EN Official Journal of the European Union C 299/158

Opinion of the European Economic and Social Committee on the ‘Proposal for a Regulation of the European Parliament and of the Council on ship recycling’

COM(2012) 118 final — 2012/0055 (COD)

2012/C 299/29

Rapporteur: Mr SIECKER

On 10 April 2012 the Council, and on 19 April 2012 the European Parliament, decided to consult the European Economic and Social Committee, under Article 304 of the Treaty on the Functioning of the European Union, on the

Proposal for a Regulation of the European Parliament and of the Council on ship recycling

COM(2012) 118 final — 2012/0055 (COD).

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 26 June 2012.

At its 482nd plenary session of 11 and 12 July (meeting of 12 July) the European Economic and Social Committee adopted the following opinion by 122 votes to 31 with 6 abstentions:

1. Conclusions and recommendations

1.1 Ships are being scrapped in an irresponsible way. Most of them are scrapped in India, Pakistan or Bangladesh using the "beaching" method involving grounding them on a sandy beach, where they are scrapped by unskilled workers, including many children, without appropriate equipment and without any protection against the large quantities of hazardous substances released.

1.2 Decommissioned ships are regarded as hazardous waste and fall within the scope of the Basel Convention, which regulates the transport of hazardous waste. Because the rules of this Convention had been systematically circumvented on a massive scale for years, in 2009 the IMO adopted the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships. The EU and its Member States have concluded that both Conventions appeared to provide an equivalent level of control and enforcement for ships classified as waste. All African states and a number of Latin American states disagreed with this conclusion. The Hong Kong Convention is expected to enter into force in about 2020, if it has been ratified by enough countries.

1.3 The European Union bears a major responsibility in this field as a large part of the global cargo fleet is in the hands of shipping companies based in the EU Member States. The Commission has been concerned about trends in the sector for years. A few years ago therefore it decided to do something about it. Over the last five years the Commission has produced a green paper on the subject, followed by a communication, and now it has published a proposal for a regulation. The proposed EU regulation brings into force early a number of the requirements of the Hong Kong Convention.

1.4 The proposal for a regulation on ship recycling is a rather pale reflection of the previous green paper and the communication on the same subject. The two previous documents provided an impeccable analysis of ship recycling problems in Bangladesh, India and Pakistan and expressed the view that robust measures were needed to tackle the unacceptable conditions in these countries. The measures proposed in the proposal for a regulation do not however solve these problems. The EESC can only conclude that the political will is manifestly absent.

1.5 What is lacking in the proposal, for example, is an economic instrument which the Commission could use to guide developments in the desired direction. The possibility of an instrument of this kind was mooted in the previous documents. The Commission had a study carried out on the possibility of establishing a fund to which every ship docking in a European port would have to contribute. The amount of the contribution would be determined by a combination of tonnage and toxicity. The use of a fund of this kind fits in perfectly with the "polluter pays" principle. The money could be used in part to improve working conditions in South East Asia, by training workers in safe working practices, by raising local awareness of the dangers of the irresponsible scrapping of large seagoing ships and by improving local public infrastructure.

1.6 The EESC prompts the European Commission to investigate the possibility of using this money to develop scrapping capacity and to establish a recycling industry in Europe. There is sufficient dock capacity in the EU which is no longer, or only partly, used for building and repairing ships but which is suitable for the decommissioning and recycling of ships. This would fit in with the European Union's ambition to develop into a sustainable "recycling society", a society in which waste is turned into raw materials by means of a sophisticated and fine-meshed recycling system. This could produce considerable economic gains in terms of valuable materials which could meet a significant proportion of the demand for raw materials and generate many new jobs. In view of steadily rising raw material prices and high unemployment in a number of European Member States, this could be highly profitable for Europe as a whole. Moreover, an industry specialising in recycling end-of-life ships would be an opportunity for the development of maritime areas and the training of young people in emerging skills and the unemployed.

