TED Case Studies

EC Eco-Labelling

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          CASE NUMBER:         225  
          CASE MNEMONIC:      EULABEL
          CASE NAME:          EU Eco-Labelling Law

A.        IDENTIFICATION

1.        The Issue

A 1992 EU regulation, the European Council Regulation EEC 880/92 
(based upon a current German policy enacted in 1991) encourages
"environmentally-friendly" packaging of all products traded within
the EU, earning them an "eco-daisy" stamp of approval.  Some
manufacturers see the measure as discriminatory and a barrier to
free trade, especially in the wake of Germany's large-scale failure
to recycle its supposedly "green" packaging.  Despite large-scale
approval and nationwide enactment of the policy, the German policy
has proven too costly to be effective.  Others, however, see the
European policy as a helpful step toward an environmentally-sound
Union.

2.   Description

Representatives of the European Union (formerly European
Communities) have developed a plan (EU Packaging Waste Directive)
to standardize packaging of products sold within and across EU
according to environmentally-friendly guidelines, similar to
Germany's current "Grune Punkt," or Green Dot requirements.  The
EU's "Green Dot" is a daisy emblem, with one white petal for each
member state, a golden center, against a blue or green background,
a similar design to the circle of stars on the EU flag.  In order
to receive this eco-daisy stamp of approval, manufacturers must use
both recycled and recyclable material in their packaging carton or
container.

The issue has slipped from the focus of current EU attention since
its 1993 introduction, perhaps in conjunction with a general
European trend towards apathy about the environment especially in
the face of economic and political issues.  This slip in popularity
is marked by the losses of Green Parties in national and EU
Parliamentary elections, following strong showings in previous
elections and such previous (EU) European Commission initiatives as
the Community Eco-Management and Audit Scheme (EMAS, July 10, 1993)
and the Fifth Action Programme on the Environment, Towards
Sustainability (March, 1992). In response to the fall in
popularity, the EU has implemented a new award scheme on such
products as kitchen appliances, toilet paper, and soil additives. 
It is considering adding such items as detergent, paint,
stationery, shoes, pet products, and health and beauty aids.

If more manufacturers participated in the voluntary program, the
Label could substantially impact development of environmentally-
friendly merchandise.  As this participation is completely
voluntary, it can only be effective if producers see a market
advantage in joining.  Proponents argue that the stamp promotes the
bearer as a "clean producer" throughout the 15 EU member states,
and predict an increase in eco-label producers soon.

This measure directly impacts both waste handling and composition
within Europe, as it would limit the amount of packaging product
could have as well as their composing materials.  Because most
packaging material contains paper, the measure would also
indirectly affect the timber industry, making a more profound
impact in the long term.  The regulation would also alter the
process of product packaging, as it would require manufacturers to
change standard packaging to include either more recycled
materials, more recyclable materials, or less material altogether.
     
The long-term goals of the directive would require (1) 90% recovery
of packaging waste, (2) 60% recycling of each packaging waste
material, and that (3) only the residue of collection and sorting
processes would be forwarded to landfills.  The industry's three
primary methods of reducing packaging are (1) eliminating
unnecessary packaging, (2) lightweighting, and (3) concentrating
packages.

In 1990, former European Union Commissioner Carlo Ripa di Meana
submitted the proposal for an Eco-Label based on a new approach
using the market economy to encourage industry to produce
alternatives which are friendlier to the environment.  The Eco-
Label is based on the former West Germany's "Blue Angel" scheme,
which has been popular with industry and environmentally aware
German consumers and has helped bring about a reduction in
environmental damage caused by mass-market products.  Other
countries within the EU that previously had no labelling system
have widely preferred a community-wide system to separate national
systems.  Hence, the EU-wide labelling scheme was adopted March 23,
1992 for implementation in all 12 EU countries.  Countries that
already have national labelling programs will be able to continue
their labelling alongside the EU Eco-Label.

In order for the Eco-Label to be operational, ecological criteria
have been established in four steps for various product groups. 
These include: preparation of the criteria by neutral and
independent eco-labelling bodies established by the Member States;
consultation by the Commission of interest groups through a
Consultation Forum; opinion by a Regulatory Committee set out by
representatives of the Member States; and decision by the
Commission on the proposed criteria.  As of November 1994,
criteria have been adopted for washing machines, dishwashers,
kitchen rolls, toilet paper and soil improvers.

