Trade and the Environment: The Influence of the European Union's Environmental Directives on China...

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Issues & Studies© 45, no. 3 (September 2009): 165-209.

Trade and the Environment:The Influence of the European Union's

Environmental Directives on China

ARMIN IBITZ

Trade between the European Union and China has increased tre-mendously over the last decade, with the EU becoming China's largesttrading partner. However, free trade advocates and environmentalists areengaged in a debate about the impacts of trade on environmental regula-tion setting. China's integration with the world economy has triggeredconcerns that trade will put advanced nations under strong competitivepressure to lower their environmental standards in order to stay compe-titive (race to the bottom). In addition, developing nations will have noincentive to strengthen their environmental protection measures as thiswould carry costs and reduce their global competitiveness (stuck at thebottom). However, in the case of trade between the EU and China, theopposite can be observed. The EU has implemented tight environmentaldirectives, and China has upgraded its environmental regulatory system.This study analyzes the linkage of trade and environmental standardsbetween the two trading powers by adopting Putnam's two-level gamesapproach. The research is based on three case studies: the restriction ofhazardous substances (RoHS), car emissions standards, and the registra-tion, evaluation, authorization, and restriction of chemicals (REACH). Itprovides insights into how China is affected by these regulations and how

ARMIN IBITZ is a Ph.D. candidate at the Graduate Institute of China and Asia-Pacific Studies,National Sun Yat-sen University, and a lecturer at the Wenzao Ursuline College of ForeignLanguages, Kaohsiung, Taiwan. His research interests are in trade and the environment,and climate policy. He can be reached at <[email protected]>.

© Institute of International Relations, National Chengchi University, Taipei, Taiwan (ROC).

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論

it tries to utilize them to boost its economic development and enhance thequality of its environment.

KEYWORDS: China; environmental regulation; restriction of hazardoussubstances (RoHS); vehicle emissions standards; registration, evaluation,authorization, and restriction of chemicals (REACH).

* * *

The volume of trade between the European Union (EU) andChina has increased dramatically over the last decade. Chinais the EU's biggest source of imports, and the EU has become

China's largest trading partner. However, while the world is experiencingunprecedented growth in trade, environmental indicators have continued todeteriorate and new environmental challenges are emerging, e.g., climatechange, ozone depletion, increasing amounts of e-waste, and poisonoussubstances contained in products. Free trade advocates and environmen-talists are engaged in a heated debate about the impacts of trade on theenvironment.1 Among the many aspects of the discussion, influence onenvironmental regulation setting is a major point. From the point of viewof developing nations, strengthening environmental protection measuresmeans increasing production costs, and countries with lower standards maytherefore have no incentive to upgrade their environmental protectionlegislation as this is believed to hinder economic development. Upgradingstandards would result in a loss of competitiveness. Countries thereforefind themselves stuck at the bottom.2

1Jagdish Bhagwati, "The Case for Free Trade," Scientific American 269, no. 5 (November1993): 42-48; Gene M. Grossman and Alan B. Krueger, "Environmental Impacts of a NorthAmerican Free Trade Agreement," in The U.S.-Mexico Free Trade Agreement, ed. PeterM. Garber (Cambridge, Mass.: MIT Press, 1993), 13-56; Brian R. Copeland and Scott M.Taylor, "Trade, Growth, and the Environment," Journal of Economic Literature 42, no. 1(March 2004): 7-71; and David Vogel, "Environmental Regulation and Economic Integra-tion," Journal of International Economic Law 3, no. 2 (June 2000): 265-79.

2See Gareth Porter, "Trade Competition and Pollution Standards: Race to the Bottom orStuck at the Bottom?" Journal of Environment & Development 8, no. 2 (June 1999): 133-51;and Eric Neumayer, "Do Countries Fail to Raise Environmental Standards? An Evaluationof Policy Options Addressing Regulatory Chill," International Journal of Sustainable De-velopment 4, no. 3 (2001): 231-44.

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However, in the case of trade between the EU and China, we see theopposite effect. Over the last few decades the EU has gained a leadingglobal position in setting tight environmental standards. It has adopted aseries of environmental regulations to limit and reduce the risk of harmto health and to the environment from products. These directives re-garding product standards have had a serious impact on both EU andnon-EU countries. Since the EU is a major destination for Chinese ex-ports, linking market access and compliance with environmental re-quirements is a major concern for Chinese manufacturers and also forthe govern-ment. Contrary to predictions, we observe a process of Chinagradually strengthening its environmental standards. This is partly due tothe increased responsibilities that come from participation in various in-ternational environmental treaties, and partly due to its trade links withmarkets controlled by strict environmental standards. The present studyexplores the connection between three EU environmental directives andenvironmental regulation setting in China. These directives concern therestriction of hazardous substances (RoHS), car emissions standards, andthe registration, evaluation, authorization, and restriction of chemicals(REACH). To date, no research has been conducted linking the EU'senvironmental directives with environmental outcomes in its greatestsource of imports— China. With this research I hope to contribute tothe ongoing debate about the consequences of trade for environmentalregulation setting. Since the EU and China are the biggest trading powersin the world, and China, as an emerging economic power, has also turnedinto a major contributor to the world's pollution, a close investigationseems worthwhile.

This article is divided into four sections. The introduction is followedby a brief discussion of the theoretical background of the study. Thissection takes up the ongoing debate on trade and the environment, andprovides the basic framework for this research. Next, the paper discussesthe increasingly active role of the EU in environmental issues. As the eco-nomic and political integration process deepens, European environmentalpolicies are attracting more attention from producers worldwide. Thepaper then explores the relationship between international trade and the

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environment in the case of China. This section sheds light upon how andwhy Beijing has responded to the external standards. Finally, we draw con-clusions about the findings.

Trade, Development, and the Environment

Concerns about the environmental impacts of trade policies werealready being voiced in 1972 at the United Nations Conference on De-velopment and Environment in Stockholm. More attention was given tothe issue during the negotiations over the North American Free TradeAgreement (NAFTA) and the trade talks of GATT/WTO (General Agree-ment on Tariffs and Trade/World Trade Organization).3 However, dis-cussion about international trade and the environment is multi-faceted,incorporating many environmental aspects.4 Attempts have been madeto link trade and environmental conditions with respect to development.Under this assumption, the income level of a country plays an importantrole in its efforts to overcome environmental problems. The invertedU-shape of the environmental Kuznets curve (EKC) relates income andenvironmental quality.5 At relatively low per capita incomes, growth spursenvironmental deterioration.

3Bhagwati, "The Case for Free Trade," 42-48; Herman E. Daly, "The Perils of Free Trade,"Scientific American 269, no. 5 (November 1993): 50-56; Daniel C. Esty, Greening theGATT: Trade, Environment, and the Future (Washington, D.C.: Institute for InternationalEconomics, 1994); and Grossman and Krueger, "Environmental Impacts," 13-56.

4Some more important discussion points are developmental issues, environmental quality,consequences of differential environmental standards, environment measures as strategictrade policy, international pollution control, and climate change issues. See, among others:Werner Antweiler, Brian R. Copeland, and Scott M. Taylor, "Is Free Trade Good for the En-vironment?" American Economic Review 91, no. 4 (September 2001): 877-908; Jeffrey A.Frankel, "The Environment and Globalization," NBER Working Paper 10090, (2003), http: //ssrn.com/abstract=467558 (accessed April 22, 2008); and Copeland and Taylor, "Trade,Growth, and the Environment," 1-115.

5For a detailed discussion of the environmental Kuznets curve, see Gene M. Grossman andAlan B. Krueger, "Economic Growth and the Environment," Quarterly Journal of Eco-nomics 110, no. 2 (May 1995): 353-77.


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Thus, countries in the early stage of development and industrializa-tion face worsening environmental conditions. Improvements in environ-mental quality can be achieved by increased income levels, as rising in-come levels make environmental protection more important to people. Itcan be argued that economic developmental priorities are helpful, as theyspur needed transformation within society caused by value change, tech-nological change, improved efficiency, and institutional change. Anotherexplanation of the effects of the EKC is that at an early stage of develop-ment, countries are more engaged in the secondary sector where typicallypolluting industries are located. Later in development, countries movetoward the tertiary sector, toward "cleaner" production. Pollution levelsmay fall in this stage of development.6

6Ibid.

Figure 1The Environmental Kuznets Curve

Environmental degradation

Income per capita

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Competitiveness and Environmental Regulation

Regulatory responses to environmental challenges have importantimplications for nations engaging in trade.7 It is plausible to assume thatstrict environmental standards raise costs for companies. Since the de-veloped nations began implementing a system of environmental regulation,there has been discussion about the potential negative effects on compe-titiveness. Standard trade theory predicts that higher costs would putindustries in advanced nations at a disadvantage.8 Differences in environ-mental standards among trading nations may have effects on competition.In general, developed nations have high standards, while standards in de-veloping nations are less strict or troubled by enforcement.9 Trade maylead to specialization in pollution-intensive sectors in countries with lowstandards.10 In this case, free trade would contribute to the worsening ofenvironmental quality as specialization is met with lower environmentalstandards. Other countries may benefit as they become cleaner and as im-ports substitute domestic pollution. The overall environmental outcome isthus lowered.