1.7 If Europe wants its ships to be scrapped in a responsible way, it is not unreasonable that it should pay part of the cost of building the capacity needed to ensure that this is done in an appropriate manner. In a market economy nothing is free, and a price has to be paid for everything. The price for the responsible scrapping of ships is paid in money. When ships are scrapped in an irresponsible way the price is paid in other currencies, such as destruction of the local environment and the loss of human lives. Given that we in the EU do not wish to accept these currencies as a legal means of payment, we must also not accept their use as a means of payment in trade with countries outside Europe. The Commission could place more emphasis on this. The EESC therefore considers that Commission should have produced a better, more creative, more adventurous proposal, richer in initiatives, in line with the level of ambition of the previous Commission documents and the Committee's opinions on them.

1.8 With a view to authorising the recycling of ships in facilities situated in non-OECD countries, provided that they meet the requirements for inclusion on the European list, the EESC recommends –that the Regulation be based in particular on the existing guidelines of the relevant international organisations (1), as well as on the Basel Convention itself and its technical guidelines.

2. Introduction

2.1 In the late 1980s there was international indignation at the export of toxic waste from industrialised to developing countries. Reports of 8 000 barrels of chemical waste being dumped on Koko Beach in Nigeria and of ships like the Karin B, which sailed from port to port attempting to dispose of its dangerous cargo, hit the headlines, and there were demands for stricter international rules. In 1989 the United Nations' Basel Convention on the control of transboundary movements of hazardous wastes was adopted.

2.2 The Basel Convention provides for a worldwide system of prior written notice and approval for the movement of wastes between countries. In 1995 an amendment was adopted banning the export of hazardous waste from EU and OECD countries to non-OECD countries. The EU has implemented the Basel Convention and the "ban amendment" in Community law (2).

2.3 Although the law on movement of waste also applies to ships, and although it has been ruled, on the basis of the Basel Convention, that ships may at a certain point be classified as waste, they are still, in line with other international rules, regarded as ships. As virtually all ships contain large quantities of hazardous substances like oil, sludge oil, asbestos, glass wool, PCBs, TBT and heavy metals, e.g. in paint, ships going for dismantling must be regarded as hazardous waste. Thus, EU-flagged ships of this kind, if exported from OECD countries, may, in accordance with the Basel Convention, only be dismantled in OECD countries.

2.4 However, this legislation is systematically circumvented by ships, thereby rendering both international rules and Union legislation ineffective. In order to improve the situation, parties to the Basel Convention invited the International Maritime Organization (IMO) to develop mandatory requirements for ship recycling. In 2006 the IMO presented a draft convention which in 2009 was adopted as the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships. The Convention must be ratified by a sufficient number of large flag states and recycling states in order to enter into force and become effective.

2.5 In 2006 the parties to the Basel Convention welcomed the IMO's draft convention and began an assessment of whether the level of control and enforcement required by the Hong Kong Convention was equivalent to that provided for in the Basel Convention. The European Union and its Member States finalised their assessment in 2010 which concluded that both conventions appeared to provide an equivalent level of control and enforcement for ships classified as waste. In October 2011, the parties to the Basel Convention encouraged the ratification of the Hong Kong Convention to enable its entry into force. This is expected to be in 2020 at the earliest. When this occurs, countries which are parties to the Convention will be allowed to have their large commercial ships dismantled only in countries which are also parties to the Convention.

2.6 The environmentally damaging and unsafe practices used in dismantling ships remain a serious source of concern for the European Commission and the Commission is therefore following developments closely. In 2007 the Commission published a Green Paper on better ship dismantling (3), and in 2008 a Communication proposing an EU strategy on ship dismantling (4). The EESC reacted to these documents with earlier opinions (5). This opinion is the EESC's reaction to the Proposal for a Regulation of the European Parliament and of the Council on ship recycling (6).

