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Legislative response to ODS illegal trade
1. 1 THE LEGISLATIVE RESPONSE: Actions of the Montreal Protocol in responseto illegal trade in ODS
2. The birth of the problem The problem of ODS smuggling was not foreseen when the Protocol was framed. Though entirely unintentional, there are elements of the Montreal Protocol that actually contributed to illegal trade. The staggered schedule of ODS phase-out gave rise to the problem. The 10 year grace-period given to Article 5 countries (developing nations) opened up tremendous potential for smuggling CFCs and other ODS into non-Article 5 (industrialised) countries after their 1996 phase-out deadlines. Demand for CFCs in non-Article 5 countries continued beyond the phase-out deadlines in 1996 due to the continued use of old CFC-dependent equipment such as air conditioners and refrigerators. While production continued in Article 5 countries and in non –Article 5 countries under certain exemptions 2
3. The birth of the problem Alternative chemicals for these appliances were originally more expensive than CFCs, which made cheaper, illegally traded substances attractive. A significant loophole also existed - recycled substances are not subject to the Protocols control measures (other than a requirement to report the quantities traded) – and it is difficult to distinguish between new and recycled substance. Further ODS -containing equipment is also not controlled. So the illegal trade flourished initially in developed countries and later in developing countries as the phase CFC phase out schedules progressed. 3
4. The Legislative response To combat these activities, measures were taken by the Parties to the Montreal Protocol to address illegal ODS trade in Article 5 countries. In 1997, a framework was adopted (through the Montreal Amendment) that required all parties to implement an import/export licensing system to track commerce and facilitate data collection. Such a licensing system should also allow for better crosschecking of information between importing and exporting countries 4
5. UNEP Assistance In order to facilitate the creation of these new licensing systems, UNEP conducted a series of regional training workshops for customs officers and representatives from other government agencies Almost all Article 5 countries have adopted licensing systems but these require good enforcement to make them effective 5
6. ‘Encouragement’ In addition there have been several Decisions which make non binding recommendations: 2002: Decision XIV/7 which encouraged all Parties to, inter alia,‘ consider means and continued efforts to monitor international transit trade’, and to ‘exchange information and intensify joint efforts to improve means of identification of ODS and prevention of illegal ODS traffic’ as well as to report cases of illegal trade to the secretariat. 2004: Decision XVI/33 called for a further study of the feasibility of a system for tracking trade in ODS and for improving communications between exporting and importing countries. 6
7. ‘Encouragement’ 2005: Decision XVII/16 encouraged Parties to adopt a series of activities designed to more closely monitor international trade in ODS, exchange information between themselves about exports and imports, and in general take actions designed to combat illegal trade. 2006: After commissioning a feasibility study in 2005 of a system for tracking trade in ODS and for improving communications between exporting and importing countries, the Parties decided against greater commitments to tackle illegal trade such as a tracking system of a system or prior informed consent. 7
8. Existing problems There is not formal systematic sharing of licence information and checking between importing and exporting countries prior to trade - other than between countries participating in the voluntary iPIC system. There are many significant data discrepancies between reported import and export data of trading partner countries (could be indicative of illegal trade) Possibility of illicit ODS production Weak transit controls Customs not routinely monitoring trade in HCFC alternatives such as HCFs which are frequently used to mis-declare ODS. ‘Loophole’ of trade in recycled ODS remains Illegal trade is not a high priority for enforcement agencies in most countries 8
9. Outlook While CFC production has now ceased, there is a genuine concern that as the phase-out of HCFCs begins to take hold in developing countries there will be a sharp spike in black market trade which would threaten compliance with the Montreal Protocol. 9
Editor's Notes
(when containing controlled substances in Annex A or Annex B as a refrigerant and/or in insulating material of the product)