CASE NUMBER: 29
CASE MNEMONIC: GERMPACK
CASE NAME: German Packaging Law
A. IDENTIFICATION
1. The Issue
Packaging and waste requirements for packaging are being debated and implemented in Europe. In April, 1991, the Federal Republic of Germany (now Germany) passed a stringent law that has industries and governments in the European Community and elsewhere pointing out the trade distorting effects of the law. The German law, unilaterally declared without EC consultation, not only calls for an increasingly larger percentage of the collected waste to be recycled, but also legislates that incineration is not an option for disposal. The German government appears to have developed such severe standards because of the lack of domestic waste disposal area. It is estimated that in five years, two-thirds of all municipalities in Germany will have run out of space for waste deposit sites, and a German Environment Ministry official estimated that while West Germany recycled 49 percent of its glass and 40 percent of its paper, it recycled only 1 percent of its plastics.
2. Description
The German law was implemented in three phases. Phase I required that manufacturers and distributors take back all transport packaging after it has been used, for re-use or recycling as of 1 December 1991. Phase II required that distributors, manufacturers and retailers take back re-packaging (i.e. blister-packs, sheeting, etc.) as of April 1, 1992, and Phase III required that distributors, manufacturers and retailers take back all sales packaging beginning January 1, 1993. Products labelled with the Duales System Deutschland's (DSD) green dot will be exempt from the Phase III requirement. Additional requirements of the law include that by January 1, 1993, 50 percent of packaging material had to be collected, with 30-70 percent of the materials collected being recycled or reused and as of July 1, 1995. The quotas will increase to an 80 percent collection requirement with 80-90 percent recycling or reuse. Incineration or dumping of the materials will be considered an offense.
The packaging industry contended that the law was discriminatory, and formal complaints by Member States have been lodged with the EC Commission. Although the Commission considered requesting that Germany not implement its' packaging law, Phase I was implemented in December 1991 and Phase II in April, 1992. Opponents contended that the German packaging law was discriminatory because it distorted competition and imposed barriers to trade and the single market by requiring unilateral standards. Foreign firms found it more difficult to comply with these standards. The standards required companies to develop collection systems to sort and appropriately handle the packaging which some claim will be time consuming and expensive. Small exporters found it especially difficult to take back and recycle small quantities of packaging. It is argued that Germany's packaging law is an example of where environmental concerns also act to protect domestic industries. Another aspect of the law is the requirement which requires that only 28 percent of all beer and soft-drink containers be "one-trip," (therefore 72 percent of these beverage containers must be refillable). "Foreign drinks distributors who use non-refillable plastic bottles have complained that the refilling requirements and collection scheme will exclude them from the market" (see DANISH case).
The DSD set up over 440 companies to receive the sales packaging that the law requires stores take back as of January 1, 1993. The DSD required a green dot on products of industries participating in the scheme, signifying that the packaging will be recycled, and not disposed of in a landfill or by incineration. The DSD is open to non-German companies and companies do not have to become members of the DSD to apply for the right to place the green dot symbol on their packaging. There are definite advantages to acquiring the green dot for packaging since recycling of materials at one location is more attractive to most consumers than returning packaging to several different retailers. In addition, in Germany's environmentally aware and "friendly" society, it is very likely that consumers will lean toward purchasing items with the green dot because of the positive environmental implications. Since it is estimated that ten billion units already are marked with the green dot, retailers and wholesalers may start refusing to accept packaged products without the green dot, because of the time and money it will cost them to handle the sales packaging returned to them.
Ideally, the charge for the green dot will pay for the system, but ultimately the cost will be passed onto the consumer via increased prices. The German Environment Ministry officials claims that the new law will not obstruct trade and that disposal costs will be incorporated into the price of products purchased. The German law is internalizing the external costs of waste disposal. Some environmentalists and economists contend that internalization of environmental externalities is a market-strategy approach to protecting the environment, because the true costs of a product will be reflected in its price (see GERMAUTO case).
The success of the German law rests on the predisposition of the German consumer for sorting waste. The return of sales packaging portion of the directive is premised on the concept that German consumers will not only sort packaging, but also return the packaging to the point of purchase or to a DSD or other recycling center. If consumers are not willing to make this effort, it will be difficult for Germany to reach the goals set by the legislation. The German packaging law has already begun to affect its Community partners: "already there are reports that British companies are being turned away at German borders, either for using wrong-sized pallets, instead of the 600-millimeter by 800-millimeter Europallet, or for not having made the correct return or recycling arrangements." Under strong pressure from domestic packaging industries, the French and British governments have advocated beginning legal proceedings against Germany. The European Commission has not taken this action (as of now) because it is trying to implement its own packaging directive. This legislation will attempt to address the German legislation and probably also because it is somewhat wary of taking such an issue to the European Court of Justice because of the ruling on the Danish bottling case (see ECPACK, ITALYBAG, and DANISH cases).
The German Packaging Law was passed in April, 1991, and implementation of the first phase began on December 1, 1991. The European Community's draft proposal for the EC's own packaging law states in the Explanatory Memorandum Section that the Commission is currently scrutinizing the possibility that the German Packaging law has violated the Community's laws regarding the free movement of goods and competition rules.
3. Related Cases
Keyword Clusters
(1): Trade Product = WOOD
(2): Forum = European Union [EURCOM]
(3): Environmental Problem = Waste Land [WASL]
4. Draft Author: Michelle Dearing
B. LEGAL Clusters
5. Discourse and Status: DISagreement and COMPlete
The final stage of the legislation went into effect in January 1993, where point of sale consumption is now returnable. The first two stages were directed at manufacturers.