3. Background

3.1 The dismantling of ships is driven by market factors. The cost of maintaining an ageing fleet, transport tariffs and the price of scrap determine when a ship is scrapped. The choice of location for scrapping depends on the price quoted. And the price is determined by demand for recycled steel in the region and the cost of infrastructure for protecting workers and the environment. As a result of these factors the recycling of large sea-going ships has over the years moved to South East Asia.

3.2 Of all the decommissioned ships scrapped worldwide since 2004, at least 80 % were scrapped in India, Pakistan or Bangladesh using the "beaching" method. The ships are grounded on a sandy beach and then scrapped without using heavy machinery. There is a lack of facilities in these countries for dealing with heavily polluted and toxic waste appropriately. The governments of the South East Asian states refuse to tackle these practices because they consider ship recycling to be an important economic activity in which they should interfere as little as possible. It creates large numbers of jobs, but the social and environmental consequences are disastrous.

3.3 Large ships which are sent to Asia for dismantling are one of the main sources of hazardous waste moved from industrialised to developing countries. These include substances like asbestos, oil and sludge oil, polychlorinated biphenyls (PCBs) and heavy metals. A 2004 study by the Commission (DG TREN) estimated the amount of hazardous waste at 1 000 to 3 000 tonnes of asbestos, 170 to 540 tonnes of PCBs, 6 000 to 20 000 tonnes of hazardous paints and 400 000 to 1,3 million tonnes of sludge oil per year up to 2015. The impact on the environment has rarely been studied in detail but the available data show that there is a significant impact on sea water, beaches and sediments. Sea pollution from scrap yards in India and Bangladesh is clearly visible in photographs taken from the air. NGOs also report the disappearance of vegetation and fish from these areas.

3.4 The health and safety situation in South East Asian scrap yards is critical. The lack of heavy machinery and safety equipment for workers means that there is a high risk of serious accidents. According to a report by the Indian government, between 1996 and 2003 there were 434 accidents in the shipbreaking yards at Alang, resulting in the deaths of 209 workers. According to reports from Pakistan, more than 400 shipbreaking workers were killed in that country between 1986 and 2006 and 6 000 were seriously injured. It is also estimated that thousands of workers contract incurable diseases as a result of coming into contact with or breathing in hazardous substances without any preventive or protective measures. Most workers come from the poorest regions, have no qualifications, employment contracts or sickness and accident insurance and are not allowed to organise in trade unions. A study from India has identified a high level of child labour. A quarter of workers are younger than 18, and 10 % younger than 12.

4. Main points of the regulation

4.1 The Ship Recycling Regulation aims to substantially reduce, particularly in South East Asia, the negative social and environmental consequences of the recycling of EU-flagged ships without causing unnecessary economic hardship. The proposal for a regulation implements some of the requirements of the Hong Kong Convention early, thus accelerating its worldwide entry into force.

4.2 The following requirements of the Hong Kong Convention are to be implemented early: 4.2.1 Ships flying the flag of an EU Member State will have to establish and maintain during their whole operating life an inventory of the hazardous materials present on board. While new ships will have to establish an inventory immediately, existing ships will have five years to do so. The inventory has to be updated prior to sending the ship for recycling so as to ensure that the selected ship recycling facility is able and authorised to manage all the hazardous materials and waste present on board. 4.2.2 A list of requirements for improved protection of the environment and public health to be fulfilled by the ship recycling facilities has been developed on the basis of the Hong Kong Convention. Individual recycling facilities fulfilling these requirements may be included in a European list of ship recycling facilities. Ships flying the flag of an EU Member State will only be allowed to be recycled in facilities present on the European list. 4.2.3 Ships flying the flag of Member States will have to minimise the amount of hazardous waste present on board prior to delivery to a ship recycling facility. In the specific case of tankers, the ship owners will have to ensure that ships arrive at the ship recycling facility in a condition which is ready for certification as "safe for entry" and "safe for hot work" so as to prevent explosions and (fatal) accidents amongst workers in ship recycling facilities.