Additional product groups under consideration include writing
paper, textiles, detergents, paints, varnishes, batteries,
shampoos, shoes, cat litter, deodorants, and hairstyling agents. 
Products that are excluded from the Eco-Label program are food,
drinks and pharmaceuticals, as these products are under separate
regulations.  In addition, ecological criteria are defined on the
"cradle-to-grave" assessment (complete life cycle) of the
environmental impact of the product group.  In this regard, the
whole production process is analyzed, from the extraction of the
raw materials to the product's disposal after use.  These
comprehensive criteria are formulated so the consumers are certain
that each product awarded the Eco-Label has more than one
environmentally sound characteristic.  Furthermore, the Eco-Label
is expected to have a substantial impact on research and
development of clean technologoies that will result in an increased
number of environmentally friendly products.

As the Eco-Label is entirely voluntary, it is up to the
manufacturers to apply for the Eco-Label on their products.  Due to
increasing consumer awareness to environmental issues, the
incentive for manufacturers to use the Eco-Labels is very great. 
In order to obtain authorization to use the Eco-Label on products,
manufacturers must apply to the authorities in the country where
the product is manufactured and importers must consult the
authorities of the Member State into which the product is imported,
or, of the Member State where it was first put on the market.  The
decision whether the label will be awarded or not applies
throughout the 12 countries (15 countries as of January 1, 1995) of
the EU.  

Awarding the Eco-Label is based on ecological criteria that must be
adopted by the EU Commission after a Community-wide consideration
of proposals.  Each EU state must designate a body which is
responsible for receiving applications from manufacturers or
importers for the Eco-Label to be considered for their products. 
If the application is approved by the Member States, the applicant
must sign a contract for use of the Eco-Label during a specified
period, where fees for the application and annual use of the Eco-
Label are charged.  The final stage is the publication of the
details of the product group definitions and ecological criteria 
in the Official Journal of the European Community and the award of
the Eco-Label on products that meet the requirements.

3.   Related Cases:

     ECPACK case
     GERMPACK case
     GERMAUTO case
     ONTARIO case
     DANISH case
     ITALYBAG case

     Keyword Clusters

     (1): Trade Product                 =  PLASTic
     (2): Bio-geography                 =  Temperate [TEMP]
     (3): Environmental Problem         =  Waste Land [WASL]

4.   Draft Authors:  Mari-Anne Kocian and Maya Dragicevic

B.   LEGAL Cluster

5.   Discourse and Status: AGReement and COMPlete

After several attempts at resolution in the EU arena, this
contentious issue has at last been implemented as EU policy in EEC
regulation 880/92.  As it is voluntary, individual companies within
states may or may not comply.  In the background, the decades-long
environmental debate continues.  Northern European countries such
as Germany, the Netherlands and Sweden, with strong national
environmental policies and high government subsidies, oppose
Southern and Eastern European states, with generally weaker
economies and greater environmental problems.  The North argues
that extensive packaging clutters its natural lands and wastes
resources; the South and East retort that traditional packaging
helps sell their products and is more cost-effective than utilizing
recycling methods, evidenced by the failure of Germany's "Green
Dot" program. 

6.   Forum and Scope: EURCOM and REGION 

Although developed by the European Commission and ultimately
debated in the European Parliament, the relative weakness of the EU
superstructure leaves de facto power in the federal  legislatures 
of member states.  Because the action is to be taken as a
continent, however, the scope remains unequivocally regional. 
Since 1978, Germany has had its own successful Eco-Labelling
program that has been very popular both with manufacturers and
consumers alike.

8.   Decision Breadth:  15

The issue primarily affects the 15 states within the European
Union, but its more than 100 trading partners would also feel the
effects as they could export only "green"-packages to the EU if the
measure were implemented.

9.   Legal Standing:  TREATY

Because EU member states granted the organization unique legal
authority under the Single European Act (1987) and Treaty on
European Union (1992), EU policy must be recognized by member
states.  Such legitimacy may be debated at the regional and
national level, however, and as the Union lacks a powerful,
overreaching executive, its policy may sometimes be ignored by
member states with but minimal repercussion.  The provision of
individual state sovereignty also allows states the license to
reject EU policy and abstain from otherwise group-oriented schemes. 

C.   GEOGRAPHIC Filters

10.  Geography

     a.   Continental Domain:      EUROPE
     b.   Geographic Site:         Western Europe (WEUR]
     c.   Geographic Impact:       EURCOM

Because this issue considers trade and waste issues of all member
states, as well as the law of each particular country, the entire
region of Western Europe is the domain and geographic site
affected.  Similarly, the area of geographic impact may not be
limited to a single state but must include all 15, although each
state may be affected to varying degrees, depending on its current
common packaging and disposal techniques, as well as its potential
for landfill or incinerator facilities.

