Waltham Mass Illegal exports

In previous posts I've described how a normal, uniform load requires more than 70% reuse and repair value to break even.

Here is a story from last month explaining a way to send 75% junk.   Add a couple of restricted military high performance radar devices. 

I don't know this guy and don't know if he was involved in scrap, but one way of shipping guns and drugs and illegally copied rock and roll CDs is to bury them under scrap.  It doesn't necessarily have to be "e-scrap", and the crime is unrelated to "ewaste" exports, but this method would pay for a lot of really bad material to go a long distance.

ZHEN ZHOU WU,  a/k/a Alex Wu, faces a stiff prison sentence 
for espionage in the United States.
ZHEN ZHOU WU, a/k/a Alex Wu, faces a stiff prison sentence for espionage in the United States.
Following a five-week trial, a federal jury in Massachusetts found two Chinese nationals, one of whom resided in the United States, guilty of illegally conspiring to violate U.S. export laws and illegally exporting electronic equipment from the United States to China.
Several Chinese military entities were among those receiving the exported equipment.
The jury also convicted a Waltham, Massachusetts corporation, owned by one of the defendants, which procured the equipment from U.S. suppliers and then exported the goods to China, through Hong Kong. The exported equipment is used in electronic warfare, military radar, fire control, military guidance and control equipment, and satellite communications, including global positioning systems.
ZHEN ZHOU WU a/k/a Alex Wu, YUFENG WEI a/k/a Annie Wei, and CHITRON ELECTRONICS, INC. (“CHITRON-US”), were convicted of unlawfully exporting defense articles and Commerce controlled goods to China on numerous occasions between 2004 and 2007 and conspiring to violate U.S. export laws over a period of ten years. Wu and Wei were also both convicted of filing false shipping documents with the U.S. Department of Commerce. In addition, Wei was convicted of immigration fraud for presenting a U.S. Permanent Resident Card, which she knew had been procured by making false and fraudulent statements to immigration officials, to enter the country.
“For more than 10 years, this corporation and these defendants conspired to procure U.S. military products and other controlled electronic components for use in mainland China – for military radar, military satellite communications, and military guidance systems,” said U.S. Attorney Carmen Ortiz. “In doing so, these defendants violated U.S. export laws and compromised our national security. The result in this case was achieved through the exemplary investigative efforts of dedicated agents and prosecutors working with various law enforcement and other government agencies.”
“Today’s convictions demonstrate the importance of safeguarding America’s sensitive technology against illicit foreign procurement efforts. They also serve as a warning to those who seek to covertly obtain technological materials from the U.S. in order to advance military systems of their own. I applaud the many agents, analysts and prosecutors who helped bring about this successful outcome,” said David Kris, Assistant Attorney General for National Security.
Evidence presented at trial proved that the defendants illegally exported military electronic components, which are designated on the U.S. Munitions List, to mainland China, through Hong Kong, between April 2004 and June 2006. The defense articles the defendants illegally exported are primarily used in military phased array radar, electronic warfare, military guidance systems, and military satellite communications. Since 1990 the U.S. government has maintained an arms embargo against China that prohibits the export, re-export, or re-transfer of any defense article to China.
The defendants also illegally exported Commerce controlled electronics components to China that could be used in military applications in electronic warfare, military radar, satellite communications systems and space applications. These items could make a direct and significant contribution to weapons systems and war-fighting capabilities of U.S. adversaries, and cannot be exported to China without an export license from the U.S. Department of Commerce.
Wu founded and controlled CHITRON, including its headquarters in Shenzhen, China and its U.S. office located in Waltham, Massachusetts. While WU resided in China, WEI served as the manager of the U.S. office. Using CHITRON, Wu targeted Chinese military factories and military research institutes as customers of CHITRON, including numerous institutes of the China Electronics Technology Group Corporation (“CETC”), which is responsible for the procurement, development, and manufacture of electronics for the Chinese military. Indeed, Wu referred to Chinese military entities as CHITRON’s major customer since as early as 2002. WU hired an engineer at CHITRON’s Shenzhen office to work with Chinese military customers. By 2007, 25% of CHITRON’s sales were to Chinese military entities.
Correspondence between Wu, Wei and other CHITRON employees showed knowledge that U.S. export restricted parts were being shipped overseas to Chinese customers without having first obtained an export license. Wu instructed Wei and employees of CHITRON-US on numerous occasions to never tell U.S. companies that parts were going overseas. At Wu and Wei’s direction, U.S. companies were told to ship all ordered products to the CHITRON-US office located in Waltham, Massachusetts.
Upon receipt by CHITRON-US of the ordered products, the U.S. commodities were inspected by CHITRON-US employees and consolidated into packages, which were then exported to CHITRON’s Shenzhen office (located in Mainland China) using freight forwarders in Hong Kong, without the required export licenses from the Department of State and Department of Commerce.
“Today’s convictions represent an outstanding collaborative investigation and prosecution to bring to justice those who flout our export control laws and endanger our national security,” said John McKenna, Special Agent in Charge of the Commerce Department’s Boston Office of Export Enforcement. “Preventing dangerous U.S.-origin items from falling into the wrong hands is one of our top priorities at the Commerce Department,” he said.
“Today’s verdicts underscore the importance of ICE’s global investigative efforts aimed at disrupting and dismantling criminal organizations that profit from the illegal exportation of sensitive U.S. technology that threatens our national security,” said Matthew J. Etre, Acting Special Agent in Charge of ICE’s Office of Investigations in Boston.
Wu and Wei both face up to 20 years imprisonment to be followed by three years supervised release and a $1 million fine. After serving their sentence, both will face deportation to China.
CHITRON-US face up to a $1 million fine for each count in the Indictment charging the company with illegal export of U.S. Munitions List items and $500,000 for each count in the Indictment charging them with illegal export of Commerce controlled electronics. Sentencing is scheduled for August 17, 2010.

