Contract Manufacturing Visit

WR3A partners have now visited the factory in Indonesia which was attacked by BAN in the press in February.

It will take some time to write a post which respects the confidentiality of all those involved in allowing us to view and inspect the factory and its operations.   Since neither the factory nor the shipper are WR3A members, this was fact finding.

It is a major TV remanufacturing company.  More to follow.

By the way, to clarify something in dispute from BAN's response to our op-ed in December...  BAN mistated what I said about current Pledge companies shipping to remanufacturing plants.   The factories which BAN objects to are the biggest buyers of working monitors.  A Pledge Signer can test and sell fully functional monitors to these factories - which then break them down and rebuild them the same as they do the "key functions" and repairable monitors.   BAN has recommended a process of testing and objected to a process of refurbishing, but the refurbishing factories buy working units.  We did not say that the Pledge companies were dishonest or deceitful. It is true that Jim asked me who they were, and I told him that is not my job.  When he later said I had accused them of violating the Pledge, the Pledge clearly allows tested working monitors to be sold to the refurbishers like this one in Indonesia.

PART II: Are E-Scrap Exports "Good" or "Bad"

Monday's post (Part I) discussed whether used computer and electronics exports are legal or illegal.  An ordinary commodity transaction (purchase of a cathode ray tube for remanufacture) is a department of commerce issue, until it becomes associated with an environmental problem, whereby it may become a department of environment issue.  This "association" is probably exacerbated by false data on the amount of "e-waste" contained in a typical shipment of used computers overseas (allegations that 75% of ewaste is exported, and that 80% of that is discarded as waste). 

1.0 Legal -  1.1 International law, -  1.2 exporting country (USA) law, -  1.3 importing country law, and -  1.4 civil law - it reflects the purchase order/contract/agreement)  (click to view Part I)

Aside from legality, here in Part II we look at whether the exports are good or bad.  Is a "no intact unit" policy a good policy?  If electronic recycling exports are legal, should they be?  If the trade is illegal, is that a good or a bad thing?  If time allows, in Part III we will review actual statistics.  "85% of statistics are made up on the spot."

2.0 Whether Exports are Good depends on:
- 2.1 Results in affordable electronics, communication, information
- 2.2 Results in less (net) mining, energy and toxics
- 2.3 Results in good jobs and income, sustainable development
- 2.4 Doesn't poison or kill people
- 2.5 Reduces cost of "ewaste" recycling (resulting in more environmental dollars for other good) 

2.1 The result of affordable electronics is obviously positive to someone who cannot afford a new one.  It's a no-brainer.  Obviously, if people in countries earning $3000 per person per year are gaining access to the internet at 10 times the growth rate of the USA, they are not doing it with $700 PCs from Best Buy.   Even a $25 used CRT monitor is expensive for an Egyptian medical school student.  If it lasts 10 times longer than an LCD, who is to say he shouldn't be able to buy one?

2.2  Recycling results in less mining and more sustainability.  If a junk CRT is sent to a poor country with no CRT glass end market - and those end markets are very rare - then it isn't going to get recycled, and someone has to mine to replace it.  But if the CRT glass really is recycled, the recycling  process is certainly cleaner and more sustainable than mining lead and silica from the ground to make new CRTs.  The same is true of copper, aluminum, and other metals, though probably not of complex circuitry (getting gold out of a circuit board using aqua regia acids is neither safe nor efficient). 

2.3 Repairing a computer generates 100 times more jobs per ton than shredding one.   In fact, more jobs are created in the exporting country as well, since you must hire people to remove the computer from the shredder and to compare it to the purchase order, clean and inspect it, etc.

2.4 If you poison or kill someone, that obviously erases the benefit of recycling.  To accuse our fair trade program of that, without naming us or providing any evidence that it occurs, is cowardly.  These countries are already generating more e-waste on their own, domestically, than they are importing, and creating a fair and well managed program for incidental breakage from an import factory creates and pays for the infrastructure these countries need.*

2.5 Reduces cost of "ewaste" recycling... this is something I guess we all agree that exporting does.  Some people innately distrust cheap solutions, and the "get what you pay for" mantra rings deeply in the environmental community.  I think the less expensive recycling is, the more people will do it.

If I haven't missed something, exporting can be a cheap method of reuse which creates more employment, improves the net environmental cost of materials production, creates affordable internet and more affordable recycling, and doesn't by any evidence poison or hurt anyone, and should be legal so long as its "fair trade" and you can prove no one is getting poisoned or exploited.   Part II was easy.

Part I: Legality of Used Electronics Exports

Yesterday we tried to reopen the discussion of the "decision tree" for legal exports, either under R2 (Responsible Recycler) best practices, under EPA Certification, and under the BAN program (as described in Accra).