11.  Sub-National Factors:  NO

Sub-state factors play but little role in this debate; timber
producing provinces, for example, tend to prefer more paper
packaging as opposed to those from plastic-producing provinces.

12.  Type of Habitat: TEMPerate

Although the European geography varies to includes the balmy
southern coasts os Portugal and Spain as well as the Arctic regions
of northern Finland, it comprises by far a temperate climate, with
abundant forests of softwoods in non-urban areas. 

D.   TRADE Filters

13.  Type of Measure: LABELling

The "eco-daisy" concept deals primarily with products which are
traded among EU member states.  Currently the measure is voluntary,
but in the long-term, without the daisy seal states could not
export their wares to neighbors within the Union.

14.  Direct vs. Indirect: INDirect

Evidence of the effect of excess packaging on the environment would
not likely show for years, as forests would disappear and saturated
landfills would require new means or location for waste disposal. 
It would, however, more directly affect trade, as participation is
voluntary, relying on market forces.

15.  Relation of Measure to Impact 

     a.        Directly Related:        YES  WASTE
     b.        Indirectly Related:      NO
     c.        Not related:             NO
     d.        Process Related:         YES  PACKaging

16.  Trade Product Identification: PACKaging

Product types now covered include): washing machines, dishwashers,
kitchen rolls, toilet paper, and soil improvers.  Product types to
be covered include:  writing paper, insulation materials, textiles,
detergents, paints, shampoos, refrigerators, shoes, and anti-
perspirants.

17.  Economic Data

The packaging and timber industries employ almost a million
Europeans, and any substantial amendment to current packaging
standards could send the unemployment rate in these areas soaring
unless management implements careful redesignation of capital,
human and non-human.  Employment in other, recycling-oriented
industries could help absorb these excess workers but not
immediately.

18.  Degree of Competitive Impact: MEDIUM

Since the Eco-Label encourages innovation and technical
improvements in products, many countries are concerned that their
products will be denied and marked environmentally unsound.  For
instance, Canada's pulp and paper industry sees Eco-Labelling as a
non-tariff barrier against Canadian paper products, as the European
criteria favoring European-made products over imports were
developed without outside participation.  Likewise, several Latin
American countries are concerned that their products will be
unfairly denied because of the strict standards of the Eco-Label.

This measure would impact EU trade as product prices would rise
more abruptly at first, but then taper off as the paper and
packaging industries accepted the new standards, which have already
been implemented in several Northern European countries.

Countries worry that rules governing textiles will impede their
ability to export these items to the EU, especially those in South
Asia.  Not only will the substances in textiles need to be at a
certain standard, the way they are made would also be a
consideration.  Some countries see these new measures as a means of
buffetting domestic industries from imports that would be triggered
by the phasing-out of the Multi-Fiber Agreement.

19.  Industry Sector: MANY

This measure would affect several industries, including plastics
(drastically reduced) and shipping (a small reduction), the paper
industry would also be influenced.

20.  Exporter: and Importer:  MANY and EURCOM

V(E).     ENVIRONMENT Clusters
21.  Environmental Problem Type: Pollution Land [POLL]

Although fear of deforestation has been a motivation for the
measure, the most immediate impact would reveal (and has revealed)
itself in European landfills, especially in Eastern and Southern
Europe, which serve as dumping grounds for the wealthier, more
"environmentally conscious" (NIMBY) Western and Northern states. 
As these areas fill to capacity, they must be abandoned or else
found to serve some other purpose, reducing the square acreage of
land available for both humans and wildlife.

22.  Species Information

     Species:       MANY
     Genera:        MANY
     Diversity:     NA

The species affected by this measure include perhaps thousands of
various plants and animals now living in the ecosystems of European
landfills and forests.  They include woodland birds, mammals,
reptiles, amphibians, and other life forms less well-known but no
less vital to the delicate balance of each ecosystem.

23.  Impact and Effect:  MEDIUM and SCALE

By aiming primarily to reduce the cumulative amount of waste as
well as to redetermine its composition, this measure could have a
substantial effect on the environment; the resulting cost would
also quantitatively impact trade, although it would certainly halt
neither pollution nor trade flows.

24.  Urgency and Lifetime:  LOW and 100S of years


25.  Substitutes: RECYCLING

By  substituting recycled and recyclable materials for virgin and
nondegradable ones, the Europeans aim to cut landfill overflow as
well as deforestation.

F.   OTHER Factors

25.  Culture: YES

While West Europeans generally use fewer disposable products than
North Americans, purchasing glass-bottled beverages instead of
plastics, for example, they tend to buy many more items in
disposable packages than previously, buying eggs in paper cartons
instead of bringing their own buckets, for example.  Converting to
a culture with even disposable products and packages would involve
a sacrifice of convenience (lugging heavy glass jugs and jars home
from the supermarket, for example, and washing them out afterwards,
or driving the car less), something many consumers are not likely
to soon choose without immediate, tangible benefits.