Electronics Export Decision Tree: Point of Dispute

Whether to meet world demand for digital communication via mining, recycling, or reuse...  It's an obvious question, one we dealt with in the 1970s, when the EPA solid waste hierarchy was established.  EPA followed this hierarchy in establishing the CRT Rule in 2007.   Since that time, EPA has become the whipping boy of environmental NGOs.
Now the crunch is on at the Basel Secretariat to form rules around exports of used electronics, which are either 75% good or 75% e-waste, depending on your source.   The decision tree is designed to remove the residue, the bad stuff, the "toxics along for the ride", and whatever the true statistic, we must now put pen to paper to improve on it.

This "decision tree" on the export of used electronics has become the newest point of dispute with some of my fellow environmentalists.  Here is the analysis comparing the results of some NGO's proposed decision tree rules with WR3As.
Some NGOs have placed certain questions in the pre-export test box, "Is the unit functional" and "If not functional, have all hazardous parts or components been removed?" which appear reasonable.  Unfortunately, the tests were not designed with any input from the overseas repair and reuse markets, and this is why they fail to meet demand or to utilize skills or knowledge at the point the question can be best answered.
Below, I have laid out in blue our responses to the NGO's proposed decision tree questions (and a derivative question inserted by OEMs to create their own loophole to the NGO tests).  Our alternative decision tree questions are in green.

"Is the unit tested working and fully functional?"  Four problems:

- False claims.  While NGOs have repeatedly stated that "repairable" can be claimed falsely, this "tested working" is the same.   Unless the unit is re-tested and confirmed (see conclusion) any claim can be made anywhere upstream (the generator office could say it was working, the truck driver could say it was working, the lazy employee could say it was working, etc.).  WR3A actually addresses false claims, this does not.

- Off Specification.  I have purchased tested working items which were waste because the export buyer did not have a legitimate use for the unit.  Trinitron tubes sent to a factory which cannot use them, 21" monitors which are already warehoused in oversupply by the market, obsolete interfaces common in Apple and Sun monitors, all of these can be working but still be waste.  I have a tested working Apple Macintosh SE at my office, I would not export it unless it was to a Japanese collector or for properly vetted recycling.

- No legal basis.  Unless the civil law contract between the commodity parties have specified ("specked") the units to be tested working, this has no legal basis.  The Basel Convention allows exports of CRTs for reuse, repair and refurbishment, and explicitly states that parties may consider these as commodities and not wastes.