Free trade opponents fear that differences in environmental standardsamong nations may trigger the relocation of industries toward countrieswith lower standards, creating pollution havens. However, empirical re-

7See Adam B. Jaffe, Steven R. Peterson, Paul R. Portney, and Robert N. Stavins, "Environ-mental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evi-dence Tell Us?" Journal of Economic Literature 33, no. 1 (March 1995): 132-63; OECD,Environmental Policies and Industrial Competitiveness (Paris: OECD, 1993); William J.Baumol and Wallace E. Oates, The Theory of Environmental Policy (Cambridge, UK:Cambridge University Press, 1988), 257-83; and Jagdhish Bhagwati and Robert E. Hudec,eds., Fair Trade and Harmonization: Economic Analysis (Cambridge, Mass.: MIT Press:1996).

8In the negotiations for NAFTA one major fear was that stringent environmental regulationswould drive U.S. manufacturers to move abroad.

9For more about environmental standards and North-South trade, see Graciela Chichilnisky,"North-South Trade and the Global Environment," American Economic Review 84, no. 4(September 1994): 851-74.

10E.g., see Matthew A. Cole, Antony J. Rayner, and J. M. Bates, "Trade Liberalization andthe Environment: The Case of the Uruguay Round," World Economy 21, no. 3 (May 1998):337-47.


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search does not support the view that pollution havens are a significantphenomenon.11 One explanation is the relatively low share of environmen-tal compliance costs compared to other costs, such as labor. The role ofenvironmental standards in the relocation decisions of companies seems tobe overestimated.12 Other factors play a much more crucial role in decidingthe location of companies.13

However, regarding competitiveness and environmental regulation,there is another point of view. The Porter hypothesis14 assumes that if agovernment imposes strict environmental regulations on an industry, thismay provide the industry with an incentive to undertake environmentalinnovation, thereby enhancing its competitive advantage and promotingeconomic performance. Companies confronted with strict legislation arepushed to make innovations, and therefore become more competitive andflexible, allowing them to react to market changes. Benefits can be gainedfor early movers exploring new markets.15 In the context of trade, environ-

11For a more detailed discussion see Jaffe, Peterson, Portney, and Stavins, "EnvironmentalRegulation and the Competitiveness of U.S. Manufacturing," 157-59; James A Tobey, "TheEffects of Domestic Environmental Policies on Patterns of World Trade: An EmpiricalTest," Kyklos 43, no. 2 (1990): 191-209; and Lyuba Zarsky, "Havens, Halos and Spaghetti:Untangling the Relationship between FDI and the Environment," in Foreign Direct Invest-ment and the Environment (Paris: OECD Publishing, 1999), 47-73.

12Muthukumara Mani and David Wheeler, "In Search of Pollution Havens? Dirty Industry inthe World Economy, 1960-1995," Journal of Environment and Development 7, no. 3 (Sep-tember1998): 215-47; and Scott Barrett, "Strategic Environmental Policy and InternationalTrade," Journal of Public Economics 54, no. 3 (July 1994): 325-38.

13Neumayer, "Do Countries Fail to Raise Environmental Standards?" 231-44; Vogel, "En-vironmental Regulation and Economic Integration," 1-15; Tobey, "The Effects of DomesticEnvironmental Policies," 191-206; and Jaffe, Peterson, Portney and Stavins, "Environmen-tal Regulation and the Competitiveness of U.S. Manufacturing," 158.

14See Michael E. Porter and Claas van der Linde, "Green and Competitive: Ending the Stale-mate," Harvard Business Review 73, no. 5 (September/October 1995): 120-34. Accordingto Porter, environmental policies can lead to improved competitiveness for two reasons.First, more stringent environmental regulations can increase pressure on a company to

work more efficiently. This might come about as a result of awareness of previously un-known inefficiencies. Second, more stringent regulations can spur innovation in com-panies. These effects may not only offset the costs implied by the regulation, but also en-hance the firm's overall competitiveness.

15In the 1980s Germany applied stricter emissions standards on automobiles. German car-makers reacted by developing lighter and more fuel-efficient cars, whereas other Europeancountries lacked strict standards. After having developed advanced clean technologies, theGerman automotive industry formed a coalition with the greens to push for strict standards

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mental standard setting also needs to be considered on an internationallevel.

Race to the Bottom ...

Governments are concerned about the international competitivenessof their industries. Several studies focus on the implications of trade forregulatory environmental policies.16 Environmental groups often arguethat in the process of economic globalization and integration, nation-statesmay come under pressure to lower their environmental standards in orderto increase the competitiveness of local industries. It is feared that com-petitive deregulation could start a downward trend in environmental stand-ards.17 Free capital movement and international trade create incentives toset environmental standards below the optimum level, or even to start arace to the bottom to attract or retain capital.18 Trade liberalization leads toa downward trend when states underbid each other by lowering taxes andreducing the stringency of their environmental regulations, and in the endthe last remaining states are forced to abandon their protection of the en-vironment.19 However, the literature includes several studies denying the

in the knowledge that this would put them in a favorable position in relation to foreign carmanufacturers, which had not developed appropriate technologies at that time. The advan-tage possessed by German carmakers was therefore derived from the early application ofstrict regulations.

16See Bhagwati and Hudec, "Fair Trade and Harmonization," 95-174; and Baumol and Oates,"The Theory of Environmental Policy," 155-296.

17Håkan Nordström and Scott Vaughan, Special Studies 4: Trade and Environment (Geneva:WTO Publications, 1999), http://www.wto.org/english/res_e/booksp_e/special_study_4_e.pdf (accessed November 10, 2008); Bhagwati and Hudec, "Fair Trade and Harmonization,"62; and Daly, "The Perils of Free Trade," 50.

18See: Wallace E. Oates and Robert M. Schwab, "Economic Competition among Jurisdic-tions: Efficiency Enhancing or Distortion Inducing?" Journal of Public Economics 35, no.3 (April 1988): 333-54.

19Jagdish Bhagwati and Thirukodikaval N. Srinivasan, "Trade and the Environment: DoesEnvironmental Diversity Detract from the Case of Free Trade?" in Fair Trade and Har-monization: Prerequisites for Free Trade? ed. Jagdish Bhagwati and Robert E. Hudec(Cambridge, Mass.: MIT-Press, 1997), 159-232.


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existence of such a race to the bottom.20 A less pessimistic outlook is thatgovernments are caught in a regulatory chill in which national regulatorsare reluctant to adopt new environmental regulations, and progress in theupgrading of environmental legislation comes to a halt.

Developing economies, fearing loss of competitiveness, would alsohave no incentive to tighten environmental regulations (stuck at the bot-tom).21 For developing nations, both economic development and povertyalleviation are simply more urgent and important than environmentalissues. Therefore competitiveness concerns might be used as an argumentfor both developed and developing nations not to strengthen their environ-mental regulations.22

... Or Trade-Up?

Trade can provide incentives to upgrade environmental standards. Inthe expectation of gaining access to a large export market, companies arewilling to comply with higher international standards and to adopt stricterenvironmental measures.23 Therefore, engaging with nations with highstandards may lead to a trade-up. The key reason for stringent standards isto enable exporters to meet the higher environmental requirements of im-

20See, for example: David Wheeler, "Racing to the Bottom? Foreign Investment and AirPollution in Developing Countries," Journal of Environment and Development 10, no. 3(September 2001): 225-45; Daniel W. Drezner, "Globalization and Policy Convergence,"International Studies Review 3, no. 1 (Spring 2001): 53-78; and Tobey, "The Effects ofDomestic Environmental Policies," 205.

21See Porter, "Trade Competition and Pollution Standards," 133-47.22Daniel C. Esty and Damien Geradin, "Environmental Protection and International Com-

petitiveness: A Conceptual Framework," Journal of World Trade 32, no. 3 (June 1998):5-47.

23David Vogel, Trading Up: Consumer and Environmental Regulation in a Global Economy(Cambridge, Mass.: Harvard University Press, 1995); Ronie Garcia-Johnson, ExportingEnvironmentalism: U.S. Multinational Chemical Corporations in Brazil and Mexico(Cambridge, Mass.: MIT-Press, 2000); and Aseem Prakash and Matthew Potoski, "Racingto the Bottom? Trade, Environmental Governance, and ISO 14001," American Journal ofPolitical Science 50, no. 2 (April 2006): 350-64.

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porting nations.24 Studies have revealed that multinationals often play animportant role, as they tend to adopt the same standards in different produc-tion locations, since adopting only one standard— namely the highest—minimizes transaction costs.25 The size of the market and the transactioncosts of production push firms to adjust their production to the regulatoryrequirements of their destination markets. Governments can use regulatorycompetition to encourage domestic companies to undertake innovation,explore new opportunities, and reap benefits as first-movers.26

The European Union as Global Standard Setter

By their very nature, industries and business actors do not bother toomuch about environmental issues, such as energy efficiency, hazardoussubstances, waste prevention, or contribution to climate change.27 It isnational, supranational, and non-governmental bodies that must interveneand apply environmental protection measures. While in the beginning theEU and its predecessors were concerned solely with economic issues, aspolitical integration intensified its policy competencies were expanded.In order to adequately address trans-boundary ecological threats, member-states agreed to hand over limited governing and enforcement authorityto EU agencies in areas such as food safety standards, transport, telecom-munications, and environmental regulation.28 Since the 1970s, the EU hasearned credit as an important environmental actor. Now, with twenty-seven member-states, the EU accounts for a considerable power in trade.Its market of nearly 500 million people and its openness to trade have made

24Vogel, "Environmental Regulation and Economic Integration," 269-71.25David P. Angel and Michael T. Rock, "Global Standards and the Environmental Perform-

ance of Industry," Environment and Planning A 37, no. 11 (November 2005): 1903-18.26Porter and van der Linde, "Green and Competitive ," 120-34; and Vogel, Trading Up,

556-71.27Unless there are incentives for them to do so.28Anthony R. Zito, "The European Union as an Environmental Leader in a Global Environ-

ment," Globalizations 2, no. 3 (December 2005): 363-75.