6. Forum and Scope: GERMany and UNILATerl
The Commission of the European Community is considering taking action against Germany, and several Member States have formally lodged complaints about the German law. The Commission has the legal authority within the Community to address this issue and if the Commission determines that action should be taken against the German law, then the case may ultimately be argued in the European Court of Justice.
7. Decision Breadth: 12 (EURCOM members)
8. Legal Standing: LAW
C. GEOGRAPHIC Clusters
9. Geographic Locations
a. Geographic Domain : EUROPE
b. Geographic Site : Western Europe [WEUR]
c. Geographic Impact : GERMany
10. Sub-National Factors: NO
11. Type of Habitat: Temperate [TEMP]
D. TRADE Clusters
12. Type of Measure: Regulatory Standard [REGSTD]
13. Direct vs. Indirect Impacts: INDirect
14. Relation of Measure to Environmental Impact
a. Directly Related : NO
b. Indirectly Related : YES PLASTic
c. Not Related : NO
d. Process Related : YES Waste Land [WASL]
The recycling requirement affects the process of recycling products and which packaging items can be sold in the first place.
15. Trade Product Identification: PLASTic The legislation applies to three types of packaging: transport, sales, and re-packaging.
(1) Transport Packaging: This includes barrels, canisters, crates, bags including pallets, cardboard packaging, foam containers, shrink sheeting and similar wrappings which form part of the transport packaging and which are intended to protect goods from damage on their way from the manufacturer to the distributor or which are used to ensure the security of the transport.
(2) Sales Packaging: This includes closed or open containers and wrappers, which the end-user uses to transport goods or to keep them until the point of consumption such as cups, bags, blister-packs, tins, buckets, barrels, bottles, canisters, cartonages, boxes, sacks, dishes, carrier bags and similar wrappers. For the purposes of the directive, disposable tableware and cutlery are also considered to be sales packaging.
(3) Repackaging: This includes blister-packs, sheeting, cartonages or similar wrappers, which, as additional packaging around sales packaging, are intended (a) to make it possible to sell the goods through self-service outlet or (b) to reduce or eliminate the possibility of theft or (c) primarily as part of the advertising campaign.
16. Economic Data
German household waste equals 32 million tons per year and packaging accounts for half of the tonnage. When industrial waste is included, the total is 250 million tons. It is estimated that more than 10 billion units already carry the Duales System Deutschland's green dot. Establishing the DSD system will cost 10 billion DM with annual costs of 2 billion DM to run the program. Some argue that in the long term, German plastic manufacturers would benefit, through efficiency gains that would save money.
17. Impact of Measure on Trade Competitiveness: LOW By January 1, 1993, 50 percent of packaging material used in the country must be collected, with 30-70 percent of the collected material being recycled or reused and as of July 1, 1995 the quotas will increase to an 80 percent collection requirement with 80-90 percent recycling or reuse.
18. Industry Sector: PLASTic
19. Exporter and Importer: MANY and GERMANY
E. ENVIRONMENT Clusters
20. Environmental Problem Type: Waste Land [WASL]
"Packaging waste in German Households was down 500,000 tons in 1993 compared to the previous year," from 12.3 millions tons to 11.8 million tons. The adopted Duales system, was revised for higher recycling levels, especially to encourage recycling chemicals and to force producers to confirm they are recovering at least 30 percent of used packaging from stores this year and 80 percent by 1996. Some new labeling requirements were also added.
21. Name, Type, and Diversity of Species
Name: MANY
Type: MANY
Diversity: NA
22. Resource Impact and Effect: LOW and REGULatory
The actual impact of the measure would be low. Most air pollution comes from other sources.
23. Urgency and Lifetime: LONG and 100s of years
24. Substitutes: Bio-degradable [BIODG] products
VI. OTHER Factors
25. Culture: NO
26. Trans-Border: NO
Landfill sites all over Europe are reaching capacity. Germany is the largest waste exporter in Europe, but this case is not specifically a trans- border problem.
27. Human Rights: NO
28. Relevant Literature
Bernhardt, Katrin. Germany's New Packaging Laws -- The Green Dot Arrives. Paper prepared for U.S. Department of Commerce distribution, January 16, 1992.
Carritt, Tony. "New Packaging Draft Seen Forcing Changes in Germany." Reuter (March 16, 1992).
"Commission Seen Asking Bonn to Suspend Packaging Law." Reuter 0469 (November 25, 1991).
European Community. Draft Proposal for a Council Directive on Packaging and Packaging Waste. XI/369/91, DGXI-A4, 21 Final Draft (February 1992).
Federal Republic of Germany. Directive on the Prevention of Waste Packaging. Unofficial translation obtained from the U.S. Department of Commerce's Germany desk, April 19, 1991.
"Free Trade's Green Hurdle." Economist 15 (June 1991): 61-62. Menke-Gluckert, Wanda. "A Solution to Waste Disposal." Europe (March 1992): 36-37.
"New Packaging Laws in Germany." Trade Finance Report 2/3 (1st National Bank of Maryland, Fall 1992): 1.
"Packaging Waste Shows Major Drop in 1993; Ministry Plans Revisions to Packaging Law." International Environmental Reporter 17/2 (BNA, (January 26, 1994): 59-60.
Sudol, Frank J. "German Waste Reduction and Green Consumerism: Is it the Answer." Public Management 72 (November 1990): 12-14.
Thornhill, John. "Repackaged, Recycled, Restricted." Financial Times (December 6, 1991).
Twenty Questions on the Green Dot. Paper prepared for U.S. Department of Commerce distribution, January 29, 1992.