Legal in Mexico.

American Retroworks Inc. has 3 warehouses for receiving donations, surplus electronics, repairable material, e-scrap, and to separate those from a pile of "e-waste".  The headquarters is in Middlebury, Vermont, at a 50,000 s.f. warehouse known as Good Point Recycling.   This master warehouse can do everything, from repair and refurbishment to sorting for larger refurbishing operations to de-manufacturing (all unwiped PCs and hard drives are torn down in house) and processing into bales of raw material.  We also used it as a training facility for staff from Africa and Mexico.

In our warehouse in Douglas Arizona, the border fence with Mexico is literally a stone's throw from the parking lot.   This 25,000 s.f. facility receives material from the USA (including nicer TVs from Vermont and material from one-day events in Arizona).  Most of the operation in Douglas is for accountability - doing a proper reconciliation report of what has been received;.  In this process, each television is taken down by make, model and serial number for the purpose of calculating tariffs and taxes.   If the TV is to remain in Mexico, the Mexican government keeps the tariff and taxes the product.

Our third operation in Mexico is a maquiladora, which is a special status for a "USA warehouse in Mexico".  This legal status was created as an incentive for USA manufacturers to set up part of their assembly operation in Mexico. In fact, television manufacturers like Sony and Sharp were among the biggest maquiladora users in past decades.  CRTs and plastic and boards were sent into the maquiladora warehouses in Mexico without tax so long as the assembled finished goods were re-exported from Mexico.  This is the same way as our Retroworks de Mexico operates, except in reverse.  The TVs must be disassembled into commodities, and the commodities must be re-exported somewhere.  We re-export the scrap to the USA (e.g. anything with circuit boards goes to Sims Recycling in Tucson).  If the TVs work, we can re-export to another NTSC analog broadcast country such as Venezuela or Columbia.

If we are to keep the TVs in Mexico, it becomes a paperwork issue to re-calculate the taxes and tariffs originally avoided through the maquila import.   This is another reason we need the Douglas AZ warehouse, it can receive back working equipment.  But there is an easier management solution than re-transporting TVs back and forth to calculate tariffs.

In practical terms, most of the TVs and monitors sent from the USA work in the first place, and the only "refurbishing" required is plugging the TV into a wall and playing a DVD on it for a couple of hours.  The TV repair people who work on the ones that don't come on may replace a tuner or flywheel, but usually it is simply an unseated power cable that needs to be reattached or re-soldered.  Rarely, the repair involves circuit board level repair or capacitor replacement and by-pass, but those operations are still considered routine (as shown in the WR3A videos and slides from repair operations in Egypt, Senegal, Indonesia and Malaysia on and

It is easier for tax reasons to do a "triage" and to separate the TVs which are likely to be demanufactured and send them under the maquiladora paperwork, so that we can track all the CRTs and scrap coming back equals the weight of the materials sent to Mexico (minus steel scrap and other scrap we can verify weights of).  This makes the Douglas operation very valuable to us.   If a TV works or is very likely worth trying to repair, we can sell it in Douglas to Mexico NOT under the maquila.  That saves the women from re-transporting the TV to the USA and re-re-transporting it with the tariff paid (i.e. NOT under the maquiladora paperwork). 

When we were sent back questions by EPA in response to our Border 2012 grant award, they posed many questions which reflected genuine confusion over a genuinely confusing tax and tax-exempt process.  The problem is that we got the questions so long after the grant was awarded, and that they were not really stated as a question but as a resolution.  Since the USA Today article announced that the Border 2012 Grant program has been shorted from $100M per year to $17M per year, we kind of assume that the grant administrators have financial constraints and that finding the reason to disqualify a grant meets a budget need, and that is why they never picked up the phone to ask how we were legally going to accomplish recycling as a maquiladora and reuse operation per our USA export permit.

Actually its quite simple to track, because we MUST identify each and every TV and monitor by make, model and brand, whether it is sent to the maquiladora for demanufacturing or sold for reuse directly.

The fact we rent the warehouse in Douglas should show people who have questioned our status that we know whata the heck we are doing.  If our lawyers in Mexico have misinformed us, or my letters to EPA describing the process are not accurate, I think we could reasonably expect something from EPA which stated some form of objection.

I am writing this not just because I am stewing over our need for investment and the tantalizing close calls.

First Snakebite:  the City of Tucson RFP award in 2007 suddenly cancelled without explanation weeks later.  We did a FOIA and found that we were accused by the incumbent USA recycler - who shipped their TVs to California for redemption under SB20 - had accused us of burning the TVs in a primitive polluting operation which exploited the health of Mexican workers and polluted the environment.   The City cancelled the award to recycle the electronics for 12 cents with Retroworks and gave it back to the incumbent vendor and paid them 25 cents per pound.

Second Snakebite:  Investors Circle selected our operation as a finalist to do a 10 minute presentation (Shark Tank style) to a group of angel capital investors in Washington DC.  The investor most interested made a follow up call to BAN, who we heard said something negatively about our respect for international law, and the investor stopped returning calls.

Third Snakebite:   We got a permit to import the CRT glass to use at the local Mexico smelter to replace leaded silica from a local mine.  EPA gave us the status to export the CRTs for final recycling.  Then Mexico said we couldn't break or process the CRTs, so we had to go back to maquila re-transit to USA.

Fourth Snakebite:  The border 2012 grant award announced in 2009 and withdrawn (apparently if obliquely) last month.

We are now trying to arrange an SKD factory to relocate from Malaysia, so that we can create a higher level of reuse which Americans can easily visit and see for themselves the reuse jobs that are coveted in the developing world, and the affordable video display technology that results, in internet cafes and schools set up by the UN and in doctors offices and clinics.

Hundreds of thousands of dollars have been promised to the brave ladies of Retroworks de Mexico, and then snatched away,   Las Chicas Bravas only need a couple of dollars an hour to be happy and to create jobs locally in Mexico, and the entire facility could be made 21st century for a $150k investment.  By making the governance of Retroworks de Mexico the property of a women's coop, we hope to solve other problems in the area.

How can I afford to stay down there?

Morally, how can I POSSIBLY leave them?

The amount of red tape is incredible.  We have hired lawyers and I've spent hours that only a former regulator like myself could ever be expected to triangulate and address rationally.   I've read RCRA and read the Basel Convention and rented enough space and set up enough processes to do this by the book.  It's amateur hour in ewaste at the border, with enough CYA to eclipse the sun.

This whole thing stinks. Hearing my competitors whisper that I'm doing something wrong makes me madder than a wet rooster.  Where the hell are the leaders?  BAN says do it in the USA, what BS, their USA people just shred the TVs and monitors.   California says destroy everything and then creates a subsidized incentive to bring bad stuff in from Arizona, at a cost even Las Chicas cannot compete against.  EPA is going through a management transition where Lisa Jackson appears to be listening to BAN but still choosing a high school kid who repaired a few dozen computers for Cameroon as a model solution.

The whole thing really reeks of racism.  That is the common thread in all the snakebites.  Stereotypes of thong-wearing Chinese whacking a monitor apart, stereotypes of Mexican maquilas.   All right then, I'll go to hell.

No comments: