Environmental Compliance in International Trade

Let’s do a reality check……… …………how much do we know about the environment we breathe in.. Concerns for business firms

Which of these gases do you feel are NOT causing this effect?

• Oxygen•Carbon dioxide•Ozone•Sulphurdioxide•Methane•Nitrous Oxide•Carbon monoxide

So which are the countries which have the highest emission levels… is it India?

Top Emitters

The world's two largest emitters are responsible for 42 per cent of energy-related emissions

Is Trade responsible for escalating emissions: debate Trade versus environment

•Melting glaciers and arctic ice sheets•Changes weather patterns•Increased risks of droughts and hurricanes•Many health problems

Why should we worry?

LONDON: The taste of some of the world's finest wines is changing as global warming alters the way grapes mature. Grapes such as pinot noir, merlot and chardonnay are now growing more quickly, subtly changing the compounds produced as they ripen and the synchronisation between maximum flavour and the ratio of sugar to acid.

An increasing number of vineyards are thus struggling to identify the perfect moment for picking the grape . The optimal flavour moment may occur earlier too - but not as much - leaving a gap between the ideal sugar-to-acid ratio and the ideal flavour. Grapes may also ripen too fast to accumulate flavour or colour.

Commodity impact

Increasing coal burning in Europe caused 2,000 additional premature deaths, with exports from the U.S. accounting for two thirds of that increase. Coal-fired power plants are silent killers. Hour after hour, these plants fill the air with toxic pollutants, including mercury, lead, arsenic, cadmium and tiny sulphate and nitrate particles that go deep into people’s lungs and bloodstream. These emissions caused 22,000 premature deaths in the European Union (EU) in 2010, through strokes, heart attacks, lung cancer and other diseases.

The EU has seen a problematic short term rise in coal burn over the past three years . One of the biggest sources of those deadly coal imports was the U.S., whose exports to the EU almost doubled. In fact, the U.S. accounted for 65 percent of Europe’s increased coal consumption.

The problem is with ongoing economic turmoil, Europe’s decision-makers have decided to pamper dirty industries in false hopes of protecting jobs rather than pushing forward with a clean energy economy to put Europeans back to work. The biggest culprit here is the UK, where utilities have run their old coal power plants at full steam before the country’s upcoming carbon tax and air pollution regulation force the plants to retire.

Commitments under Montreal Protocol

• Each party shall ensure that for 12 moth period since 1 Jan 1996 and in each 12 month period of consumption thereafter its calculated level of imports of the controlled substances does not exceed zero.

• For developing countries: calculated level of imports may exceed that limit by upto 15% of its calculated level of production in 1986.

Imports of Ozone depleting substances such as CFCs & halons prohibited

Be cautious of using certain chemicals, packaging requirements etc.

PCB, Poly Chlorinate Tetraphenyle (PCTs) concentration exceeding 0.005 % of weight, Bezidine….

Anhydrous carbohydrate, mercury, arsenic.

Packaging material requirement

• The Kyoto Protocol is the first international agreement to fight global warming.

• The Kyoto Protocol was signed in 1997 but came into force in 2005 after getting ratified by the requisite number of countries. It gave the binding targets to bring down the carbon emission 5 percent below 1990 levels for the developed countries in the first commitment period which was 2008-12.

• • A second commitment period was proposed in 2012, known as

Doha Amendment, to propose the binding targets after the end of first commitment period.

• But many nations like Japan, Russia, and New Zealand who party during the first commitment period indicated their withdrawal from the protocol.

• China, India, and the United States too indicated that they will not ratify any treaty that will commit them legally to reduce carbon emissions. 

What is this Kyoto Protocol?

Targets

•Increase in atmospheric temperature should be limited to around 2°C above preindustrial levels in order to prevent the worst impacts of climate changes.

•Global greenhouse gas (GHG) emissions must start declining by 2015

•Industrialized countries have to reduce their emissions by 25 to 40 per cent by 2020 and 80 to 95 per cent by 2050.

