Processors and exporters expect the state to solve the problem of metal waste treatment – EU requires Serbia to remove export restrictions

When the Government of Greece unofficially asked Serbian authorities to amend the regulations pertaining to the export of non-hazardous waste to other countries, the news went largely unnoticed by the public.

In this request, the Ministry of Foreign Affairs of Greece said that the law violates the rules of free trade, as well as the Stabilization and Association Agreement.

It is this detail – the warning about non-compliance with the SAA that might prove to be the source of much more serious problems, having an impact far beyond the field of metal waste processing.

To clarify, not too long after the Greek ministry sent its request, the European Commission contacted Serbian authorities concerning the same problem, but it didn't stop there. At the same time, information appeared that the EC planned to start implementing specific customs duties on certain products from Serbia, primarily fruit and vegetables, as the countermeasure against the “delays” in the issuing of permits for the export of metal waste.

So far, this hasn't happened.

In the meantime, the Ministry of Environmental Protection of Serbia said that they were protecting Serbia's interests and that the SAA had not been violated. The state secretary at the ministry, Branislav Blazic, also said at the time that Serbia had iron processing operators and that the state was obliged to comply with the Law on Environmental Protection and entrust the nearest operator with the treatment of waste.

The ministry also decided at the time to approve several export permits for companies which deal in collection, processing and sale of metal waste in Serbia.

This, however, doesn't seem to have solved the problem.

In the recently published 2018 Annual Report on Serbia, the EC said that, in the coming year, Serbia should “urgently remove the recently imposed export restrictions on non-hazardous waste, which are not justified under the Stabilization and Association Agreement and which point to weaknesses in administrative capacity to implement trade policy”.

The eKapija portal has attempted to get a response from representatives of the Ministry of Environmental Protection regarding these recommendations of the EU and its members, as well as about further steps the state plans to make regarding the issue. However, even after more than a month of waiting and several promises, we didn't get any answers.

Waste is (not) merchandise?

Commenting on the reactions from Europe, Sremska Mitrovic-based rolling mill Metalfer says for our portal that “it comes down to strong lobbying of certain foreign companies whose main interest is to export steel waste from Serbia to their home countries, in which those companies have their own processing capacities”.

– They export waste as the raw material for their own production and import their finished products made of steel to Serbia – they say at Metalfer and explain that citing the SAA “fully misses the point, as the SAA pertains to the trade of goods and services, and waste is not a good. Instead, in Serbia and the EU, the handling of waste is regulated by the Law on Waste Management”.

As they add, the law in Serbia “clearly says that only the waste for which there are no processing capacities in the Republic of Serbia is exported”.

According to their information, annual processing capacities for steel waste in Serbia amount to nearly 800,000 tons, whereas around 500,000 tons of waste are generated each year in Serbia. This means, they explain, that “there's a considerable discrepancy with the installed processing capacities”.

On the other hand, the director of one of the big exporters, Inos Balkan, Iosif Vangelatos, says that Serbia needs to fully comply with the SAA and explains that “Serbian authorities have adopted new regulations, implementing non-tariff barriers on the export of non-hazardous waste”.

He adds that the regulations have been amended three times and that the possible conclusion is that “all this is being done in order to forbid the export of non-hazardous waste from Serbia”.

– Non-hazardous waste, such as metal, paper and plastic waste, is a secondary raw material and should be treated as any other type of goods, that is, without any kind of regulatory framework.

When asked what reason Serbia might have for not issuing exporting permits, Vangelatos answers that “the only true reason for such measures is protectionism and favoring of local industry”.

He sees the recent measure by the Ministry of Environmental Protection of authorizing several exporting permits as “a clear attempt of avoiding pressure by the European Commission, without really solving the issue”.

Vangelatos also reminds that the principles of free trade benefit the Serbian economy and that “no sector has ever become stronger and more competitive through measures of protectionism anywhere”.

– Eventually, companies which operate with secondary raw materials in Serbia will suffer damage due to these measures and lose access to the EU market.

A ban on export might cost Inos Balkan dearly. Vangelatos explains that the company exported 50,000 tons in 2016 and 70,000 tons in 2017, whereas the total value of the export amounted to EUR 23 million.

– With each month of the ban on export being in effect, we miss sales worth EUR 1.9 million – he points out and emphasizes that they “must continue exporting so that we could pay salaries and taxes, instead of laying off employees and ceasing operations in Serbia”.

Despite taking the opposite position on the issue, Metalfer is also experiencing similar financial troubles due to the unresolved issue of metal waste treatment. The company says for eKapija that they are currently working at below 50% of their processing capacities.

– If we managed to fill our processing capacities, we would employ at least another 100 workers and realize an increase in annual turnover of more than EUR 60 million – they say and add that “unlike exporters, processors of waste iron in Serbia regularly report their income and pay income taxes in the Republic of Serbia, while employing nearly six thousand workers who are paid regular salaries, and tax and contribution payments are also regular and considerable”.

They remind that waste processors contribute considerably to the GDP of the Republic of Serbia and that “they could increase their contribution even further if the Law on Waste Management was complied with and if the amounts that are exported would be processed in the existing capacities in Serbia instead”.

The amount of iron exported from Serbia annually in the past years is between 300,000 and 400,000 tons, whereas the difference between the average price of waste and the average price of finished steel products is around EUR 300 per ton. This shows that more than EUR 100 million was drained from Serbia each year due to the difference in prices.

M.V.

Metalfer d.o.o. Sremska Mitrovica

Inos-Balkan d.o.o. Valjevo

Ministarstvo zaštite životne sredine Republike Srbije

EUROPEAN COMMISSION Bruxelles

Vlada Republike Srbije

Vlada Grčke

European Commission

Government of Greece

Ministry of Foreign Affairs of Greece

metal waste processing

export of metal waste

metal waste treatment

metal waste

export of non hazardous waste

non hazardous waste

free trade

Stabilization and Association Agreement

SAA

permit for export of metal waste

Branislav Blazic

iron processing

iron

waste iron

Law on Environmental Protection

metal waste collection

export of steel waste

steel waste

steel

Law on Waste Management

waste management

waste

Iosif Vangelatos

secondary raw materials

production of steel

production of iron