German Auto Recycling Law
German Auto Recycling Law (GERMAUTO)
CASE NUMBER: 28
CASE MNEMONIC: GERMAUTO
CASE NAME: German Auto Recycling Law
A. IDENTIFICATION
1. The Issue
Because Germany has strict regulations regarding the
incineration of waste and is running out of landfill area, the government is
considering regulations requiring manufacturers to reclaim their automobiles for final
disposal. Because the lack of landfill space makes the cost of waste disposal
extremely expensive, German automobile manufacturers have tried to develop new ways to
reduce the waste that results from the disposal of automobiles. This
has resulted in a proposal to require recycling of automobile
parts. Some of Germany's trade partners, particularly the United States and Japan,
regard
such a requirement as a barrier to trade.
2. Description
Germany is considering mandated requirements regarding the recovery and
recycling of automobile parts. Should Germany choose to mandate that a
certain percentage of automobile components be recycled, there may be serious
trade implications within Europe as well as outside the European Community
(EC). U.S. automobile companies are also considering the
recycling of car parts, but German companies are currently the leaders. If the
non-German automobile manufacturers had to meet future German automobile recycling
requirements, they would require large capital investments as well as time to
"catch up" to the German car makers. If the foreign automobile manufacturers
did not develop expertise and technology, at their own expense, they would
probably not be allowed to sell cars in Germany. Furthermore, even without
recycling regulations, sales of non-recyclable cars in Europe could be
affected by the "green" European consumers purchasing more environmentally
friendly automobiles (this premise in this case is similar to the recycling
requirements in the DANISH, ITALYBAG and DUTCHWD cases).
A group of German auto manufacturers has announced a plan to recycle its
models in order to discourage disposal in landfills; for example, the German
subsidiary of Ford, Ford Werke A.G., has stated that it will take back Orion
and Escort models registered after September 10, 1991. German auto companies
are already labelling plastic materials in their cars with a
standardized government code, and Volkswagen is redesigning their models to
use fewer materials. Volkswagen has a plant in Leer, Germany that is
dedicated to determining the most efficient methods of recycling the company's cars. The
eventual goal is a "mass de-production" system for dismantling cars.
It will be some time before the newer car models for which
commitments have been made will be disposed of and thus automobile recycling
will not have immediate environmental effects. As those countries with a limited
geographical, as in Europe, run out of landfill, there will be an increased
need for government regulations requiring recycling of almost all of the
materials that make up automobiles. The challenge for the
automobile industry is to plan and develop methods and car designs that will allow
time to adjust to such changes, because trade will be affected if auto makers in
different countries are not prepared for the changes. Even if arguments
against mandated automobile recycling are presented to GATT or another trade forum in
the future, it will be some time before anything is actually
implemented.
3. Related Cases
Keyword Clusters
(1): Trade Product = AUTOmobile
(2): Bio-geography = Temperate [TEMP]
(3): Environmental Problem = Pollution Air [POLA]
4. Draft Author: Michelle Dearing
B. LEGAL Clusters
5. Discourse and Status: AGReement and INPROGress
There are several proposed solutions, but there appears
little agreement on which to choose.
6. Forum and Scope: GERMany and REGIONal
It is likely that Germany will address automobile recycling
unilaterally, followed by the EU and other states in Europe.
7. Decision Breadth: 12 [EURCOM members]
8. Legal Standing: LAW
C. GEOGRAPHIC Clusters
9. Geographic Locations
a. Geographic Domain : EUROPE
b. Geographic Site : West Europe [WEUR]
c. Geographic Impact : GERMany
This problem is related not only to landfill sites that are
rapidly being exhausted, but also to rising costs for auto parts. This
is naturally a concern for a state such as Germany that imports significant resource inputs
for producing cars.
10. Sub-National Factors: NO
11. Type of Habitat: TEMPerate
D. TRADE Clusters
12. Type of Measure: Regulatory Standard [REGSTD]
The legislation would require a certain percentage of the
car's parts to be recyclable.
13. Direct vs. Indirect Impacts: INDirect
14. Relation of Measure to Environmental Impact
a. Directly Related : NO
b. Indirectly Related : YES AUTO
c. Not Related : NO
d. Process Related : YES Pollution Land [POLL]
15. Trade Product Identification: AUTO
16. Economic Data
In 1990, Germans disposed of approximately two million cars. Although
75 percent of the scrapped components have been reused, more than 400,000
metric tons per year of the remaining plastics, rubber and glass are still
placed in the waste stream.
17. Impact of Trade Measure on Competitiveness: MEDIUM
This law would clearly have an impact on automobile trade in Germany.
The cost of producing German cars would likely rise with the
requirement, at least in the short-term, because initially it may be more
expensive to develop
and implement recycling schemes than to continue with the current "import and
throw-away policies." At home, German autos would probably gain competitiveness.
No doubt these recycling requirements would be
imposed on foreign imports, which would force some makers to produce cars
with similar recycling characteristics. German auto makers hope other foreign
producers would drop out of the German market because of this requirement.
The legislation would also have an impact on the input
industries that supply the auto industry in Germany. For example, this would
effect Germany's iron and steel industries that have already lost many workers
over the last
decade. The impact would differ over time. In the short-term, the
legislation might weaken the industries' competitiveness. In the long-term,
it would strengthen competitiveness by giving German industries a head start
over those in other states. Germany may push for this policy to become EC-
wide, therefore positioning the European Union's industries ahead of other EC
competitors. In the long-run, recycling may produce cheaper cars. To give an
idea as to the magnitude of possible impacts, approximately 20 percent has
been mentioned as the minimum recyclable content of the car. This seemingly
small figure makes a big difference when considering the volume of cars
produced.
18. Industry Sector: AUTO
19. Exporter and Importer: MANY and GERM
E. ENVIRONMENT Clusters
20. Environmental Problem Type: Pollution Land [POLL]
21. Name, Type, and Diversity of Species
Name: Many
Type: Many
Diversity: 824 higher plants per 10,000 km/sq (Germany)
Germany's domestic policy intends to lessen landfill
problems in the
country and reduce pressures for exporting waste to other
countries (see GERMPACK and ECPACK cases).
22. Resource Impact and Effect: LOW and REGULatory
23. Urgency of Problem: LONG and 100s of years
24. Substitutes: RECYCling
VI. OTHER Factors
25. Culture: NO
26. Trans-Border: NO
27. Human Rights: NO
However, German auto workers have argued that this is a
"jobs" issue in
that their right to earn a living is denied.
28. Relevant Literature
Corcoran, Elizabeth. "Green Machine." Scientific American 266
(January 1992): 140-141.
"Free Trade's Green Hurdle." The Economist (June 15, 1991):
61-62.
"How to Throw Things Away." The Economist 13 (April 1991):
17-22.
"Mass Destruction." The Economist (November 10, 1990): 82, 89.
"Recycling by Ford." New York Times (September 11, 1991): D4(L).
"VW Bumpers Built With Recycled Plastics." Design News 47
(October 7, 1991): 54, 56.
Permission to repost requested from American University March 9, 2000.