Lima Conference

• During the Lima Conference, participating nations agreed that both developed and developing nations should make pledges on how much they will control emissions beyond their present plans. Launching of first ever Multilateral Assessment (MA) marking a historic milestone in the implementation of the Measurement, Reporting and Verification of emission reductions.

• However, unlike Kyoto, no quantified targets were discussed. There was agreement in principle that rich nations should provide financial support to vulnerable developing countries.

• The Lima deal addressed the Indian concerns by paving the way for all nations to submit their 'nationally determined' pledge for emission cuts and adaptation measures by October 2015. It also addressed the concerns of developing countries like India by keeping 'adaptation' clause intact.

• In gist, the talks manifested some optimism about reaching some concrete agreement during the next climate talks scheduled in Paris in December 2015.

Sustainability case study

Since 2000, some 370,000 Toyota and Lexus full hybrid vehicles have been sold in Europe – all of which are equipped with NiMH batteries to drive the electric motor. A cornerstone in Toyota’s environmental activities is the protection of natural resources, making sustainable recycling of high voltage batteries a key priority, with the aim of decreasing everything from energy consumption to emission of greenhouse gasses, and the reduction in disposing hazardous materials. Under the agreement, SNAM will ensure that the process for the treatment of NiMH batteries through the optimal recycling channels will ensure the maximum output on secondary raw materials.

The agreement also recovered NiMH batteries can be taken back from any of Toyota’s European operations, including: Toyota’s European head office in Belgium, any of the nine manufacturing facilities in seven countries, 30 National Marketing and Sales Companies (NMSCs), over 3,000 Toyota and Lexus dealerships, as well as any authorised end-of-life vehicle treatment operator.

Business groups and Republicans in Congress had complained that meeting the new standard, which governs emissions of so-called ground-level ozone, would cost billions of dollars and hundreds of thousands of jobs. The E.P.A., following the recommendation of its scientific advisers, had proposed lowering the so-called ozone standard of 75 parts per billion, set at the end of the Bush administration, to a stricter standard of 60 to 70 parts per billion. The change would have thrown hundreds of American counties out of compliance with the Clean Air Act and required a major enforcement effort by state and local officials, as well as new emissions controls at industries across the country.

WTO measures towards environment

• Liberalization of trade in environmental goods and services (EGS)…removal of trade barriers on climate friendly technologies.

• Creating additional flexibilities under the Agreement on Trade-Related Aspects of Intellectual Property Rights to facilitate the transfer of low-carbon technologies.

• Reduction of fossil fuel subsidies and increased protection for climate-friendly subsidies.

• Importers of energy-intensive goods to pay an additional tax or to purchase emissions allowances at the border. (such measures are meant to address competitiveness concerns raised by domestic industries towards products imported from countries that have not taken “comparable” action to reduce emissions).

Agriculture is responsible for 13.5 per cent of global GHG emissions

What are agri-environmental measures?

• Agri-environment measures are designed to encourage farmers to protect and enhance the environment on their farmland.

• Two broad objectives:▫ reducing environmental risks associated with modern

farming▫preserving nature and cultivated landscapesIt provides for payments to farmers in return for a service that

of carrying out agri environmental commitments that involve more than the application of usual good farming practice.

• Farmers sign a contract with the administration and are paid for the additional cost of implementing such commitments and for any losses of income (e.g. due to reduced production) which the commitments entail. These payments are co-financed by the EU and the Member States.

•Farmers have been positively encouraged to replace their traditional and supposedly inefficient farming methods with the higher yielding technique of sun cultivation, which has resulted in over 2.5 million acres of forest being cleared in Central America alone to make way for coffee farming in this way.

•Contamination of waterways also pose serious environmental threats from the processing of coffee beans. Sun cultivated coffee often employs intensive pesticides and chemicals that present serious health and ecological concerns.