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it one of the most powerful trading units in the world.29 The EU also has ahigh profile as a civilian power on the world stage where the promotion ofmultilateral measures and norms is concerned. Much of the EU's desire topresent itself as a normative power is based on its commitment to globalenvironmental issues. The former president of the Commission, RomanoProdi, called for a European Union that aims "to become a global civilpower at the service of sustainable global development."30 Adopting com-mon policies for its single market has provided the EU with an opportunityto promote its environmental values, not only among its members butalso globally. In the context of international trade, tighter environmentalregulations applied in EU markets require adjustments on the supply side.Environmental standards are used as a decisive factor in product marketaccess. Changes in the EU's environmental legislation pressure manufac-turers and exporters to comply with the new requirements. Non-compli-ance means that products can no longer be sold in that market. Thereforethe EU is also a power through trade, linking market access to environmen-tal requirements.31 The EU's role as an external trade actor and a promoterof environmental protection thus shapes global environmental outcomes.32

Directives that derive from rising environmental awareness within the in-dustrialized countries are often perceived as "green barriers" by the de-veloping world, that is, a new type of non-tariff trade barrier that is in linewith the rules of the WTO.

One of the most prominent environmental regulations dates back tothe 1970s. European emissions standards define the limits for exhaustemissions for new vehicles sold in EU markets. The basic directive hasbeen amended a number of times to spur technological innovation in the

29European Union, http://europa.eu/abc/index_en.htm (accessed March 10, 2008).30http://europa.eu/rapid/pressReleasesAction.do? reference=SPEECH/00/41&format=

HTML&aged=1&language=EN&guiLanguage=en (accessed March 12, 2008).31Sophie Meunier and Kalypso Nicolaïdis, "The European Union as a Conflicted Trade

Power," Journal of European Public Policy 13, no. 6 (September 2006): 906-25.32Alberta M. Sbragia and Chad Damro, "The Changing Role of the European Union in Inter-

national Environmental Politics: Institution Building and the Politics of Climate Change,"Environment and Planning C: Government and Policy 17, no. 1 (1999): 53-68.

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automobile sector and to address the urgent matter of climate change. An-other influential directive is the Packaging Directive (1994), mainly aimedat reducing the impact of packaging and packaging waste on the environ-ment. Increasing economic interdependence among economies, the in-volvement in trade agreements, and established global supply chains allmake it more complicated to trace the source of environmental problems.Concerns about safety and the environmental impact of products importedinto the EU market have initiated a wave of product-related environmentalregulations. The fifth and sixth European Environmental Action Plansemphasize greater efforts to reduce hazardous waste and increase the pro-tection of human health.33 Each product impacts the environment in someway through its production, use, or disposal. European environmentalpolicy tries to reduce the use of resources, limit the environmental impactof waste, and extend the responsibilities of producers.34 In recent decadeslife-cycle assessments of products have become a central focus of environ-mental regulation.35 The embedding of integrated product policy is aimedat minimizing the environmental impact of goods by looking at all phasesof a product's life, and taking action where it is most effective.36 The End-of-Life Vehicles Directive (2000) is aimed at reducing the environmentalimpact of discarded vehicles and increasing the recycling and reuse of com-ponents. Some other regulations focus on waste issues. As most discardedelectronic and electrical waste in the EU was being dumped in landfill, andconcerns about the risks of this were increasing globally, the Union adoptedtwo more environmental regulations intended to reduce potential harm

33European Commission, "The Sixth Environment Action Programme of the European Com-munity 2002-2012," October 29, 2008, http://ec.europa.eu/environment/newprg/archives.htm (accessed January 2, 2008).

34The term "extended producer responsibility" was first introduced by Lindhqvist in 1990.See, for example: Thomas Lindhqvist, "Extended Producer Responsibility in Cleaner Pro-duction," Doctoral Dissertation (Lund University: The International Institute for IndustrialEnvironmental Economics, May 2000), http://www.iiiee.lu.se/Publication.nsf/$webAll/AE92DEB3FC71AEE0C1256C1A003E631F/ $ FILE/lindhqvist.pdf (accessed February12, 2008).

35Ibid.36European Commission, "Integrated Product Policy (IPP)," June 3, 2008, http://ec.europa

.eu/environment/ipp/ (accessed February 15, 2007).


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from the heavy metals and flame retardants contained in electrical andelectronic components. The first, restricting the use of hazardous sub-stances in electrical and electronic equipment (RoHS; 2003), and thesecond, addressing the disposal of waste electrical and electronic equip-ment (WEEE-directive; 2005), were aimed at preventing waste electricaland electronic equipment from being dumped in landfill, and at en-couraging reuse and recycling.37 After the EU implemented its RoHSdirective, other states followed suit with similar regulations on hazardoussubstances.38 In 2005, the EU passed the Eco-Design of Energy-UsingProducts Directive (EuP).39 This encourages manufacturers to design prod-ucts with consideration for their environmental impact throughout theirlife cycle. In addition, manufacturers face further challenges from theregulation on the Registration, Evaluation, Authorization, and Restrictionof Chemicals (REACH; 2006) which establishes a framework for regulat-ing and restricting chemicals within the European Union. Although theserepresent only some of the environmental regulations adopted by theEU, they demonstrate that product-based environmental standards are in-creasingly receiving attention. These three cases (RoHS, car emissionsstandards, and REACH) have been selected with a view to obtaining newand interesting insights, as well as to achieving the aims of this study.Selecting cases that affect different industrial sectors seems to be useful inilluminating the various impacts of these regulations. The selected casesall affect EU as well as non-EU manufacturers, apply to substantially im-portant industrial sectors in China, and address issues which have thepotential to do great harm to the global environment.40

37European Commission, "Waste Electrical and Electronic Equipment," December 3, 2008,http://ec.europa.eu/environment/waste/weee/ (accessed June 2, 2006).

38Among them are California , South Korea, Japan, Norway, Australia, Taiwan, and China.For more see also Sunil Herat, "Green Electronics through Legislation and Lead FreeSoldering," Clean – Soil, Air, Water 36, no. 2 (2008): 145-51.

39Ibid.40The EuP-directive has not been chosen due to the absence of directly binding requirements

for specific products. The End-of-Life Vehicles Directive addresses EU member-states andhas little impact on non-EU countries. The WEEE directive requires EU member-states totranspose its provisions into national law and the implementation of its measures varies

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China, Trade, and the Environment

Over the past fifteen years, China's exports have grown tenfold, ex-ceeding the threefold increase in world trade as a whole during the sameperiod.41 China's trade-to-GDP ratio of around 71 percent demonstrates asignificant openness toward the world economy. Foreign trade contributessignificantly to China's economic development and Chinese producers arehighly dependent on foreign markets.42 Bilateral trade between China andthe EU almost doubled between 2003 and 2007. China is the EU's secondlargest trading partner and its biggest source of imports, while the EU isChina's largest trading partner.43 In 2007, EU member-states importedabout 230.8 billion-worth of goods from China and exports to Chinaadded up to about 71.6 billion.44

Reckless economic development has led to a huge ecological crisisin China. Air pollution, for example, is linked to growing wealth and eco-nomic growth. Automobiles are becoming more affordable and thereforenumerous, and thus car emissions have become a large contributor to airpollution. Chinese urban areas rank top among the world's most pollutedcities, and heavy air pollution causes a high death toll. Economic develop-ment, growth in wealth, and changes in lifestyle in rural China, wherepeople lack awareness of potentially hazardous and poisonous substances,have led to terrifying levels of municipal waste and pollution. Improperlyhandled waste endangers human health and threatens ecosystems. Waste

greatly among member-states. However, I do not claim that other cases would not be ap-propriate for analysis, but given the scope of this study it seems reasonable to limit theanalysis to three cases, while providing a comprehensive in-depth view of the issue.

41Mary Amiti and Caroline Freund, "China's Export Boom," Finance and Development 44,no. 3 (2007), downloadable at http://www.imf.org/external/pubs/ft/fandd/2007/09/amiti.htm (accessed June 3, 2008).

42World Trade Organization, Statistics Database, October 2008, http://stat.wto.org/CountryProfile/WSDBCountryPFView.aspx? Language=F&Country=CN (accessed January 8,2009).

43European Commission, "Bilateral Trade Relations – China," March 2009, http://ec.europa.eu/trade/issues/bilateral/countries/china/index_en.htm (accessed June 13, 2008).

44Ibid.


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from electronic and electrical equipment (EEE) has become a massiveenvironmental problem. Since 2003, China has generated over 1 milliontons of electronic waste (e-waste) per year, including 5 million TV sets, 4million refrigerators, 5 million washing machines, 5 million computers,and tens of millions of mobile phones.45 And trash will continue to pileup: it is estimated that by 2010 there will be 178 million new computerusers in China alone.46 Problems from e-waste also have an internationaldimension. China is an important destination for e-waste from other coun-tries. Although the Basel Convention on the Control of TransboundaryMovements of Hazardous Wastes and Their Disposal47 curbs hazardouswaste exports, and China has put an explicit ban on imports of second-handEEE and e-waste, large amounts still find their way to China for rebuilding,renewing, re-exporting, and recycling.48 Soaring market prices due torapid economic development and the urgent need for raw materials haveprovided new opportunities for people to make a living. A major part ofe-waste in China is collected and recycled by an extensive informal sector.Studies show that the recycling of electronic and electrical garbage con-tributes substantially to the incomes of residents in towns such as Guiyu, inGuangdong Province (廣東省貴嶼鎮), at the cost of damage to health andthe environment.49 Inadequate methods of retrieving components and re-

45"Woguo meinian chansheng dianzi feiwu yue 111 wan dun" (China is producing about1,110,000 tons of e-waste every year), Xinhua, September 24, 2005, http://news.xinhuanet.com/it/2005-09/24/content_3536487.htm.