4.3 In contrast to the existing legislation, the proposed Regulation is based on the system of control and enforcement of the Hong Kong Convention, which is specifically designed for international shipping. This will make it easier to ensure compliance with EU law. A major problem with the existing legislation is that it is difficult to establish when a ship becomes waste. Under the new system Member States will receive timely information about the planned start and about the completion of recycling. By comparing the list of ships for which they have issued an inventory certificate with the list of ships which have been recycled in authorised facilities, they will be able to identify illegal recycling more easily.

4.4 In addition to economic factors, lack of capacity in Europe is an obstacle to responsible recycling. Capacity is just about sufficient for recycling the naval and other government-owned ships of the European states. Allowing ships to be recycled in facilities outside the OECD countries which meet the requirements for inclusion on the European list would address the problem facing ship owners of limited access to legal recycling capacity. This is particularly important in view of the peak in ship recycling expected in the next ten years.

5. General comments

5.1 Ships are being scrapped in an irresponsible way. Most of them are scrapped in India, Pakistan or Bangladesh using the "beaching" method involving grounding them on a sandy beach, where they are scrapped by unskilled workers, including many children, without appropriate equipment and without any protection against the large quantities of hazardous substances released. Workers are exploited and are unable to protect themselves, as in many cases trade unions are not tolerated in these sectors, for example in Bangladesh and Pakistan. Governments do nothing to tackle these abuses. These are important economic activities for these countries, which are characterised by weak and corrupt government and, especially in this sector, strong and unscrupulous companies.

5.2 The economic importance of these activities does not lie only in employment but also, and above all, in the supply of raw materials. These countries cover most of their steel requirements from ship recycling. The employment aspect is also an important issue in these countries, but controversial from a social perspective. The work is done mainly by unskilled workers from the poorest population groups, who have work but not jobs as they are hired as day labourers. The European and global concept of having a job (ILO: Global Jobs Pact, 2009) means being able to live and support a family from it. Workers in the scrap yards on South East Asian beaches cannot live from their work; it merely helps them to survive for a time. And in practice many of them die as a result of it. Either quickly, in one of the many workplace accidents, or slowly from one of the incurable, malignant diseases they may contract as a result of their work.

5.3 The European Union bears a major responsibility in this field as a large part of the global cargo fleet is in the hands of shipping companies based in the EU Member States. The Commission has been concerned about trends in the sector for years, partly because of the large-scale circumvention of the rules of the Basel Convention. A few years ago therefore it decided to do something about it. Over the last five years the Commission has produced a green paper on the subject, followed by a communication, and now it has published a proposal for a regulation.

5.4 The proposal for a regulation on ship recycling is a rather pale reflection of the previous green paper and the communication on the same subject. The two previous documents provided an impeccable analysis of ship recycling problems in Bangladesh, India and Pakistan and expressed the view that robust measures were needed to tackle the unacceptable conditions in these countries. The measures proposed in the context of the proposal for a regulation do not however solve these problems. The EESC can only conclude that the political will is manifestly absent. This is not only a pity, it is also very striking. In other areas the Commission has shown the political will.

5.5 Little remains in the current proposal of the plans set out in the previous documents, for example, to impose certain obligations on ship owners, ship builders and cargo handlers to ensure the responsible decommissioning and recycling of ships reaching the end of their economic lives. The measures which are proposed are weak and full of legal loopholes.

