children in Manila, Philippines. Environmental Research 82:3, March, pp 231-238.
U.S. EPA website: www.epa.gov/superfund/programs/lead
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