46Yingling Liu, "China's E-waste Problem: Facing Up to the Challenge," Basel Action Net-work , May 4, 2006, http://www.ban.org/ban_news/2006/060504_facing_challenge.html(accessed February 10, 2009).

47Basel Convention on the Control of Transboundary Movements of Hazardous Wastes andTheir Disposal, http://www.basel.int/ (accessed August 25, 2009).

48For further insights into the problem of e-waste see, for example: Takayoshi Shinkumaand Nguyen Thi Minh Huong, "The Flow of E-waste Materia l in the Asian Region and aReconsideration of International Trade Policies on E-waste," Environmental Impact As-sessment Review 29, no. 1 (January 2009): 25-31; and Rolf Widmer, Heidi Oswald-Krapf,Deepali Sinha-Khetriwal, Max Schnellmann, and Heinz Böni, "Global Perspectives onE-Waste," Environmental Impact Assessment Review 25, no. 5 (July 2005): 436-58.

49Charlotte Hicks, Rolf Dietmar and Martin Eugster, "The Recycling and Disposal of Elec-trical and Electronic Waste in China— Legislative and Market Responses," EnvironmentalImpact Assessment Review 25, no. 5 (July 2005): 459-71.

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sources lead to pollution of the water, land, and air. High concentrations ofheavy metals may be located in places with improper recycling activities,employing practices such as the open incineration of wires to retrievecopper, the de-soldering of IC boards, the unprofessional opening of printertoner cartridges, and the use of acid baths to recover gold from chips andthe washing of residue into nearby rivers. Parts that cannot be recycled areburned in the open, releasing additional toxins, or are simply dumped inlandfill.50 Although China banned imports of e-waste in 2000, a reportfrom the Basel Action Network and the Silicon Valley Toxics Coalition es-timated that 80 percent of the world's e-trash is exported to Asia, 90 percentof it heading for China. The problem of e-waste can only be solved by strictenforcement of environmental regulations, and the introduction of "green"product designs. The overall costs of environmental degradation are high.The World Bank estimates that the cost of environmental damage is equalto about 12 percent of China's GDP. However, the Chinese leadership isfully aware of the problems, and is paying increasing attention to domesticenvironmental issues.

EU Standards and the Implications for China

The present article attempts to explain the observed impact of theimplementation of EU environmental trade measures on the setting ofenvironmental regulations in China. In order to comprehensively explorethe dynamics of the developments, I draw on Putnam's two-level games51

approach which offers a useful framework for analyzing the linkage of

50Kevin Brigden, Iryna Labunska, David Santillo, Michelle Allsopp, "Recycling of Elec-tronic Wastes in China and India: Workplace and Environmental Contamination," Green-peace, August 2005, http://www.greenpeace.org/raw/content/china/en/press/reports/recycling-of-electronic-wastes.pdf (accessed September 12, 2008).

51Robert D. Putnam, "Diplomacy and Domestic Politics: The Logic of Two-Level Games,"in Double-Edged Diplomacy: International Bargaining and Domestic Politics ed. Peter B.Evans, Harold K. Jacobson, and Robert D. Putnam (Berkeley, Calif.: University of Califor-nia Press, 1993), 431-68.


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domestic politics and international bargaining. National governments can-not be seen as the sole decision-makers, since domestic constituents at thenational level— such as parliamentary groups, private sector associations,or political party groups— are involved in the decision-making processes.Governments are therefore confronted with the challenge of playing at twoboards at the same time, the international level and the domestic level.52

Domestic win-sets play a key role in negotiation outcomes. A win-set re-presents the outcomes that a country would be able to ratify domestically.Each country has its own win-set, and to make an agreement possible, win-sets must overlap. The size and shape of the win-set are important for thesuccess or failure of international negotiations. Larger win-sets increasethe probability of overlapping win-sets, whereas smaller win-sets increasethe risk that agreement will fail. The larger the win-set of a negotiator,meaning the more accords that would be approved domestically, theweaker its bargaining position, as an outcome further from the preferredposition is also acceptable. A negotiator with a smaller win-set may be ableto negotiate greater concessions from a negotiator with a greater win-set, asthe first negotiator can claim "I would like to accept your proposal, butI could never get it through at home."53 Since win-sets are so crucial fornegotiations, we need to explore the factors that determine and shape win-sets.54 The first is a combination of domestic preferences and coalitions.Domestic actors are supposed to act according to their political and eco-nomic interests, and groups can form coalitions according to their interests.These groups can try to propagate their interests, thus leading to a reductionin the size of the win-set. However, the degree to which domestic interestgroups will risk a no-agreement may differ.55 A domestic actor's low stakein a failing agreement means there is less incentive for it to agree upon it.Trade-dependent nations suffer higher costs from a no-agreement andtherefore they have larger win-sets compared with more self-sufficient

52Ibid.53Ibid., 441-52.54Ibid.55Ibid.

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countries. The second determinant connects the win-set size with domesticpolitical institutions, taking into account the requirements for ratificationby a country's legislature. Any agreement decided upon at the internationallevel must be ratified at the national level. The present study differs fromPutnam's or Milner's cases of treaty ratification, in that trade and environ-mental regulatory trade measures do not produce a formal treaty and arecharacterized by the absence of explicit negotiations.56 However, regula-tory trade measures can be conceived as a bargaining process in which thetwo sides need to agree upon the conditions under which they will conducttrade. Ratification then refers to a decision-process needed to implementan international agreement, formally or informally. In the case of stricterregulatory trade measures, the ratification in the target country can take theform of general domestic acceptance or support for a decision made by thegovernment. The last determinant of the size of the win-set points to theimportance of bargaining strategies applied by the negotiators during thenegotiations.

This study explores moves from a Chinese perspective and, as a con-sequence, the decision-making processes within the EU will not be exam-ined in detail.57 China has a unique political structure and, due to the lackof transparency, scholars face difficulties analyzing its decision-makingprocesses. However, it is possible to draw conclusions about domestic con-stituents' interests and positions from observed activities or inactivity. Re-search in this study will be guided by two questions. First, has trading-uptaken place in the context of trade between the EU and China? For this weneed to identify what regulatory standards were in place in China before theEU set new standards, what regulatory standards have been implementedsince then, and to what extent this strengthening is a consequence of the EUregulatory trade measures. Second, have regulatory environmental trademeasures affected the environmental performance of the target country?

56See ibid.; and Helen V. Milner, Interests, Institutions, and Information: Domestic Politicsand International Relations (Princeton, N.J.: Princeton University Press, 1997), 135-231.

57This does not imply that negotiations and bargaining processes have not taken place withinthe EU, but it will simplify the analysis if we consider the issue from a Chinese perspective.


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Since regulations are ineffective without adequate implementation and en-forcement, we need to consider how the new regulations have contributedto the reduction of pollution levels in China.

Trading-up means that a country raises its regulatory standards or im-plements new standards as a result of regulatory trade measures applied bythe initiator country. The adoption of stricter regulations from a tradingpartner may be realized through international agreements, informal mech-anisms, or market pressure. Upgrading that is the result of market pressureis more likely to happen when the stricter standards are enforced by thetarget country's most important export market and the benefits of marketaccess outweigh the costs associated with regulatory changes.58 The im-plementation of regulatory standards in the initiator country results in costsin the form of forgone trade profits in the target country. If these costssurpass the costs of complying with the stricter foreign regulations, it ismore likely that the target country will consider complying with the stricterstandards. The greater the costs that a country faces due to forgone trade,the more likely we are to be able to observe the effects of the regulatorytrade measures. The initiator country's power or influence over a targetcountry is related to the latter's dependence on the former. The more im-portant the export market, the more costly the regulatory trade measuresfor domestic exporting industries. Some export manufacturers will findit worthwhile to adjust to the export market's stricter requirements. Sub-sequently, those manufacturers may become advocates for stricter domesticstandards if they can reap extra benefits from putting competitors at a dis-advantage, increase market shares, or simply improve their image.59 On theother side, manufacturers without the capability or the willingness to adaptto stricter foreign regulations may put pressure on the government to reactor retaliate. However, it is the government that decides how to respond to

58David Vogel and Robert A. Kagan, "National Regulations in a Global Economy," in Dyna-mics of Regulatory Change: How Globalization Affects National Regulatory Polic ies, ed.David Vogel and Robert Kagan (University of California Press/University of California In-ternational and Area Studies Digital Collection, 2002), 1-28.

59Alasdair R. Young, "Political Transfer and "Trading Up"? Transatlantic Trade in Geneti-cally Modified Food and U.S. Politics," World Politics 55, no. 4 (July 2003): 457-84.

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external measures and whether retaliation or challenging the regulatorymeasures of another country is feasible or not.60 The next section will ex-plore the three cases.