- Does not addresss next problem, hazardous part removal.   The export buyer commonly makes an elective decision to upgrade parts, to replace working RAM with more modern RAM, to replace an NTSC tuner with a digital tuner, etc.  For a significant portion of tested working units sold the same upgrades will occur which BAN has objected to.

"Have all hazardous parts or components been removed?"

- This creates a costly routine which no USA recycler, E-Steward or not, will ever practice.   While it sounds reasonable, in practice it requires a "pre-repair" activity which would require the USA recycler to "pre-repair" the unit... diagnose which capacitor is failing (something the overseas repair people identify in a routine based on most likely to fail, second most likely to fail, third most likely to have failed, something they know from the make and model and design flaws of the individual unit).  You have to hire a reprairman to identify and remove the bad capacitor before you can export it to replace that capacitor.  A more simple task actually demonstrates the problem more clearly - A 110 volt power adapter will be replaced whether it is working or not in a 220 volt country.  No USA company is purchasing 220 volt power adapters before export. Our POs have us test for problems which are not repairable, we do that, but to find out what the repair IS going to be will take ten times longer. It's so ridiculous a requirement that only liars and shredders can ever succeed.  Single components are routinely identified and repaired in large scale remanufacturing operationsby the very same technicians who peform warranty repairs (sometimes as an outsource for USA OEMs!).  They are good at the one type of unit - monitors, TVs, printers, PCs - the type they buy, and it is different factories buying different things.  My small company would have to hire a repairman which can identify every type of repair on every export and remove the right piece (and not the wrong one, which might make things even worse).  This is a clear case of the perfect being the enemy of the good with unintended consequences.

- No successful model:  The companies which claim to do this are not doing it.  See above.

- Bad results:  The CRTs which have had boards removed (both useful and non-useful parts on the board shredded in the USA in order to avoid exporting the bad part of the board) have less casing protection and at the end of the line, a higher percentage of hazardous residue.  Just one CRT monitor whose neck is broken as a result of being exposed to vibration creates 30 pounds of leaded glass which is no longer repairable.  99 capacitors removed weigh less than one CRT tube, so even a 99%  success rate results in a net increase in hazardous substances transported. 

"Is it a part under warranty by an OEM?"   This test fails to recognize that all CRT monitors are outsourced, not a single CRT monitor has been assembled and manufactured by the brand on the label in 20 years.

We export to the exact same technician performing the exact same repair in the exact same factory.  It is a useless restraint of commerce to say a brand representative can export to Factory A and the generator or recycler cannot export the same monitor to the same place with the same result.  In fact, I maintain that Recyclers can do an even better job than OEMs of removing the "warranty" items which  cannot be repaired, and it is therefore likely that the OEM will sub out this work to a USA recycler in the first place.  And if the OEM subs out the work to the USA recycler to manage their warranty process, you have created a useless test where instead of examining the monitor to see if it is repairable, you are examining dates on paperwork to see if a warranty has expired.  Useless.  Environmentalists don't have time for useless regulations.

Those are the bad Decision Tree points.  What should we put in its place to reduce toxics along for the ride?
  1. Does the Unit meet the specifications of a Purchase Order Contract (requirements by the export market)?
  2. Does the Export Market Purchase Order specify a process which will likely result in proper repair and  recycling?
  3. Does the Exporter have results of past shipments which verify that parts from Units exported under this purchase order are likely to result in proper repair and recycling?
  4. Does the Exporter have staff and facility in place to properly remove units which will not result in proper repair and recycling?
  5. Do the Exporter and Importer maintain records demonstrating a mass balance of units removed and recycled, prior to or after export?

These tests, if ensconced in civil law contracts, meet the spirit of the Basel Convention and the law under Annex IX B1110.   Because they are simple, NGOs may distrust them, but until the NGOs roll up their sleeves and look under the hood, they should be taking my word for it, the same as they did nine years ago.

With the same lack of transparency described by Jeffrey Hollender (Chief Inspired Protagonist of Seventh Generation)  (who I met this week in Shelburne Vermont) these NGOs have declared themselves knowledgeable of technical processes which they have not visited or audited.  When asked for data on exports for repair and refurbishment, they have provided anecdotes and estimates.  Why do they continue to insist that 75% of CRTs exported become waste, when the economics themselves make that impossible, and when published scholarly work shows a) residue they are photographing was generated domestically in the non-OECD country, and b) 85% of imports are reused?