•The process of separating the commercial product (the beans) from the coffee cherries generates enormous volumes of waste material in the form of pulp, residual matter and parchment. Over a 6 month period , it was estimated that processing 547,000 tons of coffee in Central America generated as much as 1.1 million tons of pulp and polluted 110,000 cubic metres of water each day.

Provisions under WTO AoA

•More flexible treatment of “special products”

•Incentives for organic agriculture, which is less carbon intensive and therefore contributes to climate change mitigation.

•Enhanced market access for agricultural products providing climate benefits, such as organic products or sustainably-produced biofuels.

http://gapcertification.com/

Food Miles

Food transported across the world burns up a lot of fossil fuel and contributes to global warming → consumers are becoming conscious and need to know nr. of miles from food to plate → shorter shipping distance becomes a competitive advantage

• www.organiclinker.com/food-miles.cfm (food mile calculator)

Water Footprint : caution for Indian Rose exporters

• Over the years, many EU companies have made water issues an integrated part of their corporate policies and committed themselves to reduce the use of water in their own processes, as well as in processes taking place in their supply chains. The Water Footprint is an indicator that allows consumers, companies or countries to measure their freshwater use and can as such be used as a starting point for the development of water strategies.

• Large European multinationals are developing guidelines for measuring their water footprint and for the implementation of actions in order to reduce the use of water. These actions of European companies often take place within the framework of their Corporate Social Responsibility (CSR) policies

Environmental issues in Floriculture Exports•Impact of use of chemicals on environment and on workers

•Intensive use of crop protection agents and fertilizer•Japanese market demands complete absence of insects or mite in imported flowers•Depletion of ground water resources (rose requiring 1 lit of water per day)•Plants under greenhouse depleting soil fertility

EU Directive on packaging and packaging waste 94/62/EC

• Volume and weight of the packaging shall be limited to the minimum amount to maintain the necessary level of safety, hygiene and acceptance for the packed product and for the consumer.

• Packaging shall be designed, produced and commercialised in such a way as to permit its re-use or recovery, including recycling, and to minimise the environmental impact when packaging waste is disposed of.

• Packaging shall be manufactured in such a way that the presence of noxious and other hazardous substances and materials is minimised with regard to the presence in emissions, ash or leachate, when packaging is incinerated or landfilled.

Indian industries impacted

The US ban on imports of shrimps from countries not using Turtle Excluder Devices (TEDs) and not accompanied by "turtle-safe" shrimp certifications from countries.

The U.S. has given a five month period to impose the ban which requires that all harvested or wild caught shrimp should be accompanied by certificates vouching that TEDs were using during fishing..

Heavy utilization of sea water for prawn farms and the frequent discharging of effluents into nearby waters has resulted in low productivity of marine life and affected ground water levels in coastal areas. The U.S. ban is the result of an environmental group, the Earth Island Institute

Turtle Excluder Devices (TEDs)

A turtle excluder device or TED is a specialized device that allows a captured sea turtle to escape when caught in a fisherman's net.

In particular, sea turtles can be caught when bottom trawling is used by the commercial shrimp farming industry. In order to catch shrimp, a fine meshed trawl net is needed. This results in large amounts of other marine organisms being also caught as by catch. When a turtle gets caught or entangled in a trawl net, it becomes trapped and is unable to return to the surface. Since sea turtles are air-breathing creatures with lungs , they eventually drown.

http://www.google.co.in/url?url=http://en.wikipedia.org/wiki/Ecolabel&rct=j&frm=1&q=&esrc=s&sa=U&ei=D2CzVNf1DJSTuASXwYHgBw&ved=0CBcQ9QEwAA&usg=AFQjCNGqttOkSOkP0CtdG_YGKYajdgmg6Q

• Catch certificate (wild fisheries): To combat illegal fishing, (wild caught) fish imported or trans shipped in the EU must be accompanied by a catch certificate.