Case 1: RoHS - Restriction of the Use of Certain Hazardous SubstancesRapid technological change and shorter life cycles of IT products

have resulted in a fast-growing problem around the globe in terms of thedisposal of outdated EEE. Between 1994 and 2003, an estimated 500million PCs were discarded globally, and in 2005, approximately 130million cell phones ended their lives. Other electronic equipment, such asPDAs, MP3 players, and peripherals, accounts for similar quantities ofwaste.61 The problem of e-waste has attracted global attention for tworeasons: first, if not treated properly, e-waste is a major source of toxins andcarcinogens, causing health and environmental problems. In many caseselectronic components are dumped in landfill, and over time the hazardoussubstances from this waste find their way into the surrounding watersystems, leading to high levels of toxic substances in the food chain, andcontaminating drinking water.62 Second, electronic waste can provide avaluable source of secondary raw materials. The EU made efforts to tacklethese problems in 2003 by introducing the Directive on the Restriction ofthe Use of Certain Hazardous Substances (RoHS; Directive 2002/95/EC),aimed at curtailing the use of hazardous substances in the manufacture ofelectrical and electronic equipment and improving the environmental per-formance of producers. The directive, which became effective on July 1,2007, bans the use of lead (Pb), Mercury (Hg), Cadmium (Cd), Hexavalentchromium (Cr6+), PBBs (polybrominated biphenyls), and PBDEs (poly-

60Unlike other green trade barriers, the implementation of environmental product standardshas not yet been challenged successfully under the current rules of the WTO. Thus, bring-ing such cases to the WTO's dispute settlement mechanism bears extra risks.

61Kim A. O'Connell, "Computing the Damage," Waste Age, October 1, 2002, http://www.wasteage.com/ar/waste_computing_damage/ (accessed April 17, 2008).

62Jim Puckett, Leslie Byster, Sarah Westervelt , Richard Gutierrez, Sheila Davis, Asma Hus-sain, and Madhumitta Dutta, "Exporting Harm – The High-Tech Trashing of Asia ," BaselAction Network, February 25, 2002, http://www.ban.org/E-waste/technotrashfinalcomp.pdf (accessed February 2, 2008).


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brominated diphenyl ethers) in all electronic goods and appliances mar-keted in the EU.63 Compliance with the RoHS Directive requires producersof equipment exported to the EU to ensure that they do not use materials orcomponents that contain these restricted substances.64 At the time when thedirective was adopted, China had yet to introduce regulations addressingthis specific issue.

China's electronic and electrical sector: Electronic products occupya vital position in China's overall export production, accounting for 35.2percent of the country's total exports and 25 percent of the global elec-tronics trade. The e-sector accounts for about 10 percent of the country'stotal industrial output value. According to the China Home ElectronicAppliance Association, nearly a third of home electronic appliances manu-factured in China are exported to EU countries. Foreign-invested enter-prises are the main exporters of electronic equipment in China. Statisticsfrom China's Ministry of Commerce show that joint ventures and largedomestic enterprises share about 75 percent of the country's electronicsexports.

After the RoHS was implemented, producers needed to re-evaluatethe chemicals used in every component, product, and process, and makesure their suppliers were also complying with the directive. Certificationby independent third-party agencies is required, which adds to productioncosts. More than 6,800 Chinese electronics companies and Chinese ex-ports worth about US$5.6 billion were affected by RoHS. Its introductionwas estimated to have been responsible for losses in foreign trade amount-ing to US$37 billion.65 Most of the approximately 11,700 EEE manufac-turers in China are small and medium-sized enterprises (SMEs) whichhad a low level of awareness of RoHS and had little knowledge of environ-mental and health issues in key international markets. The RoHS directive

63RoHS-Website of the European Union at http://www.rohs.eu/english/index.html (accessedApril 20, 2008).

64Ibid.65Zijun Li, "EU 'Green' Directives Cast Challenge to China's Electronics Industry," World-

watch Institute, February 22, 2006, http://www.worldwatch.org/node/3883 (accessed May20, 2008).

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has hit SMEs hard as they lack capital and technology, and usually do nothave an environmental management system. The required investment intechnology put pressure on SMEs at the bottom of the supply chain. ForSMEs it is more difficult to acquire information about environmental re-sponsibility and product safety. Thus, most SMEs are unenthusiastic aboutadapting to new standards. However, the opposite is true of large domestic(mostly state-owned) and foreign-owned enterprises.66 Those companiesresponded positively and, being aware of the regulations and standards,took proactive steps early on to make sure they complied with the chal-lenging environmental requirements (e.g., Haier 海爾, Changhong 長虹,Lenovo聯想, TCL ). The first SGS-China RoHS-certificate was receivedby Haier, for air conditioners to be exported to Europe.67 Foreign-investedcompanies are well aware of the risks and opportunities ahead, and mostare familiar with environmental and health standards. Global brand com-panies and original equipment manufacturers (OEM) working for differentglobal and domestic brand companies, are key players in the disseminationof new green technologies, as they often implement RoHS-compliantpolicies company-wide in different countries. Developments in manufac-turing show a trend toward greener EEE-products. For example, lead-freesoldering reduces the dissemination of lead into the environment. Accord-ing to findings from the China Electronics Material Industrial Association,lead-free soldering is mainly concentrated in areas where major electronicsexporters are located, such as Guangdong Province, and Shanghai (上海)and Suzhou (蘇州) in the Yangtze River Delta (長江三角洲),68 thus in-dicating that its introduction is a result of strict regulations in export mar-kets. Information about the new directives is disseminated through severalchannels. Independent certification and testing agents work with local in-

66UNCTAD, The Trade and Environment Review (New York and Geneva: United NationsPublication, 2006), 74.

67SGS is a large global inspection, verification, testing, and certification company, http://www.ee.sgs.com/first_sgs_china_rohs_certificate_received_by_haier_rohs? viewId=5598(accessed July 10, 2009).

68Tong Xin, "Diffusion of Lead-free Soldering in Electronics Industry in China," ChinaPopulation, Resources and Environment 17, no. 6 (November 2007): 66-71.


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dustries to distribute information on environmental requirements for ex-ports, and they also provide assistance with staff training. Studies showthat the main sources of information about the EU directives are businesspartners, industrial associations, and research institutes, while govern-mental organizations do not appear to be significant in this regard.69 Othersources are seminars organized by domestic and foreign government de-partments, institutions, and organizations, as well as industry associations.Consultants and research institutions also play a key role in the dissemina-tion of information on how to comply with standards.70 As the main focusfor manufacturers is fulfilling the requirements for market access, environ-mental awareness could be increased, but ecological considerations areoften ignored in product design or production processes.71

China-RoHS: Confronted with increasing domestic problems fromhazardous substances and new, strict standards in the EU export market, theChinese government decided to forge ahead and implement its own regula-tions on hazardous substances. Measures for the Administration of theControl of Pollution by Electronic Information Products,72 or China-RoHS,were promulgated by the Ministry of Information Industry (MII) and otherparticipating agencies on February 28, 2006, and came into effect on March1, 2007. The MII was chiefly responsible for drafting the measures, withinput from other authorities, such as the General Administration for QualitySupervision, Inspection, and Quarantine (AQSIQ), the National Develop-ment and Reform Commission (NDRC), the State Environmental Protec-tion Administration (SEPA), and the State Administration for Industry andCommerce (SAIC). The goal is to control the use of hazardous materialsthrough disclosure via labeling requirements, and through substance re-

69Jieqiong Yu, Richard Welford, and Peter Hills, "Industry Responses to EU WEEE andROHS Directives: Perspectives from China," Corporate Social Responsibility and En-vironmental Management 13, no. 5 (December 2006): 286-99.

70Ibid.71Ibid.72The Measures for the Administration of the Control of Pollution by Electronic Information

Products can be retrieved under: http://www.fdi.gov.cn/pub/FDI_EN/Laws/GeneralLawsandRegulations/MinisterialRulings/t20060620_51155.jsp (accessed August 29, 2008).

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strictions.73 These regulations ban the same six substances from electronicsproducts as the EU RoHS. While the EU directive only affects producerswho wish to sell in EU markets, China-RoHS requires locally produced andimported electronic equipment to be China-RoHS compliant and marked assuch. This closed a loophole for electronics manufacturers, as they nowhave to comply with EU-like standards, regardless of whether their prod-ucts are bound for the domestic or the EU market. China-RoHS is to beimplemented in two phases. In the first phase, which was due to start onMarch 1, 2007, products within the scope of the law needed to be marked,and a written disclosure had to be prepared for product parts that containedany of the six substances. With only a year between the publication of thelaw and its implementation, China allowed manufacturers significantlyless time to comply with its environmental regulations than the EU did, andthe MII failed to provide the essential details needed for implementation ontime. It was therefore necessary to postpone the March deadline and givethe industry more time to prepare. The release of secondary documentsredefining the scope of the regulations and addressing aspects missing fromthe original text indicated that China-RoHS was promulgated withoutmuch prior consultation with the industry on how it should be imple-mented. In the second phase, use of the dangerous substances would ac-tually be restricted. An annually revised catalogue, prepared by the MII inconsultation with the six other ministries concerned, listed the productssubject to restriction. When new products listed in this catalogue enter themarket, the materials from which they are manufactured have to undergotests for compliance in specified Chinese laboratories. Only after theserequirements are met does the manufacturer receive the China CompulsoryCertification (CCC) and permission to put the product on the market.Initially, phase two was due to start at the end of 2007. However, thecatalogue, along with other information, was not published on time, so im-plementation was postponed first of all to the end of 2008, then mid-2009,and is now not expected before 2010.

73Herat, "Green Electronics," 145-51.


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A question mark hangs over the enforcement of China-RoHS, asChina is not known for its effective or consistent law enforcement. En-forcement is in the hands of AQSIQ and SAIC. The law includes penaltiesthat can be imposed on any violator at any point in the supply chain or alocal government. The sanctions for non-compliance include withdrawalof licenses, the shutting down of production, and the possibility of criminalaccountability.

