The Big Stick Approach

The European Union quietly holds corporations accountable

by Joel Bleifuss

In These Times magazine, April 2000


With little fanfare and no notice in the U.S. media, Europe is fomenting an environmental revolution. Inspired by a concept known as "extended producer responsibility,' the European Union Is drawing up regulations that require corporations to change their environmentally wasteful ways.

In the near future, the European Union will hold any company that enters the European market responsible for the environmental impacts of its products. New regulations will force manufacturers to change product design, the kinds of materials used in manufacturing and how products are disposed. American corporations, none too pleased with this government interference, have enlisted the aide of the Clinton administration to waylay these green proposals.

Extended producer responsibility, or EPR, got its start in Germany in 1991, when the Christian Democratic government, responding to citizen concerns about the scarcity of landfill sites, passed a law requiring manufacturers to take back and recycle all packaging materials, boxes, cans and bottles. Within two years, 12,000 companies, many of them U.S.-based, were participating in an industry-funded recycling program, which shifted the costs of managing packaging waste from taxpayers to the waste producers. It was wildly successful. Holland soon followed suit, as did Sweden, France, Austria, Finland, Spain and Belgium. Now the European Union is finalizing legislation that will standardize EPR for packaging across its 15 member states.

EPR is not just an Old World thing. In European Canada, seven of the 10 provinces have adopted an EPR system that requires producers to take responsibility for beverage-container waste. As a result, these provinces have achieved a recovery rate for beverage containers that far exceeds that in most American states.

The beauty of EPR is that by putting the financial burden on companies for the environmental impacts of products throughout their life cycle, industry has a natural economic incentive to act in an environmentally responsible manner. When properly regulated, the market does work. Writing in Beverage Industry magazine, E. Gifford Stack of the National Soft Drink Association, describes EPR as "a big stick approach." "Because the stick delivers a pretty good financial whack," he notes, "producers also have a financial incentive to design their products to make less waste."

EPR has failed to take hold in the United States, in large part because the Clinton administration has done everything it can to block it. The President's Council on Sustainable Development, established in 1993 to examine ways to encourage environmentally sustainable growth, held heated discussions about EPR. But in its proposed program the council's industry dominated task force substituted "product" for "producer." Under the council's scheme of "extended product responsibility," as spelled out in its 1996 report, "Sustainable America: A New Consensus," "Manufacturers, suppliers, users and disposers of products share responsibility for the environmental effects of products throughout their life cycle." This entirely voluntary program will cost corporations nothing and achieve little-just what the K Street lobbyists ordered.

Despite the best efforts of the Clinton administration, the concept of extended producer responsibility is spreading. The Organization for Economic Cooperation and Development (OECD), an association of the world's most developed economies, is promoting EPR as a "promising new public policy tool" that could "minimize waste by transferring substantial or complete financial (and physical) responsibilities to private enterprises for managing their products at the post-consumption phase." Ignoring protests from the United States, the OECD is drawing up guidelines on how countries can best implement EPR policies.

At a December 1998 OECD conference on EPR, Clare Lindsay, head of the Environmental Protection Agency's extended product responsibility project, said the United States "stresses collaboration and partnerships over command and control." "We have a different philosophy here," she noted, "[which] acknowledges that producers play a central role in reducing the environmental impacts of their products, but recognizes that they can not always do this alone."

Of course, U.S. corporations could take such responsibility, they just don't want to bear the cost. And the EPA and other branches of government are doing what they can to make sure that they won't have to. "We are not going to simply follow in the footsteps of Europe," Elizabeth Cotsworth, acting director of EPA's Office of Solid Waste, told a May 1999 conference on EPR.

But this is the global economy, and any American-based multinational that wishes to do business in the European Union must first conform to its standards. Consequently, EPR in Europe is already forcing U.S. companies to assume environmental responsibility for their products.

For instance, in February the European Union passed EPR regulations on vehicles, against the wishes of the world automakers. By 2006, vehicles sold in Europe must contain no heavy metals, such as lead, mercury or cadmium, and be manufactured from recyclable materials. In addition, automakers will be held responsible for final disposal of the car. This is good news for the U.S. environment, says Charles Griffith of the Clean Car Campaign, a coalition operating out of the Ecology Center in Ann Arbor, Michigan. "Europe is driving this and Japan is following fairly closely on what Europe is doing," he says. "Consequently, U.S. companies are basically gearing up to meet the European requirements. It will be hard to come up with separate designs for the European and U.S. markets, so the U.S. automakers are going to seek to meet the European Union phase-outs across the board."

Understanding that EPR threatens the corporate bottom line, the office of the U.S. Trade Representative has teamed up with U.S. business interests to attack Europe's EPR regulations as unfair trade practices. The current battle focuses on E.U. plans to implement EPR regulations for all products that contain electrical circuits. The proposal, known as Waste from Electrical and Electronic Equipment (WEEE), would phase out the use of toxic metals (lead, cadmium, mercury) in the production of consumer items like refrigerators and desktop computers, require products to contain a certain percentage of recycled material, set design standards that would allow computer equipment to be more easily upgraded, and generally make the manufacturers of that equipment assume financial and legal responsibility for their products throughout their entire life cycle.

The Silicon Valley Toxics Coalition is spearheading support for WEEE in the United States through it's Clean Computer Campaign. The campaign is focusing on holding producers responsible for clean product design and pushing them to take back computers at the end of their life. The coalition is taking their cue from Sweden, which has been the leader in implementing legislation to apply EPR to computer manufacturers. Mans Lonnroth of the Swedish environment ministry observed in 1997, "The product developers of electronic products are introducing chemicals on a scale which is totally incompatible with the scant knowledge of their environmental or biological characteristics."

The Toxics Coalition's literature notes that computers are made from more than 1,000 materials, many of them highly toxic, including chlorinated and brominated substances, toxic gases, toxic metals, acids, plastics and plastic additives. Yet an estimated 75 percent of all computers ever purchased in the United States are currently stored in people's attics and basements. By 2004, there will be an estimated 315 million obsolete computers in the United States, most of them will be destined for landfills or incinerators. Already, consumer electronic products account for about 40 percent of lead found in landfills, where it can leach and contaminate drinking water supplies.

A number of trade associations, led by the American Electronics Association (whose members include Microsoft, IBM, Motorola and Intel), and including the American Plastics Council, the International Cadmium Association and the Lead Industries Association, are adamantly opposed to WEEE. They lobbied the Clinton administration for help, and the administration was happy to oblige.

U.S. opposition to the WEEE environmental initiative is spelled out in a November 1998 cable, leaked to the Toxics Coalition, sent by State Department economist Jonathan Mudge (at the behest of the U.S. Trade Representative) to the U.S. Mission in Brussels. Mudge instructed all embassies in E.U. capitals to "highlight U.S. concerns about the draft directives."

Providing a list of talking points, Mudge suggested that U.S. diplomats explain that "imposing the entire cost of taking back and recycling electrical products on the manufacturer" poses an undue burden on corporations. "This expense could be shared with municipalities and other actors," he wrote. "We urge [the European Union] to work with industry and other interested parties to devise a more efficient, less trade restrictive approach to meet its goals."

The European Union is unlikely to cave in to U.S. pressure to abandon EPR. What's more, U.S. actions contradict the professed intentions of Clinton, who, in a March 15, 1999, address to a WTO symposium on trade and the environment, said, "We must do more to ensure that spirited economic competition among nations never becomes a race to the bottom. We should be leveling environmental protections up, not down."

But like so much of Clinton's lofty rhetoric, his words l are belied by his actions.

Controlling Corporations