• You, as an exporter, request the catch certificate for catches destined for the EU market at the competent authority of the Flag State of your fishing vessel, and submit the request to this authority for validation. The exporter needs to communicate the validated catch certificate to the importer

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Eco-labels for Textiles

http://www.ecolabelindex.com

• Azo dyes: if you dye your textile make sure you do not use any of the azodyes that release any of the 22 aromatic amines which are prohibited. The EU legislation lists the aromatic amines, not the azo dyes which release them. The vast majority of azo dyes are therefore legally acceptable.

• Flame retardants: in textile products that come into contact with the skin flame retardants are restricted. Often used flame retardants are Tris (2,3 dibromopropyl) phosphate (TRIS), Tris(aziridinyl)phosphineoxide (TEPA) and Polybromobiphenyles (PBB).

• Organotin compounds: if you use PVC in your products, know that organotin compounds are also restricted. OrganotincompoundsDioctyltin (DOT) compounds and Dibutyltin (DBT) compounds can be used in textiles products (e.g. print on t-shirts and other garments). Their use is restricted as they can pose a risk to human health

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Textile Labelling

• Directive 2008/121/EC •All textile products must carry a label

which indicates the fibre content on the product

•A textile product consisting of two or more fibres must be marked + %

•Fibre marking in % order

Leather

• Azo-dyes legislation also applied to the colouring of the leather.EU has adopted a Regulationin March 2014 to put restrictions on the use of chromium (VI) in leather as it can produce allergic contact dermatitis. The new legislation will be effective as from 1 May2015. Germany already has national legislation to limit (max 3 ppm) the use of chromium in leather products.

• Metal parts and accessories (e.g. zippers, jewellery, buttons) coming into direct and prolonged contact with the skin should not release more 0.5 μg/cm2 nickel per week.

• The organotin compounds mentioned under textile products also apply to articles made from PVC (e.g. gloves, childcare articles). In addition, specific legislation exists for phthalates in childcare articles and toys. They are used as a softener of PVC and can have an adverse effect on human health. The restriction for each phthalates is 0.1% by weight.

• Only products treated with environmentally friendly chemicals are accepted in Germany (critised by Italy (leather supplier) and France (biggest supporter of PCP.)

Environmental branding: case of Nike

• Nike Considered Design is a sustainable line of shoes introduced by Nike, Inc.

• The line utilizes materials found primarily within 200 miles (320 km) of the Nike factory which reduces the energy used for transportation, diminishing the resulting climate change impact.

• The manufacturing process reduces solvent use by more than 80% compared with Nike’s typical products.

• The leather comes from a tannery that recycles wastewater to ensure toxins are kept out of the environment, and it is colored using vegetable-based dyes.

• Hemp and polyester are used to make the shoe's woven upper and shoelaces.

• The mid-sole is cut to lock into the outer sole, reducing the need for toxic adhesives.

• The shoe's outer sole includes rubber made from recycled factory rubber waste

Metals & Ceramics

• A large variety of industrial products will have to be CE-marked according to specific standards. This shows that the product complies with harmonised safety, health and environmental requirements.

• Since July 2013 manufacturers of finished products that will be used as construction material need to provide a declaration of performance (DoP) for the materials they use.

• Food contact materials • For metal parts (e.g. cutlery, containers, pans) that come into contact with

food • specific health control provisions apply. Food contact materials such made

from for example (recycled) plastic and ceramic must be manufactured so that they do not transfer constituents to food in quantities that could endanger human health, change the composition of the food in an unacceptable way or deteriorate the taste and odour of foodstuffs. Common restricted substances are vinyl chloride monomer N- nitrosamines, N-nitrosatable BADGE, NOGE, BFDGE and heavy metals.