The case of RoHS shows how large domestic export manufacturersand foreign-owned enterprises have adapted early to new cleaner techno-logies and are now producing "greener" electrical and electronic equip-ment. Joint ventures and large domestic enterprises produce about 75percent of China's electronics exports, and they have a strong incentive tosafeguard their market access. Due to their stronger capabilities andawareness, they started preparing for the stricter EU regulations earlier thanother firms, and they can achieve compliance more easily. Products of jointventures and large government-owned manufacturers, like Lenovo, Haier,Skyworth, TCL, or Changhong, are compliant with the new EU directives,and some have even applied stricter standards than required. Therefore,the government's decision to adopt regulatory standards similar to those inthe EU did not pose a great threat to them, as technological upgrading isachievable and compliance costs are lower than the costs of a no-agree-ment. For the Chinese government and large export manufacturers, thecosts of tighter domestic regulations are low compared to those accruingfrom potential loss of market access. A high degree of dependence uponthe EU export market and the large domestic win-set left space for ac-cepting an agreement despite the need to make concessions in the form ofadaptation to the new production technologies. However, SMEs find theirinterests are overlooked and they face hard times if China-RoHS is fullyimplemented.

Case 2: Exhaust Emissions StandardsThe first aspirations to limit gasoline consumption and reduce air

pollution emerged in the United States during the 1960s. Europe was alatecomer, as the first European regulations on automobile exhaust emis-

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sions date from the 1970s. The directive Measures to be Taken against AirPollution by Emissions from Motor Vehicles (70/220/EEC), upon whichfurther regulations are based, has been amended several times to keep upwith technological developments and progress in the automobile sector.In an effort to improve air quality, increase fuel efficiency, and reducegreenhouse gas emissions, this directive sets specific limits on the amountof pollutants that can be released into the environment. Non-compliantvehicles cannot be marketed within the EU.74 European regulations on ex-haust emissions have been steadily tightened, and the envisioned Euro-VInorms represent the strictest in the world.

China's automobile industry: Before 1984, private car ownership wasprohibited in China. The Chinese automotive industry existed only to servethe government's need for vehicles, mainly trucks and buses. Only from1984 onwards were foreign companies allowed to invest in the Chinese carindustry. China's intention was to accumulate know-how, increase pro-duction capabilities, and speed up implementation of new managementsystems for local car producers, and by 2006, China had 117 vehicle manu-facturers.75 The automobile industry has become one of the most impor-tant manufacturing sectors in the Chinese economy, employing almost 1.6million workers. Together with the vehicle supply industry, it employsaround 31.9 million people. Production has skyrocketed from a mere 2million units in 2001 to a predicted 10 million units in 2009.76 China hasbecome the world's largest manufacturer of passenger vehicles.77 In 2007,the total number of privately owned vehicles on Chinese roads hit 35million, and about 1,000 to 1,200 vehicles are added to Beijing's roadsevery day.78 While international car producers expect an expansion in

74However, these new emissions standards only apply to new vehicles.75Katja Pesselhoy, "Strukturelle Anpassungen der chinesischen Automobilzulieferindustrie,"

China aktuell 35, no. 5 (2006): 5-46.76Ying Diao and Fangfang Li, "Auto Sales 'surpassed US in Jan'," China Daily, February 6,

2009, http://www.chinadaily.com.cn/bizchina/2009-02/06/content_7450489.htm.77"China's Auto Output Ranks Third in the World," People 's Daily Online, April 24, 2007,

http://english.peopledaily.com.cn/200704/24/eng20070424_369323.html.78"Car Ownership Up 32 % in 2007," China Car Times, March 10, 2008, http://www

.chinacartimes.com/2008/03/10/car-ownership-up-32-in-2007/ (accessed January 5, 2009).


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the Chinese domestic market, Chinese automobile manufacturers dreamof breaking into the international market.

Heading for global markets: In July 2005, the JMC Landwind was thefirst Chinese vehicle ever to be exported to Europe, and Geely Automobilemade the headlines when it became the first Chinese carmaker to display atthe prestigious Detroit automobile show in 2006. In recent years moreChinese car producers have shown their products at international automo-bile exhibitions. The numbers of Chinese cars exported may not be im-pressive at present, but they are clearly on the rise. Chery Automobile'soverseas sales in 2007 reached 119,800 units, an increase of 132 percentover the previous year.79 The total number of exported vehicles rose from173,000 in 2005 to about 612,000 in 2007. The country's vehicle exportsare predicted to reach one million annually by 2010, with the value of ex-ports accounting for US$7.31 billion.80 Experts believe that some Chinesecar producers could follow the example of their Japanese and Korean pre-decessors.81 The automotive industry has been declared one of the key in-dustries for Chinese economic development, and the exploration of newautomotive export markets is a target. The second China-Europe AutoSymposium held in Shanghai in 2009 and entitled "Successful MarketEntry into Europe" is a clear indication of the direction of Chinese efforts.82

Ownership and control of the Chinese automotive industry is domi-nated by the state. All of the big three automakers— China First Auto-motive Work Group Corporation (FAW), Shanghai Automobile IndustryCorporation (SAIC), and Beijing Automobile Industry Corporation(BAIC)— are state-owned enterprises (SOEs) with foreign joint venturepartners. The Chinese Communist Party is strongly represented on the

79Chery Automobiles, http://www.cheryglobal.com (accessed September 1, 2008).80"2007 Car Exports Hit Record" Shanghai Daily, February 5, 2008, http://www.china.org

.cn/english/business/242239.htm.81John Tagliabue, "Low-Cost Chinese Cars Making Restrained Entry to European Market,"

The New York Times, July 13, 2007, http://www.nytimes.com/2007/07/13/business/worldbusiness/13eurocars.html.

82China-Europe Auto Symposium, http://www.ceas-china.org/2009/en/agenda.php (accessedSeptember 20, 2009).

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automakers' boards of directors and has a strong influence on managerialdecision-making. About 90 percent of all vehicles manufactured in Chinaare produced by joint ventures between Chinese SOEs and foreign car-makers. There are only a few private enterprises, such as Geely Automo-bile. The NDRC plays a major role in regulating the automobile industry,controlling market entry, and approving key investment projects, as well asformulating industrial policy and overseeing its implementation. Withinthe NDRC, the Department of Industry Policy is in charge of draftingpolicies for the automotive sector, and also studies and analyzes thedevelopment of the industry, formulates policy recommendations, andsupervises policy enforcement. In 2004, the NDRC released its latestAutomotive Industry Development Policy that sets out a roadmap for theindustry's development, replacing previous policies issued in 1994. The2004 policy includes the further consolidation of the industry and supportfor the development of large-scale automakers that can compete on theinternational market, the promotion of more advanced technology, and theestablishment of a domestic components industry. The policy reiteratesthe government's desire to control and shape growth in the auto sector.Although the ultimate decision-making power lies with the NDRC, oneinteresting aspect of policy-making in the automotive industry is that car-makers are invited to comment and reflect on policy drafts. The NDRCarranges open hearings, and drafts are reviewed several times before theyare finalized.83

China's car emissions regulations: Between the 1950s and themid-1980s, the Chinese government did not pay much attention to vehicleemissions. Regulations limiting automobile emissions began with the AirPollution Prevention and Control Law which was passed by the NationalPeople's Congress in 1987. Vehicle emissions became an increasingly im-portant contributor to urban air pollution in the late 1990s, and only sincethen have major efforts been made to control vehicle emissions. Thesehave included the banning of leaded fuels and the requirement that all

83Yukyung Yeo, "Regulating China's Industrial Economy: A Comparative Case Study ofAuto and Telecom Service Sectors" (Ph.D. dissertation, University of Maryland, 2007), 84.


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automobiles are fitted with catalytic converters and electronic fuel-injection engines. In 1999, the State Environmental Protection Adminis-tration (SEPA) outlined a three-phase national plan in conformity with EUstandards, setting a target for the introduction of Euro I standards in 2000-01, Euro II in 2004-5, and advanced levels by 2010.84 These emissionsstandards are aimed at regulating the country's rapidly growing vehiclemarket, helping to reduce China's increasing dependence on foreign oil,and helping to slow down emissions of greenhouse gases. Another objec-tive was to encourage foreign automakers to import advanced fuel-efficienttechnologies into China and make Chinese cars competitive in interna-tional markets.85 Formal ties between foreign automakers and Chinesepartners had to be established in the form of joint ventures to ensure theupgrading of the Chinese automotive industry. In 2000, the State Admin-istration of Taxation and the Ministry of Finance lowered the consumptiontax on cars that meet Euro II standards, although this standard was not re-quired for new automobiles until 2004.86 All the big automakers receivedtax refunds for meeting the Euro II standards ahead of time. At that timeeven cleaner technologies were already available to most joint venture carcompanies; however, without the likelihood of economic benefits there islittle incentive for companies to introduce cleaner technology, even if it isavailable.87 Since the majority of vehicles are produced by joint ventures,and advanced clean technology is available through foreign partners,raising domestic standards has not caused the Chinese industry to incurheavy costs.

84At the time this plan was set out, climate change was of little concern for China; however,with the rapid increase in the number of vehicles in China, automobile emissions are in-creasingly contributing to China's greenhouse gases. Therefore, emissions standards arealso seen as a way of reducing greenhouse gases.

85Lin Gan, "Globalization of the Automobile Industry in China: Dynamics and Barriers inGreening of the Road Transportation," Energy Policy 31, no. 6 (May 2003): 537-51.

