Doing Business : Recycling Law Ignites Trade-Barrier Debate : * Critics say Germany's strict rules put foreign products at a disadvantage.

By JOEL HAVEMANN

April 7, 1992 12 AM PT

TIMES STAFF WRITER

BRUSSELS —

Throughout Germany, little green dots are sprouting on packages of everything from cosmetics to computers. They bring good news to environmentalists: that the packages will be recycled instead of being buried in ugly landfills or set ablaze in incinerators.

But businesses--particularly outside Germany--aren’t so happy. Many importers resent a new German law that all but forces them to pay up to 12 cents a package for the green dot.

And importers are even angrier over another German requirement freezing the amount of non-reusable packaging in the country, which means companies must either adopt new packaging for their products or collect and take out of Germany the old ones. It is much harder for foreign companies than for domestic firms to retrieve and reuse the bottles, boxes and cartons that they sell in Germany.

“It’s highly discriminatory,” said a spokesperson for Tetra Pak, the Swiss-based maker of paper and plastic beverage cartons. “It deprives us of our right to increase our market share.”

What’s happening in Germany is the head-on collision of two commonly approved goals--environmental protection and free trade--and it is happening in other corners of the globe as well. Whether intentionally or not, environmental regulations are increasingly interfering with international trade.

The United States, for example, has barred tuna imports from Mexico and Venezuela, which catch tuna in fine-mesh nets that also snare dolphins. More than that, it bars tuna from the many nations--including Britain, France, Italy and Spain--that buy tuna from the two Latin American countries.

To environmentalists, that’s wonderful. International commerce has provided a rare opportunity to press for environmental protection in countries that might otherwise provide little.

To advocates of free trade, however, it smacks of environmental imperialism--foisting the environmental standards of one (usually rich) nation on other countries, often poorer and unable to afford the luxury of strict environmental controls.

A panel of the General Agreement on Tariffs and Trade (GATT), the Geneva-based body that supervises international trade, issued a preliminary ruling last year against the U.S. tuna ban. GATT’s 103 members, the panel said, have agreed not to project their environmental standards beyond their own borders. The governing GATT Council--which could theoretically authorize offended countries to take countermeasures against the United States--has postponed taking any final action.

A Feb. 12 GATT report said that under the logic of the U.S. tuna ban, “any country could ban imports of a product from a country merely because the exporting country pursues environmental or health policies different from its own. . . . The potential for protectionist abuses would be very great. . . .

“There is much evidence which points to a serious risk of environmental issues and concerns being exploited by protectionists for their own benefit,” the GATT report declared. It warned of efforts by manufacturers to manipulate environmental standards and “to draw environmental groups into implicit or explicit alliances.”

If industrial countries are serious about improving the environment of Third World nations, the GATT report argued, they ought to trade more with them, not less. Experience shows that as nations get richer, they can afford more environmental controls, the report said. And one way for Third World countries to get richer is to trade more with the industrial world.

Environmental restrictions, the GATT report said, should be left to international agreements such as the Montreal Protocol limiting the use of chlorofluorocarbons, which attack the atmosphere’s ozone layer. Environmentalists, however, are impatient with that approach.

“International environmental agreements are few in number and slow in coming,” Charles Arden-Clarke of the World Wildlife Fund told a GATT meeting in February. It is Germany, propelled by its powerful Green Party, that now seems to lead the world in trade-restrictive environmental regulations.

“People in Germany are always very keen to follow new philosophies,” said Helmut Wienholt, a top official of the Foreign Trade Assn., which represents European Community exporters. “This is one of the problems of our country.”

Germany’s 1991 packaging law is driving some exporters frantic. The London-based Industry Council for Packaging and the Environment (INCPEN), protesting that the law is playing havoc with trade to Germany, has launched a formal complaint with the 12-nation European Community.

A provision of the law that took effect last December requires companies selling in Germany to collect and recycle packaging used to transport their goods, or to pay someone else to do it for them.

INCPEN offers one small example of the consequences: Germany has told Brazilian orange exporters that it will accept only corrugated cardboard orange crates, not wooden ones, because wood cannot be recycled. But Brazil does not have enough cardboard to transport the oranges it exports to Germany.

It is not until next Jan. 1 that the German law sets targets for the collection and recycling of consumer packaging. That is where the green dot comes in.

The green dot signifies that the manufacturer is prepared to recycle the package. It is also to remind consumers to deposit the package in recycling bins that will soon become omnipresent.

The money--up to 12 cents a package--paid by manufacturers for their green dots will cover the costs of a private company, Duales System Deutschland (DSD), which will be responsible for collecting most of the packaging for German consumer goods. By 1995, DSD is to collect 80% of all kinds of packaging. Recycling is to be done by the industries that make packaging materials. Of the collected materials, 72% of the glass and aluminum is to be recycled by 1995, as is 64% of the paper and plastics. None is to be incinerated. The green dot is not compulsory, but observers expect most retailers and consumers to demand it.

The rules are the same for domestic and foreign packaging. But companies that export to Germany say it will be harder for them to comply. Daniel Cloquet, industrial affairs director for the Union of European Community Industries, said foreign producers are having great difficulty simply getting information about the massively complicated German law.

Many exporters are looking for relief to the European Community, which is struggling to formulate its own rules governing the recycling of packaging. The latest draft prepared by the EC would set less ambitious targets than Germany’s and allow for some incineration.

But before that regulation can take effect, it must still clear the EC’s labyrinthine legislative process, and that could take several years. Despite the EC’s goal of dismantling barriers to trade between the 12 member countries by the end of this year, Germany might be able to maintain its program, much as California enforces tougher air-pollution standards than the rest of the United States.

Waiting just off stage in Germany is the textile industry, which is considering the use of an eco-label certifying that clothing, whether German- or foreign-made, complied with German environmental standards for its manufacture, use and disposal.

The label would be voluntary, but Wienholt of the Foreign Trade Assn. said it would give competitive advantage in a country of environmentally conscious consumers. And, he said, it could be difficult for non-German manufacturers to qualify.

“If you ask me, it’s a non-tariff barrier to trade,” Wienholt said.

Wasteful Habits

Some Europeans cut back on garbage in the 1980s. But Americans threw away more.

Municipal waste per capita in kilograms

Belgium *: 1980: 313

Denmark: 1985: 423 1980: 399

Germany: 1985: 318 1980: 348

Greece *: 1980: 259

Spain: 1985: 275 1980: 215

France: 1985: 272 1980: 260

Ireland: 1985: 311 1980: 188

Italy: 1985: 263 1980: 249