26.  Human Rights:  NO

27.  Trans-Boundary Issues: NO

28.  Relevant Literature

Barnes, Pamela, "A new approach to protecting the environment:  The
European Union's environment management and audit regulation," 
Environmental Management & Health 1994, v5 n3, p 8-12.

Brinkhorst, L.J., Focus on environment and trade: EU and US
strategies in the nineties, Leiden, The Netherlands: Europa
Institute, Faculty of Law, Leiden University, 1994.

"Canada: Warning Sounded on Europe's 'Eco-Labelling'." Reuter
Textline. November 29, 1994. (Lexis/Nexis).

Clarke, Chris, "E is for environment...and legislating for
liability," ReActions 1994/1995,   A-Z of Risk Supplement, p 17-18.

"Commission Approves Three More Eco-Labels." The Reuters European
Community Report. November 15, 1994. (Lexis/Nexis).

Commission of the European Communities. Commission Information on
Eco-Labelling.      Brussels, January 1993.

Commission of the European Communities. Commission Information on
Eco-Labelling.  No. 3, Brussels, July 1993.

"Commission Proposes a Community Environmental Labelling System."
European Community Information Press Release. Brussels, November
29, 1990.

Community Eco-Label Award Scheme. European Community Environmental
Pamphlet.

Dewatripont, M, et al, European economic integration: a challenge
in a changing world, Amsterdam: North-Holland, 1994.

"Economies in Transition," Business America, Sep '94, v115n9, p 80-
86.

"Environment: EEC Minister Adopt the 'Green' Label." European
Report. No. 1729. December 14, 1991.

"European Environmental Bureau: To the Rescue of the European Eco-
Label." Europe Environment. September 27, 1994. (Lexis/Nexis).

European Commission (EC), "Environment Report," European Trends
Fourth Quarter 1993, n4, p 43-51. 

European Commission (EC), "Report of the Commission of the European
Communities to the United Nations Conference on Environment and
Development, Rio de Janeiro, June 1992," Luxembourg:  Office for
Official Publication of the European Communities, 1992. 

Henderson, David, "Green paths through the packaging maze,"
Purchasing & Supply Management, Jul/Aug 1994, p 30-31.

Hibbit, Chris, "Green reporting:  It's time the UK profession
responded," Accountancy, Oct '94, v114 n1214, p 97-98.

Hildebrandt, Eckart, "Structures and trends in the greening of
industrial relations in the countries of the EC, Skanhill, Co,
Dublin," Ireland: European Foundation for the Improvement of Living
and Working Conditions, 1992.

Lawrence, Daniel, "An acceptable package on waste?" International
Corporate Law, May '94, n35, p 19-25. 

"Legislation." Official Journal of the European Communities. Volume
35, April 11, 1992.

Leonard, Dick, "Eye on the EU," Europe, Dec '93/Jan '94, n332, p4.

Milmo, Sean, "Detergents '94: Europe - Green pressures," Chemical 
Marketing Reporter, 24 Jan '94, v245 n4, p SR26.
     
Myers, Paul, "Boycott threat over 'eco-friendly' label," Guardian,
12 May '94, 1, 9:1.

Palmer, John, "Bonn plans brisk EU programme," Guardian, 4 July
'94, 1, 8:7.

Rothery, Brian, BS 7750: "Implementing the Environment Management
Standard and the EC Eco-Management scheme," Aldershot, Hampshire,
UK: Gower Publishing Co, 1993.

Simons, Marlise. "A 'Green Label' for Europe's Consumer Goods." The
New York Times. A11. December 14, 1990.

"U.K.: Europe's 'Slow-Spin' Programme for Eco-Labelling - Not Fast
Enough Says John Gummer." UK Government Press Releases. September 
15, 1994. (Lexis/Nexis).

"U.K.: Government Stamps Out Fake Eco Claims." Reuter Textline.
November 3, 1994. (Lexis/Nexis).

Ward, Mike, and Kirschner, Elisabeth, "US and Europe regulate
plastics recycling," Chemical Week, 2 Mar '94, v154 n8, p 23.

Welford, Richard, "Improving corporate environmental performance,"
Environmental Management & Health 1994, v5n2, p 6-10. 

Wilmowsky, Peter von, "Civil liability for waste: a legal analysis
of the proposed EC directive," Frankfurt am Main: P. Lang, Inc.,
1992.