86It is important to note that in China the consumption tax is paid by manufacturers and notby consumers, which gives enterprises an economic incentive to adopt new technologiesearlier.

87Jimin Zhao, "Whither the Car? China 's Automobile Industry and Cleaner Vehicle Techno-logies," Development and Change 37, no. 1 (April 2006): 121-44.

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Although the central government is following an ambitious plan tocatch up with vehicle emissions standards in developed countries by 2010,inconsistent and uncoordinated policy realization among governmentalbodies has created difficulties for the implementation of these standards.For example, the deadline for the Euro II start was originally set for July2004. In September 2004, SEPA extended this deadline to the end of theyear in order to allow carmakers to get rid of their large stocks of Euro Icars.88 SEPA thereby helped companies that could not yet comply with theregulations to gain market advantage by continuing to sell high emissionsvehicles. Chinese national standards were then raised gradually, to Euro IIin 2005, and in 2007 to Euro III. The city of Beijing implemented evenstricter regulations and banned the sale of new cars which are not Euro IVcompliant starting from March 1, 2008.89

Fuel quality presents another barrier to the effectiveness of the imple-mentation of emissions standards, as Chinese gasoline is high in benzene,olefin, and sulfur. Based on concerns that national oil refiners were notready for Euro III, the NDRC overruled the relatively weak SEPA and sug-gested that enforcement of the new standards be phased in over severalyears, instead of sticking to the deadline of July 1, 2007.90 Interestingly,China's main oil refiners, Sinopec and PetroChina, confirmed – in contrastto statements by the NDRC – that they had the capacity to produce cleanerfuel.91 While large carmakers confirmed their readiness to meet the newstandards, some smaller carmakers appear to have successfully lobbied thegovernment to postpone enforcement.92 The 1998 reform of the bureau-cracy gave SEPA responsibility for the control and monitoring of vehicle

88Ibid., 129.89"Cars Sold in Beijing to Meet New Emission Standards," Xinhua, February 15, 2008, http://

news.xinhuanet.com/english/2008-02/15/content_7611371.htm.90Shai Oster and Gordon Fairclough, "China May Delay on Emissions," Wall Street Journal ,

June 21, 2007, http://online.wsj.com/article_print/SB118235950408042172.html.91Ibid.92James B. Treece, "Tenneco CEO: China Will Roll out Emissions Enforcement Regionally,"

Automotive News, November 13, 2008, http://www.autonews.com/article /20081113/ANA04/ 811139973/1186.


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emissions. Although measures for inspection and maintenance, such asannual emissions tests, roadside inspections, and programs for the scrap-ping of old vehicles, have been implemented, enforcement is still problem-atic in certain regions. Inspections are carried out by agencies authorizedby local bureaus of public security and environmental protection. How-ever, it is easy for drivers to pass the inspections and it is common to payfor inspection licenses.

The Chinese automotive industry is not so dependent on exports asthe electronic equipment industry. Thus we might expect that external EUregulations would have less effect on domestic policy setting. However,the automotive industry is a pillar industry that receives major governmentattention. Beijing wants to create an internationally competitive auto in-dustry and Chinese car manufacturers are preparing themselves to meet thedemands of their major export markets. The consultation with the industrythat took place prior to the formulation of the new policy suggests that thegovernment wants to ensure the availability of certain technologies in orderto reduce the costs of developing new ones, especially for domestic carmanufacturers. Since both domestic manufacturers and joint ventures areconfronted with the same domestic standards, Chinese regulators are reluc-tant to implement more aggressive standards, fearing that domestic com-panies will not be able to meet them.93 Foreign companies have alreadymade innovations, as they are confronted with even stricter standards intheir home countries. The availability of technology from foreign jointventure partners allows the Chinese regulators to steadily tighten regula-tions without this imposing too high a cost on domestic carmakers.

Case 3: REACHThe third EU directive that has a serious impact on Chinese producers

is the Directive on the Registration, Evaluation, Authorization, and Re-striction of Chemicals (REACH; EC 1907/2006), which is aimed at im-

93Kelly S. Gallagher, "Limits to Leapfrogging in Energy Technologies? Evidence from theChinese Automobile Industry," Energy Policy 34, no. 4 (March 2006): 388.

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proving the risk assessment of chemicals for which little or no data is avail-able. It should help to overcome the lack of data on emissions, toxicity, andthe impact of chemicals on the ecosystem or on human health. In the past,many carcinogenic chemicals were released from consumer products, suchas diapers, softeners, baby toys, toothpaste, etc. Governments as well asconsumers were unaware of the chemical properties of those and othersubstances. The legal framework of REACH is designed to ensure thatchemicals are used more responsibly and do not harm consumers or theenvironment. Under the legislation, potentially hazardous chemicals willprogressively be replaced with safer alternatives, while research and inno-vation will be stimulated.94 Companies need to obtain explicit permissionfrom the authorities before they can sell or use such chemicals.95 Be-ginning on June 1, 2008, chemical substances can only be used in theEU market if they have been pre-registered with the European ChemicalAgency (ECHA) in Helsinki. If an EU-based company uses or imports oneton or more of a chemical each year, it must be registered under REACH.Over 30,000 substances are covered by the registration obligations. Thedata collected is used to assess safety risks and health and environmentalimpacts. Under the REACH directive 40 different chemical laws in theEU have been replaced with just one overarching EU-wide system, in thehope that this will make products safer and make the sector itself morecompetitive by means of innovation and the application of sustainable tech-nologies.96 As integration of the EU market proceeds, officials have an in-terest in exporting EU standards and in the future even associating themwith international agreements. The regulation that now applies to all ofthe 27 EU member-states is likely to spread to more markets.97 Japan and

94European Union, "Europe Has Hazardous Chemicals in Its Sights," June 1, 2006, http://ec.europa.eu/news/environment/070601_1_en.htm (accessed May 11, 2008).

95Henrik Selin and Stacy D. VanDeveer, "Raising Global Standards," Environment 48, no.10 (December 2006): 6-18.

96European Commission, "No Data, No Market!" June 13, 2008, http://ec .europa.eu/news/environment/080513_1_en.htm (accessed May 11, 2008).

97"Call to Wake Up to REACH Rules," China Daily, May 30, 2008, http://www.china.org.cn/business/news/2008-05/30/content_15550827.htm (accessed November 13, 2008).


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South Korea are in the process of drafting their own chemical managementlaws similar to REACH.98

China's chemical industry: China's chemical industry has grown sub-stantially over the last ten years. It is China's third largest industry and ac-counts for about 10 percent of the country's GDP. The EU is the largestbuyer of Chinese chemical products. In 2008, Chinese exports to the EUwere worth US$20 billion, while China imported chemical products worthabout US$17 billion from the EU. Bilateral trade is growing rapidly. By2015 it is estimated that China will have overtaken the United States as thelargest global producer of chemicals.99 The new European legislation ishitting the Chinese chemical industry hard, as it also covers related indus-tries, such as household appliances, textiles, clothes, shoes, toys, electronicproducts, automobiles, and medicines.100 According to the calculations ofthe China Chamber of Commerce of Metals, Minerals & Chemicals Im-porters & Exporters (CCCMC), registration costs for Chinese products willraise production costs by as much as 5 percent. An estimated 5 milliontypes of products will come under the new regulation. About 30,000 enter-prises are directly linked to the Chinese chemical industry.101 Small andmedium-sized companies will suffer most, and many have adopted a wait-and-see policy.102 The General Administration of Quality Supervision,Inspection, and Quarantine (AQSIQ) led the dialogue between the EU andChina on the implementation of REACH. According to one AQSIQ esti-mate, the directive will directly affect exports of chemical materials worthUS$10 billion annually, and will have an indirect impact on anotherUS$100 billion-worth of textile, toy, and machinery exports. BetweenDecember 2006 and November 2008, three chemical working group meet-

98"ChemCon Asia 2009 Preview – REACH and GHS in a Global Context," ChemicalWatch, January 15, 2009, http://chemicalwatch.com/1619? q=consortia (accessed March13, 2009).

99Ibid.100"REACH Not Easy for China," China Daily, October 19, 2007, http://www.china.org.cn/

english/business/228885.htm (accessed May 13, 2008).101See note 97 above.102See note 100 above.

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ings were held and (quasi-government) business organizations like theChina Petrol and Chemical Industry Association (CPCIA) and the CCCMCwere involved in the dissemination of information and the holding ofseminars and workshops. The CPCIA is the umbrella organization for as-sociations related to the petroleum and chemical industry. While it ismainly involved in helping enterprises maintain their profits and ensuringthe overall progress of the industry, the CPCIA also functions as an ad-visory board to the government, channeling information from the industryup to government level. The CCCMC is an association that serves themetal, mineral, and chemical industries. With its broad member base ofmore than 4,300 companies, including over 250 that are ranked amongChina's top five hundred exporters, it also acts as an important link betweenthe industry and the government. In the short term, it is believed that ex-ports of Chinese chemical products to the EU will decline, and as a firstresponse to REACH, China opened an office in Helsinki linked to theREACH Centre.103 The office is operated by the CCCMC and it is intendedthat it will act as the agent for Chinese companies, handling their productregistration as well as providing consultation services designed to safe-guard their interests. However, in the long term, according to Cheng Siwei(成思危), China could well aspire to establishing a similar regime.104

China-REACH? China has a complex chemical management andcontrol regime. Although the country shows great interest in developingsimilar regulations to REACH, the existing control system is governed bya whole array of ministries and agencies, such as the ministries of Health,Communication, Commerce, and Public Security; the State Administrationof Quality Supervision, Inspection and Quarantine; the General Adminis-tration of Customs; the State Food and Drug Administration; the State Ad-

103"China Opens Representative Office in Helsinki," Chemical Watch, September 14, 2007,http://chemicalwatch.com/154? q=only%20representative (accessed December 12, 2008).