Which is better, a USA company which claims that every monitor they export works (based on their own $9 per hour employee report), and therefore they don't need to verify them?  Or a company which allows export for repair, but actually receives back reports on what was repaired, pays for recycling of any removed part, and makes changes and adjustments based on the reports?  What about the third company, which shreds every monitor and allows none to be repaired?

My theory is that the NGOs conflate trade with selfishness.  NGOs distrust the profit motive, and attribute the profit motive to my business, and therefore distrust the statistics I provide.   Yet the profit motive does little to explain what I am doing, the affection for the people I trade with does far more to explain how much risk and criticism I endure for so little profit.   The IRS corporate descriptions of NGOs and 501-c3s etc has become a byzantine nonsense, fair trade coffee and micro lending are today's tools for creation of goodness, and donations and white guilt are passe, but that's a tangent.

The NGOs are fighting a battle of word processors instead of looking at spreadsheets.   The facts show that the 100,000 CRT monitors we exported were the result of domestically recycling 300,000 non-acceptable CRTS, and that the fallout of the CRTs exported was identified and properly recycled (creating a recycling infrastructure overseas in the process).  Most of the recycling which occurred after my sea containers arrived in the country were from changes in market demand (massive swing in supply when China enforced against a Hong Kong importer and the CRT monitors were diverted to my buyers port).

The NGOs also confuse cost externalization with talent and demand imbalances.  If an Egyptian med school prefers refurbished heavy CRT monitors to flat screens, because the monitors are cheaper and less likely to be stolen and last longer, selling them those monitors is no more exploitative than selling food to a hungry person.

Exporting and shipping costs money, and if the unit is sold for more than the value of the scrap, it's a pretty good indicator that the final use for a majority of the container's contents was not scrap or disposal.  If an export market's purchase order specifies a test which eliminates one monitor and accepts another of the exact same make and model, the test cannot be based on scrap value or externalized costs.

When we have a process, and show the results of ou process (monitors removed in USA, CRT glass test in USA, monitors reused overseas, CRT glass test overseas), and SW says I have not done a "pulse test" or some other mcguffin which has never had the same data collected, it appears to me the main purpose of the proposed test is to say something different than I am saying and to disqualify my company.  If I'm wrong about that, it's simple, show me the results of the pulse test you say is necessary.  There was only one company doing it, they are in WR3A, and they showed me their results.  My results are superior (because I remove a higher percentage of CRTs in USA, I'm targeting the ones statistically likely to fail the pulse test).

Coolest in the World: Evolutionary Fondness

Multiple Choice Question:  Which phrase best describes Jean Frederic Fahiri "Fred" Somda?

a) six month trainee in demanufacturing at Good Point Recycling in Vermont?

b) former attorney general of Burkina Faso?

c) a man whose parents were both dead by the time he was 5, whose brother and sister went to work in the field so that he could attend school as the best hope of the family?

d) a man persecuted by the government in Africa for refusing to prosecute a political rival of the president?

e) a lawyer who has studied the Basel Convention (mostly in French) and written a paper prioritizing prosecution according to risk vs. benefit?  (hint:  drums of toxic waste dumped on Ivory Coast is high.  A capacitor replaced by a monitor repairman is low).

f) a man who lived with Mexican women trainees, a Puerto Rican school teacher, a Senegalese businessman, and a motormouthed slob?

g) all the above.

When I'm at a loss what to write about, I like to write about people I like.  I learned from this man not to get pissed off and take myself so seriously.  How can I get angry when I see this guy, who has seen his father, mother and best friend die before him, from monkey bites and snake bites and botched childbirth, and who works his hands off, taking a 15 minute lunch, reading law books the whole time?  Who left his wife, daughter and son alone, to crawl through the brush across the border, with an arrangement that only one 11 year old girl should know where he was hiding and carry the messages back to the family?

If the people I get mad at met the people I like, this would all be worked out.  That's the dream and goal of WR3A.   We want to show the people who are benefiting from fair trade programs, so that people know what will be sacrificed in a boycott, and so people can have faith who should be in charge of making sure the reuse of electronics does not become an excuse to export "E=waste".