There are two goals to the decision tree: Legal and Good. In Part I, we need to cover what is legal, since illegal good is not a sound business model. In Part II, we will cover whether the export of used computers or "e-waste" is a glass of morality which is half full or half empty.

1.0 Legal
-  1.1 International law,
-  1.2 exporting country (USA) law,
-  1.3 importing country law, and
-  1.4 civil law - it reflects the purchase order/contract/agreement)

2.0 Good
- 2.1 Results in affordable electronics, communication, information
- 2.2 Results in less (net) mining, energy and toxics
- 2.3 Results in good jobs and income, sustainable development
- 2.4 Doesn't poison or kill people
- 2.5 Reduces cost of "ewaste" recycling (resulting in more environmental dollars for other good)

Much of the difference between the R2, EPA, and BAN standards can be traced to the definition of the problem.  BAN has stated that 75% of "e-waste" is exported, and that 80% of that is "waste".   We have repeatedly asked for any data supporting either of these statistics (and the 75% and 80% appear to be interchangeable in different BAN press quotes).  The published report by ASU of loads sold to Peru showed 85% reuse, and my own analysis is that less than 70% recycling and reuse cannot be economically sustainable due to shipping costs.  There are problems in "processes" (burning or acid treatment of circuit boards) which can make even 30% waste a significant problem, however, even when the circuit board is not itself toxic.

1.1 International Law basically means the Basel Convention on interboundary movement of wastes - if it IS a waste - but means GATT and WTO and other trade laws if if is a commodity.  The Basel Convention was established when drums of poison were dumped on the shores in Africa.  It was designed to stop clear-cut shipping of toxic garbage to avoid costs of environmental treatment in the developed country.  The law clearly did not cover 'process wastes' (e.g. manufacturing and mining, which moved to developing countries, produces waste but is not covered) and clearly did not cover raw materials (e.g. the export of clean lead to make into new car batteries) or repair, reuse, and refurbishment.  Is it debatable that it covers those?  NO.  It says in black and white that those are not covered.  There is nothing to interpret.  It says that nations which define something as a commodity, and not a waste, are not covered.  It says that used electronics exported for repair and refurbishment, but not 'major reassembly', are exempt. (The press in my opinion has been particularly negligent in giving BAN license to repeat misinformation when the Basel Convention text is readily available, and EPA's positions on reuse clearly reference the Basel Convention).  If something is NOT defined as a commodity, and is a waste, then the USA cannot, as a "non-party", purchase waste disposal services from a member country.  It has to be a non-waste for the USA to export it under international law.  Incidentally, when the USA did not join the bandwagon of nations wishing to ratify Basel, it was not to protect the right to dump toxic chemicals on their beaches... in fact, by not signing the treaty, the USA is arguably even more strongly forbidden from dumping (as a non-signatory).  The USA was concerned that the laws between commodity and waste would be blurred.

1.2  Exporting country law (USA) tends to divide between commodities and waste, based largely on the International definition above, but also under USA law.  EPA  has RCRA, the Resource Conservation and Recovery Act, as the authority to police waste.  Non-wastes are governed by OSHA, Department of Transportation, etc.   RCRA is not a license for EPA to walk into a business or a home and seize property (imagine your cell phone being seized because you were not using it - when you still had data and addresses inside).  EPA law tends to want documentation A) that the commodity exempt working and repairable goods are actually reused, and B) that the importing country allows the import - which gets to the third mark.  The USA has some other laws governing how powerful a computer you can export to a country which is not friendly (the one time I was interviewed by federal law officials, they were looking into exports of high technology to unfriendly nations - it had nothing to do with "ewaste" concerns).  Improperly identifying your exports gets you into all kinds of illegal activity. 

1.3  The Importing country laws fit two basic groups - commerce laws and environmental laws.   If the goods are defined as a commodity, the Commerce department governs whether the import is legal.  In some cases the Commerce Department of the importing country declares a working commodity or goods to be illegal - that is usually a protectionist law, e.g. when China banned the import of working CRTs (including used and new) in response to Mexico, EU, and USA laws putting high tariffs on Chinese made CRTs - it was all about "dumping" in a trade sense of the word, and had nothing to do with dumping in the waste sense of the word.  Where BAN is affecting trade, they are writing the the environmental offices of importing countries (like Malaysia DOE) and imploring them to take away permits issued by the Commerce Deparment.  In several cases - the recycling of used CRTs by Samsung Corning in Malaysia, the import of working used computers in Kenya, and most recently the import of repair and refurbishable CRTs in Indonesia - BAN has succeeded in "poisoning the well", often because the importer chooses not to fight the BAN protest (there is plenty of other scrap in the world).  Since R2 defines exports to be "legal in the importing country", the USA exporter is often put into a pinch between two foreign offices - a Commerce Department import permit for the commodity, and an Environmental Department ban on importation of "waste".