104Cheng Siwei is vice chairman of the Standing Committee of the National People's Con-gress and former vice minister of the chemical industry. See Valentin Handschin, "Chinahat Appetit auf Clariant & Co.," Handelszeitung Online, February 5, 2008, http://www.handelszeitung.ch/artikel/Unternehmen-China-hat-Appetit-auf-Clariant-o.__274334.html.


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ministration of Work Safety; the State Administration of Standardization;and the NDRC, and this jurisdictional complexity may well present a hugeobstacle to the introduction of an all-embracing set of regulations likeREACH. In addition to a comprehensive regulatory regime for chemicals,REACH also requires a good scientific infrastructure, technical enforce-ment capacity, chemical monitoring and tracking mechanisms, and state-of-the-art laboratories, all elements which China obviously lacks.

Nevertheless, in 2003, SEPA promulgated the Measures on the En-vironmental Management of New Chemical Substances. The Ministry ofEnvironmental Protection (MEP) and the Chemical Registration Center areplaying key roles in the registration of new chemicals and the maintenanceof the inventory of existing chemicals. On May 21, 2009, the Chinese MEPinitiated an inter-ministerial consultation to amend this existing regime forthe notification of new chemical substances.105 If adopted in their currentform, the new rules, due to come into force in October 2010, will havemany similarities with the EU's REACH, particularly those items con-cerning risk assessment, risk management, and data submission. Priorto manufacture or importing, Chinese producers and importers of newchemical substances would be required to obtain a registration certificateby submitting toxicological and other data to the Chemical RegistrationCentre of the MEP. Enforcement would be put into the hands of the MEPand its local bureaus. Under the proposed new measures, financial penal-ties may be imposed for violations and the authorities may require cor-rective actions to be undertaken. If strictly enforced, the practical costsof non-compliance – the inability to produce, import, or use a particularproduct – might be substantial.

Compared to the two other cases described above, the introduction ofnew chemical regulations presents China with a much more difficult taskdue to the larger number of governmental bodies involved, each with itsown very different interests. Chinese chemical companies will face high

105Gary Nevison, "The China REACH Surprise," Electronics, Design, Strategy, News, June26, 2009, http://www.edn.com/blog/570000257/post/990046099.html (accessed August5, 2009).

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costs from forgone trade, and therefore they have a big stake in meeting for-eign standards. Business associations are at the forefront of informationgathering and the dissemination and evaluation of a similar domestic regu-lation. However, it remains to be seen when, or if, the Chinese governmentwill be able to bring together all the disparate interests and gather supportfrom all domestic actors for such an overarching regulation.

Concluding Remarks

From the European perspective, relations with China represent atough challenge. China is not only a big trading partner, but also a crucialfactor in the EU's efforts to promote itself as a green global power. Despitefears that China's integration into the world economy would fix the coun-try's environmental standards at a low level, we actually observe an upwardtrend in the setting of Chinese environmental regulations. This tighteningup of environmental legislation can be partly attributed to the responsibili-ties that come from China's close integration into the international com-munity and its multinational agreements, and partly to its trade links withindustrialized countries with stricter environmental standards, such as theEU. While China is an important trading partner for the EU, the EU is evenmore important for China. EU exports to China are equivalent in value to0.7 percent of the former's GDP, whereas Chinese exports to the EU areworth about 7 percent of China's GDP. In 2008, about one-fifth of all Chi-nese exports went to EU markets. The Chinese government and the coun-try's industries are well aware that China simply cannot ignore recent EUenvironmental regulations. Product-based regulations like RoHS, those onemissions standards, and REACH have triggered responses from Chinesepolicymakers that have led to reactions from affected industry actors andfinally to the implementation of new and strict domestic environmentalregulations.

From the government's perspective, the external environmental regu-lations threaten China's export revenues and ultimately its economic de-velopment. In the case of RoHS and REACH, the loss of access to EU


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markets (no-agreement) would incur massive economic costs for importantChinese industrial sectors, since the EU is China's biggest trading partnerand dependence on the EU export market is high. China is an export-oriented economy and its competitiveness in international markets is basedon low production costs. Upgrading technology in order to comply withstrict standards will increase those costs. However, if compliance costs arelower than the costs of no-agreement, it makes sense to attempt to upgradethe domestic technological level. Of course, China is not the only develop-ing country affected by the directives, but if Beijing is able to introducemore advanced technology (e.g., lead-free soldering and low emission en-gines) and to lead its industries toward complying with higher internationalstandards more quickly, it has the opportunity to gain an edge over inter-national competitors – like India— as a first-mover. China can reduce itscompliance costs due to its unique economic structure, as companies haveaccess to foreign technology and know-how through foreign joint venturepartners. Thus China is able to enhance its competitiveness in the EUmarket due to its lower production costs and progressive legislation thatis in line with existing EU directives.

From industry's perspective, Chinese export manufacturers have achoice between upgrading their technology to comply with EU standards(agreement) or having their market access limited (no-agreement). Forexporting companies, losing market access is a high stake issue. Jointventures and large state enterprises – which dominate the automotive, elec-tronic, and chemical industries under discussion here – have enough capitaland access to technology, and they are in possession of effective informa-tion channels. Thus compliance with strict foreign regulatory measures iseasier for them. Since large domestic export manufacturers have a majorstake in compliance with foreign standards, they have made early prepara-tions to comply with those standards. Although compliance brings withit the cost of adjustments in production for individual firms, they may ex-pect to reap substantial economic profits from trade, as well as from im-provements in efficiency and productivity and from technology transfer.European environmental regulatory measures are acting as catalysts in en-couraging Chinese enterprises to consider greener product development

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and to adopt more advanced technologies. Large foreign-owned and multi-national companies are the major forces in transferring new technologiesto the Chinese electronic and automotive sector, and thus helping to sub-stantially reduce the costs of compliance. An estimated 40 percent of thetechnology transferred to China through exports or investment originatesin Europe.106 If the government introduces domestic environmental stand-ards of a similar stringency to those of the EU, they will not harm com-panies that have previously been engaged in trade with Europe. On thecontrary, those companies could gain an advantage over their domesticcompetitors who do not have the resources to implement new technology.Thus, large domestic enterprises and joint ventures have reason to advocateor at least not to oppose new or higher domestic standards since they arealready exposed to strict standards in the EU market. As the case of theauto industry shows, it is possible for enterprises to gain access to govern-ment decision— makers, protect their interests, and shape policy-making.However, higher standards leave SMEs at a clear disadvantage, since theylack capital, technology, and know-how, and also have low awareness ofthe issue. Chinese governmental bodies, business associations, and third-party certification agencies are trying to raise awareness among them toprevent them from being forced out of business.

One formidable barrier to the amelioration of environmental degra-dation is lax or slow legal enforcement. Since the central government isin charge of policy formation while local authorities are responsible forpolicy enforcement, conflicts of interest still exist. The fact that the en-vironmental and economic bureaucracies are at odds with one another canbe seen from inconsistent policy implementation on the part of govern-mental bodies or from weak enforcement. Local governments often failto enforce environmental regulations as strictly as they should in an effortto protect the interests of local companies which provide them with taxrevenue. In some cases, the penalties imposed on companies for violations

106European Commission, http://trade.ec.europa.eu/doclib/docs/2008/september/tradoc_140747.pdf (accessed January 8, 2009).


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of environmental laws have been repaid to the enterprises in the form oftax refunds by the local government. For the Chinese central governmentto strengthen enforcement would incur a high political cost.

As this study reveals, external environmental regulatory trade meas-ures may alter and shape the behavior of relevant Chinese domestic actors,and consequently have an impact on policy formation processes. Althoughit is difficult to establish direct links between the EU regulatory measuresand the setting of Chinese regulations, the reactions of domestic actors, thesimilarities of the environmental issues addressed by European and Chi-nese regulations, and also the timing of the Chinese regulations stronglysuggest a connection with EU policies. Both China-RoHS and Chinese caremissions standards borrow heavily from their EU counterparts. In thecase of REACH it remains to be seen how the Chinese government willfinally respond. The speed of Chinese follow-up regulations shows thatChina's leaders follow the development of environmental policies andregulatory standards in the EU very closely. The EU directives seem tohave acted as a catalyst for addressing specific environmental issues, sincethese regulatory trade measures have induced companies to adjust theirproduction and made government agencies implement EU-like policies.However, EU policies cannot be seen as the sole driver of policy change.In all of these three case studies, the Chinese regulatory processes were notstatic prior to the implementation of the EU environmental directives. Inthe wake of China's integration into the international community, Beijinghas been very active in constructing a comprehensive framework of en-vironmental legislation. However, there is no indication that without theprior implementation of EU regulatory measures, China would have setregulations addressing these specific issues quite so soon.

There are doubts about how effective product-based regulations arein reducing pollution during the production process. Pollution-causingmanufacturing processes are an essential focus of efforts to improve en-vironmental quality and to achieve a more efficient use of resources. An-other limitation stems from the fact that product-related standards mayresult in manufacturers looking solely at the technical details requiredto meet the standards rather than incorporating a comprehensive life-cycle

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assessment into the product design process. It remains a big questionwhether eco-design can be promoted through such regulations. The yearsahead will show if the EU's focus on products is really breaking ground fora new generation of effective environmental protection measures.

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