5.6 When the proposals for the Hong Kong Convention were complete, the participating states assessed whether the level of control and enforcement required by the Hong Kong Convention was equivalent to that provided for in the Basel Convention. No agreement was reached by the parties to the Basel Convention on the subject. The assessment of the IMO and the EU Member States, however, was positive. One reason for the different assessments may have been that the Hong Kong Convention only deals with the scrapping of ships. The Basel Convention on the other hand is mainly concerned with the responsible handling of hazardous substances and sets conditions for the downstream processes. The Hong Kong Convention has little to say about this. The EESC notes that the Commission proposal does address this issue in general terms and recommends that – with a view to authorising the recycling of ships in facilities situated in non-OECD countries, provided that they meet the requirements for inclusion on the European List – that the Regulation be based in particular on the existing guidelines of the relevant international organisations (7), as well as on the Convention itself and its technical guidelines.

5.7 The Commission possibly goes further in its proposal than the provisions of the Hong Kong Convention but less far than the provisions of the Basel Convention. The Commission argues that it did not want to set the bar too high, or else states where scrapping takes place under conditions which endanger people and the environment might not accede to the Hong Kong Convention and the regulation would miss its target. This is a dubious argument: if a particular set of laws and regulations (the Basel Convention) is being regularly flouted, replacing that legislation with a new set of laws that are weaker in their implementation (the Hong Kong Convention) would not appear the most obvious way of tackling the problem. The Commission could have paid more attention in its proposal to an improved level of implementation.

5.8 Two much-used ways of circumventing the requirements of the Basel Convention are reflagging a ship from a European Member State to a non-EU state or selling the ship to a buyer. If the sale takes place in European waters, the buyer may not export the ship to a non-OECD country for recycling, as it falls under the rules of the Basel Convention. But the buyer can make a declaration, stating that he is not buying the ship for scrapping but for economic use. As soon as a ship of this type has left European waters it often immediately sets sail for the beaches of South East Asia, and the declaration proves to have been false.

5.9 The EESC notes that the Commission's proposal incorporates the main elements of the Hong Kong Convention, which apportions responsibility between flag states, recycling states and port states on the one hand, and ship owners, shipbuilders and recycling facilities on the other. The Committee has doubts, however, about the balance of this apportionment and would have liked to see the position of the previous owners/beneficial owners addressed.

5.10 What is lacking in the proposal is, for example, an economic instrument which the Commission could use to guide developments in the desired direction. The possibility of an instrument of this kind was mooted in the previous documents. The Commission had a study carried out on the possibility of establishing a fund to which every ship docking in a European port would have to contribute. The amount of the contribution would be determined by a combination of tonnage and toxicity. The use of a fund of this kind fits in perfectly with the "polluter pays" principle. The money could be used in part to improve working conditions in South East Asia, by training workers in safe working practices, by raising local awareness of the dangers of the irresponsible scrapping of large seagoing ships and by improving local public infrastructure.

5.11 The EESC prompts the European Commission to investigate the possibility of using this money to develop scrapping capacity and to establish a recycling industry in Europe. There is sufficient dock capacity in the EU which is no longer, or only partly, used for building and repairing ships but which is suitable for the decommissioning and recycling of ships. This would fit in with the European Union's ambition to develop into a sustainable "recycling society", a society in which waste is turned into raw materials by means of a sophisticated and fine-meshed recycling system. This could produce considerable economic gains in terms of valuable materials which could meet a significant proportion of the demand for raw materials and generate many new jobs. In view of steadily rising raw material prices and high unemployment in a number of European Member States, this could be highly profitable for Europe as a whole.

5.12 If Europe wants its ships to be scrapped in a responsible way, it is not unreasonable that it should pay part of the cost of building the capacity needed to ensure that this is done in an appropriate manner. In a market economy nothing is free, and a price has to be paid for everything. The price for the responsible scrapping of ships is paid in money. When ships are scrapped in an irresponsible way the price is paid in other currencies, such as destruction of the local environment and the loss of human lives. Given that we in the EU do not wish to accept these currencies as a legal means of payment, we must also not accept their use as a means of payment in trade with countries outside Europe. The Commission could place more emphasis on this. The EESC therefore considers that Commission should have produced a better, more creative, more adventurous proposal, richer in initiatives, in line with the level of ambition of the previous Commission documents and the Committee's opinions on them.