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Product safetyManufactured products

• CE Marking [compulsory to a range of products and hazards, incl. e.g. machinery, toys, protective wear, electrical appliances, pressure vessels. Full list is mentioned under the New Approach Directive] Indicates that the product conforms to the

European applicable and legal demands in terms of safety, health and consumer protection

Product safety

CE marking• EU Directives (per product group) describe the

essential requirements (laid down in norms as defined by CEN, CENELEC or ETSI), which differ as per the safety risk involved

• From self-declaration by the manufacturer to testing and verification by testing institutes (notified bodies)

• http://www.newapproach.org/ ▫ Product overview, directives with full legal texts and

applicable standards (EN norms)▫ Safety of toys; Directive 88/378/EEC

EU’s requirement for Gems and Jewelery

REACH is the EU legislation on chemicals and their safe use that came into force in June 2007 through Regulation (EC) 1907/2006. REACH establishes one single regime throughout the 27 EU Member States for existing and new substances. It deals with the Registration, Evaluation, and Authorization of Chemicals.

REACH : paints and coatings, fine chemicals or cosmetic ingredients textiles, office and school supplies and electronics

Electronics and electrical• Technical requirements for specific applications:

In addition to CE-marking additional technical requirements can apply to electronics and electrical engineering used in specific applications (e.g. aircrafts and motor vehicles). These concern the essential requirements related to product integrity (e.g. structure and materials, propulsion, system and equipment), product operation and organisations structure.

• Ecodesign for energy-related products: • The Energy-related Products Framework Directive is a specific CE-Directive specifically for energy-

using and energy-saving products. It deals with the environmental impact of products, including their energy consumption throughout their entire life cycle.

• Energy labelling : • Energy using products, such as household appliances or power supplies, and energy-related products

must bear specific energy labels when put on the EU market. An energy label communicates information on the energy consumption of the product. The household appliances covered by the Energy Labelling Directive directives are also covered under CE marking directives. Therefore CE-marked energy-related products must also comply with the Energy Labelling Directive.

• Heavy metals in EEE • If you produce electrical and electronic equipment (EEE), RoHS is applicable to your products. Under

the directive, six hazardous substances are restricted, namely: lead, mercury, hexavalent chromium, polybrominated biphenyls (PBB), polybrominateddohenyl ethers (PBDE) and cadmium (0.01 % by weight for cadmium and 0.1 % for the other substances). In 2013, a new version of RoHS, Directive 2011/65/EU, also referred to as “RoHS2”, entered into force

• EU has also established legislation on Waste Electrical and Electronic Equipment (WEEE). It obliges EU producers to set up and participate in product take-back schemes.

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Supporting sustainable trade of Southeast Asian python skins

Pythons are largely farmed in Southeast Asia and their skin is exported to Europe to make high-end leather products as part of the luxury fashion industry. Value of trade in python skins to be US$ 1 billion annually, and raises concerns about sustainability, illegality and animal welfare along the value chain.

In 2014, ITC partnered with the International Union for Conservation of Nature and Kering, a fashion company for major luxury brands such as Gucci, to form the Python Conservation Partnership (PCP), a public-private partnership to promote sustainable sourcing and support local livelihoods in the python skin trade.

Enhancing biodiversity export opportunities from Madagascar

The island of Madagascar has one of the highest levels of poverty in the world. It also has one of the highest levels of biodiversity, home to more endemic species than any other country.

•Asia-Pacific Partnership on Clean Development and Climate: combines publicly funded research and technology transfer in seven countries with an assessment and lowering of barriers to trade and investment in climate-friendly technologies.

All green (environment friendly) buildings - identified on the basis of use of water\energy conservation methods, recycled materials, solar power, natural lighting and energy self-sufficiency - across the country will get special logo in the New Year.The environment ministry is working on a methodology by factoring in the existing norms to issue such logo which will be developed by inviting designs from general public and experts.

At present, buildings get star rating by a government agency - Bureau of Energy Efficiency (BEE) - for energy efficiency and other green ratings by two private bodies. The logo to be issued by the environment ministry for such buildings will factor in all such existing norms.

This is part of several other initiatives which are to be taken up by the environment ministry in 2015. Promotion of renewable energy - solar and wind - in a big way is an important component of the government's plan.