1.4  Civil Law is my favorite.  In an early 2008 episode of NBC's Law and Order, a major retailer imported poison toothpaste.   Would a retailer be more afraid of prison, or of lawsuits?  The fact is that civil law - the enforcement of commercial contracts and agreements in court - is far more useful as an enforcement tool than "police".  Butcher shops are concerned about the USDA, but they are probably more concerned about getting sued by poisoned customers.   For ten years, I have advocated state "e-waste" processing contracts, and for people to purchase solely off of those contracts, because if the "ewaste" recycler doesn't do what the state contract directs them to do, you can call the Attorney General's office - a much easier enforcement prospect than the mythical "Basel Convention Police" or even EPA enforcement. is attempting to negotiate very large international contracts and purchase orders, where USA exporters ship used commodities UNDER WARRANTY.  If the buyer wants "tested working" (and many do, especially in Africa), then the USA exporter should have skin in the game and be forced to financially cover the products if they are rejected.  If, on the other hand, a major factory wants to buy CRTs with faulty power supplies (only the CRT or key function working), because they are going to refurbish the USA 110volt monitor for use in a 220volt country and don't need the "powers up" test because they are replacing the power supplies, then the tests for that purchase order - and its own "decision tree" - will be different.  The huge irony about the BAN decision tree is that if the USA recycler tests all the monitors and proves they are working, they can STILL be purchased by the same refurbisher, and the "working" USA 110v power supplies are removed just like the faulty ones would be.  If, as BAN has stated, the faulty power supply cannot be legally recycled in the country of import (another condition of WR3A civil contracts), then they have also barred exports from their own members of working CRTs to the same country.   And the other irony is that these "manufacturer takeback" operations are the most capable of reuse (much more technically capable than buyers of "tested working" equipment), and the OTHER IRONY is that groups like Electronic Takeback Campaign are advocating for manufacturer takeback as a solution - to this manufacturer takeback problem.

(Note:  some NGOs maintain that fluoride is a poison and that almost all toothpaste is therefore poisoned).

I am late to work, so I will pick up on the Part II - Good or Bad.  But just as a preview, let's start with this premise:


In Part III, we will cover an actual case of actual exports for recycling, attacked by BAN and the NRDC.  WR3A inspectors have just returned from the first visit to the Indonesian CRT factory attacked by BAN in February, which resulted in 9 containerloads of used CRTs being sent back to the port of Boston, resulting in an editorial in the Boston Globe which accused the exporter of being a bad recycler.

The bias should be in favor of trade.

The greatest injustice is using the law to keep justice at bay.

Dilbert Nails BAN

This Scott Adams Dilbert strip describes what the Basel Action Network is trying to do by substituting a "cell phone" testing procedure for a CRT procedure.

BAN's December 2009 presentation in Accra was designed to replace the Basel Secretariat's Annex IX B1110 (and footnotes) interpretation of used goods and cores with BAN's recommendation (present in their letters of protest to the Basel Secretariat) that "tested working" and "fully functional" should have been written into the convention instead.

BAN lost that argument, and is now trying to rewrite a decision tree so that there is no way out for a repairable CRT.  Those of us in the trade see Dilbert in action.

Here is the actual decision tree:

1) Does the CRT fit a valid, legal, commercial supply agreement, contract, or Purchase Order?

2) Does the quantity of the CRTs fit the maximum obligation or factory demand?

Then you test each one for each factory based on the PO.  Typically:

NO - Screen Burn
NO - R4 (Trinitron) CRTs
NO - Vacuum damage (requires LED or blacklight inspection)
NO - Heavy scratch

For the screen burn and heavy scratch, this is actually a cost based test.  You CAN sell screen burn, and factories CAN polish out scratches, but currently the demand for CRTs has pushed the price point down to where those repairs are not cost justified.  If the factory makes more money by breaking the monitor for copper than they would polishing it, you don't want to send it even if it is "polishable".

If a factory doesn't WANT 21" tubes (because they have too many in invetory, or no demand, or they have filled their quantity from a different order), then you cannot ship them.  It doesn't matter if they are tested working, it doesn't matter if they are new-in-box.  They don't want them.  You cannot ship something someone doesn't want.  In this way, WR3A's decision tree is stronger than BANs.  My factory has actually had to recycle CRTs which we had tested for a previous purchase order when the order expired and the factory we dealt with did not want them any more.

3) Does the factory reconciliation (post inspection) report verify the exporting country has the Quality Control in place to meet the purchase order?

4) Does the Agreement provide for proper recycling of

YES - Incidental breakage
YES - CRT glass recycling
YES - EHS Standards
YES - Replaced Parts, capacitors, boards, tuners, power supplies

As you can see, it is difficult to construct a decision tree which actually represents trade between two parties.  The end market and the supplier both have their own decision tree.  The supply chain has to fit both, like the blue and red lenses of 3D glasses.