6. Specific comments

6.1 The EESC supports the objective of the proposal on ship recycling and the general approach taken by the Commission but has major reservations about its implementation in practice. The Committee is critical of the following provisions.

6.2 Article 15 of the regulation states that recycling facilities located outside the Union may be placed on a European list if they meet the requirements set by the EU for responsible scrapping. However, the facilities themselves have to provide proof that they meet the requirements. Site inspections by the Commission or agents acting on its behalf are only included as an option in the proposed Regulation. The EESC calls on the Commission to set up an explicit, effective mechanism for inspections and supervision by independent third parties in order to ensure compliance with the requirements set out in Article 12.

6.3 Article 12 provides a summary of the requirements with which recycling facilities have to comply in order to be included in the European list. There is not much to be said about the requirements themselves. However, the transitional provision of Article 28 states that Member States may, prior to the publication of the European list, recognise ship recycling facilities located outside the Union subject to the verification that the ship recycling facility complies with the requirements set out in Article 12 based on the information provided by the shipowner, the ship recycling facilities or acquired by other means. Once again, the EESC calls on the Commission to set up an explicit, effective mechanism for inspections and supervision by independent third parties in order to ensure compliance with the requirements set out in Article 12.

6.4 Article 23 proposes penalties for breaches of the regulation, which may be of a civil or administrative nature and should be effective, proportionate and dissuasive. Specific penalties are not laid down. The same article also provides that penalties may be imposed on the penultimate owner where a ship is sold and, within less than six months after the selling, is sent for recycling in a facility which is not included in the European list. The Committee points out, however, that six months is a short period in the average life cycle of a ship. The Committee also points out that the conditions for the exemption from penalties in the event that the shipowner can show that he has not sold the ship with the intention of having it recycled can easily be met by means of declarations, as has repeatedly been seen in connection with the current problems with implementing the Basel Convention.

6.5 In Article 30 the Commission undertakes to review the regulation not later than two years after the date of entry into force of the Hong Kong Convention. As this is expected in 2020, the review of the regulation would therefore take place in 2022. The Commission is considering the inclusion of facilities authorised by the parties to the Hong Kong Convention in the European list of ship recycling facilities in order to avoid duplication of work and administrative burdens. It is very possible that the facilities recognised by the parties to the Hong Kong Convention, i.e. those working downstream of scrapping and required to handle hazardous substances responsibly, will not meet the requirements of the European list. This will also weaken current practice.

6.6 The EESC points out that, where ship recycling is carried out using the beaching method, workplace safety is completely inadequate, workers are exploited and the consequences for the environment are disastrous. Ships are scrapped on the beach by hand and all the hazardous substances they contain (oil, sludge oil, PCBs etc) run freely into the sea or seep into the sand. Studies have shown that flora and fauna have completely disappeared from a wide area around the scrapping beaches. In view of the EU's sustainability agenda, the Commission might be expected to exclude recycling facilities using these methods from the European list. This is not clear at present.

Brussels, 12 July 2012. The President of the Economic and Social Committee Staffan NILSSON

(1) Technical Guidelines for the Environmentally Sound Management of the Full and Partial Dismantling of ships, Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, UNEP;

Guidelines on Safety and Health in Shipbreaking: Guidelines for Asian countries and Turkey, International Labour Organization (ILO);

Guidelines on Ship Recycling, International Maritime Organization (IMO).

(2) Regulation (EC) No 1013/2006 of the European Parliament and of the Council of 14 June 2006 on shipments of waste.

(3) COM(2007) 269 final.

(4) COM(2008) 767 final.

(5) CESE 1701/2007, OJ C 120, 16.5.2008 p. 33; CESE 877/2009, OJ C 277, 17.11.2009, p. 67.

(6) COM(2012) 118 final.

(7) See footnote 1.