In the big, big picture, 50,000 years from now, I want there to be more people like the people I like in the world.  The people I like are my people.  If each of us takes the time to promote and advocate for the people we most admire, even when those people are "out of style", we can execute evolutionary fondness.

Chile, Estonia, Israel and Slovenia join OECD

It had been ten years since OECD added any new countries to the "developed nation" club, even though development increased at the fastest pace in history.  Think about that.  More countries leapfrogged the environmental, economic and health standards that won OECD status in the 1990s, but fewer countries were added to the OECD roll.

After a decade of hiatus, OECD got busy again and so far in 2010 has admitted 4 new countries - Chile, Estonia and Israel and Solvenia.  Credit is given to the appointment of Senor Angel Gurria as OECD Secretary-General, though he has taken his time since 2006.  Gurria was the former Mexican finance minister, and the first secretary to come out of a country which was not originally OECD.  He announced at the outset his intention to get the BRICK countries (Brazil, Russia, India, China and Korea) into the OECD (South Korea is already a member).  OECD has created a list called "enhanced engagement countries" (Brazil, China, India, Indonesia, South Africa), a category which did not even exist when the Basel Convention was written.

Here is a link to the "roadmap" Slovenia followed to gain OECD status.  Bribery control, banking norms, "like mindedness", and other points on the checkslist govern entry.

There has been frustration on many fronts that the national boundaries which define OECD entities do not fit the path of organic development.   A country like Singapore which has very small boundaries has elected not to be drafted into OECD even though it has more engineers than Silicon Valley... but it is surrounded by Malaysia (a country it was once part of before the city-state went its separate way).   The other major cities of the Peninsula, Jahor Bahru, Kuala Lumpur, and Penang which remained with Malaysia are now tied to Malaysia's island of Borneo.  Kind of like having Billy Carter or Roger Clinton in your immediate family (and I make that reference with a nod to us southerners who know that Billy and Rogers exist in every family, and we love them, and we noticed that brothers and sisters don't get the same spotlight when a northerner is in office).

The OECD was originally formed to help member states develop, under the Marshall Plan after the destruction of World War II.  The slogan, "Whatever the weather we must move together" was a statement of trade, partnership, economic unity, and assistance in creating mutual standards.   It was an inclusive message.

The long and short of this post is that OECD will, sooner or later, make the Basel Action Network's objections to WR3A markets moot, since the Convention allows free trade within the OECD.   There may be some strange circumstances depending on the timing of incusion events.  For example, if OECD admits India and China into OECD before it admits Penang Malaysia (a place in the "developing world" where dodging BMW's in the parking lot is the primary danger to the workforce), the Basel Convention may steer our exports back to China, reversing the gains we made in setting up nicer factories in places with higher environmental and workplace standards.   OECD is also placing more and more emphasis on Southeast Asia. But whichever country is admitted first, or whether they are admitted in rapid succession or one fell swoop, it will put the Basel Action Network out of the "Asia" business.  BAN has increasingly focused on Africa, something I supported and recommended five years ago, and that may ironically be what saves BAN from limbo if China is admitted to OECD in the near future.

The main point is that on the date that a country becomes an OECD member, it is like the end of prohibition.   No one remembers or cares about the arguments whether it was legal to export for repair, if parts were replaced, if it was under warranty, if removed parts were properly recycled, etc... all those activities suddenly become irrelevant, and you can legally dump waste in the partner state and it's no one's business whether it was pollution or fair trade.   For fair trade to have a meaning, and for fair trade to be a condition of trade, it needs to be implemented in this narrow window when it can actually make an environmental difference.

The best hope of nations to meet their aspirations and one day become developed nations invited into the OECD is to get online.  Fair trade of reuse in electronics is a natural and necessary part of that development.  If we never trade with the developing world, it will forever be lesser developed.  If we take the fear of "e-waste" so seriously that we destroy in the USA billions of dollars in repairable and working computers, history will not show us to have been morally or environmentally superior.  History will remember those of us who were willing to get in the trenches and help our friends in the developing countries to drop their buckets where they are, and to lift as they climb.