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15/06/2013 0 Comments

Ship recycling markets and the impact of Hong Kong convention

Over the last decade governments, the shipping industry, the ship recycling industry and

NGOs, have been involved in long drawn discussions and negotiations over the need to

regulate internationally the recycling of ships so that it takes place in a safer and less

polluting ways.

Earlier efforts to enforce the Basel Convention to the recycling of ships had failed because that convention had not been

developed with shipping in mind, making its implementation im practical as well as legally uncertain. While countries that are

Parties to the Basel Convention recognized this by requesting the International Maritime Organization (IMO) to develop a new

international convention to specifically address the recycling of ships, the NGO Shipbreaking Platform persisted with

campaigns based on their twin goals of the enforcement of the Basel Convention to ship recycling and the banning of

beaching. At IMO, on the other hand, the international community with the clear support of the shipping industry, and

occasionally of the ship recycling indus try, developed the new convention that was adopted in 2009.

The convention, which is known as the Hong Kong Convention (HKC) acknow ledging Chinas hosting of the Diplomatic

Conference in Hong Kong, will enter into force after it has been ratified by a s et number of States which control 40% of the

worlds fleet and the equivalent ship recycling capacity. Entry into force will take a few years to achieve, as is often the case

with international conventions. In the meantime, a number of recycling yards have started instigating gradual improvements in

safety, waste management and social welfare. Also, nowadays, more and m ore yards submi t themselves to ISO certification

that covers health and s afety and pollution prevention is sues . The shipping industry has also began to voluntarily implem ent

the technical standards of the HKC with a small but growing number of shipowners providing their ships with Inventories of

Hazardous Materials and by recycling ships in what is generally termed green or respons ible recycling.

From quite early, the European Union implemen ted the Basel Convention into European legisla tion and i t also implemented

unilaterally the ban amendment, which is a Basel Convention provision that has not entered into force internationally and

which forbids the export of hazardous was tes from OECD to non-OECD countries. According to an early decision at a meeting

of the Basel Convention, end-of-life ships are to be considered as hazardous waste and in line with this decision the

European Commission has tried over the years to enforce its Basel based legislation to ships destined for recycling.

Nevertheless, in 2010, the European Commission publicly recognized that the enforcement of its legislation to ships was

impractical with more than 90% end-of-life ships avoiding or evading its legislation. Being unwilling to wait until the HKC

enters into force, the European Com miss ion then em barked on the development of new legis lation for regulating the recycling

of European ships . In March 2012 the Commis sion published its Proposal for a Regulation of the European Parliament and

of the Council on ship recycling. While the draft text was based on the mechanisms of the Hong Kong Convention it also

introduced a num ber of new ideas, s ome of which were clearly unworkable. Note that the draft text did not explicitly ban the

beaching of European end-of-life ships, but instead it did hint that yards that rely on beaching might not be included in the

European list of approved yards. Notwithstanding certain valid criticisms on some of the provisions of the draft proposed

Regulation, it was a bo ld step forward, because with it the European Com miss ion acknowledged the need to move away from

the Basel Convention and it also recognized the HKC as the practical and reali zable s tandard for the recycling of European

ships.

According to the European decision making process the European Council of Minis ters (i .e. the 27 Member States ) and the

European Parliament will need to consider the draft text, decide on any amendments each body might want to introduce and

then negotiate between them an agreed final text. The European Council started its work soon after the draft text was

published in 2012 and apparently by now it has developed numerous amendments that bring the text very close to the

provisions of the Hong Kong Convention, and in this way would provide a near seamless transition when the HKC enters into

force. On the other hand, the European Parliament, here under the leadership of the Green Party and the active lobbying of the

NGO Shipbreaking Platform, is proposing a set of amendments that include the outright banning of beaching for European

flagged s hips.

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It is certainly hoped that, during its negotiations with the Council, the Parliament would see the light to agree to back off from

its stated position of banning the beaching of European flagged ships. However hoping is not enough and here there is a real

risk that Europe might end up making a bad mistake. The sad reality is that the European politicians who are promoting the

ban do this on the basis of misinformation l obbied by the NGO Platform. It goes without saying they should have understood

that if Europe bans beaching, India, Bangladesh and Pakistan who recycle two thirds of the worlds recycled tonnage using

beaching, will certainly not stop beaching and recycling ships. Instead, the three South Asian countries will carry on their

business while ignoring Europe and its calls for higher standards; calls which obviously have not been thought out. In the

same log ic it is not unlikely that these three countries may also conclude to i gnore the Hong Kong Convention. Surely, this is

not what Europe wants to achieve.

It appears that the movers in the European Parliament have not understood the dynamics of the international s hip recycling

industry and in ignorance are endangering the progress that has taken place in the last decade towards a s afer and cleaner

global s hip recycling indus try. The attached paper focuses on certain fundamental principles of the ship recycling industry and

clarifies its economic rationale. The paper is circulated with this letter (as attached) to the industrys stakeholders in the

sincere hope that it will reach decision makers and wil l also he lp them take the global s hip recycling industry forward, and not

a decade back.

Source: Article written by Dr Nikos Mikelis* Non-executive director, GMS

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