China’s new waste import policy

In the wake of China’s decision to prohibit foreign exports of certain recyclable waste, council contractors are no doubt scratching their heads as to what to do next. How do they manage their obligations, where will all this material go.

Have you heard about a ‘Force Majeure’? Me neither. Over the past couple of weeks it has become a term worth noting, because it could very well become a term on the tip of Victoria’s collective tongue.

A council contractor has reportedly invoked a ‘force majeure’ to suspend the performance of their obligations; to councils or businesses where they collect and offer recycling services due to China’s ban on foreign waste, which kicked off on the 1st of January and threw the world’s plastic recycling operation into complete disarray.

The ‘force majeure’ is a French term that translates to ‘major force’, and in this circumstance it is a situation where the party or parties’ contractual arrangement is ‘frustrated to the extent that one party or both parties cannot perform their obligations under the terms of the contract, and as a result those obligations are suspended because of that intervening factor that no one could foresee,’ as Justin Lawrence of Henderson and Ball Lawyers laid out on 3AW Breakfast on the 31st of January.

So what does that mean for the residents of Victoria??

While it is not known how many Victorian councils will be affected when the suspension commences on February 9, it will have a major impact on the waste services of Victoria, and potentially have implications across Australia if their precedent is followed.

“The international market is tightening, costs are increasing and they’re [China] requiring less contamination and that’s leading to greater costs,” Greater Shepparton City Council CEO Peter Harriott said. “So there’s pressure on the industry already.”

The longer-term implications could potentially be far more severe than overfull skip bins, tardy rubbish collection and an exhausted waste management industry.

Victoria, and Australia as a whole, is facing a waste recycling and management crisis.

President Grant Musgrove of the Australian Council of Recycling (ACOR) referred to the recycling industry as being in a “perfect storm”. In Victoria, Mr Musgrove said “hundreds of millions of dollars being raised as revenue from the landfill levy” was not being spent. “Recycling is effectively being taxed to prop up a state government budget,” he said.

The chain effect could add up to further environmental damage and a huge dent in the availability of resources that are sustainable. This industry development and the inaction of regulators and governing bodies will force the ratepayers to pay more for the disposal of their household waste.

Whether China’s decision to ban recyclables actually constitutes a ‘force majeure’ is a matter for lawyers to pick apart, but one thing is for sure, it is unlikely that the force majeure clause will go under the radar in Australia’s waste management industry after this episode. Law firm Holding Redlich’s article “Dealing with the Unknown in Contracts”, made the statement “[L]ack of thought as to the composition of the force majeure clause can be very costly.”

The Chinese decision is just another indicator that the world’s population will be forced to turn its attention toward sustainable and impactful change to how we recycle and dispose of our waste. And the stagnation of government policy and regulation could force the consumer to look for answers outside of the box.

One of those is located in the United States. Recycle Track Systems has presented itself as an alternative to council rubbish collection that will focus on training people to recycle more and dispose more efficiently. CEO Gregory Lettieri says, “We like to say we provide white glove service. We take diversion rates to a higher level. We help you throw out more and recycle more. Our staffers, who we call sustainability analysts, train you how to sort your trash.”

Like the company in the Unites States, Future Recycling is in the market to change people’s perceptions about waste. To reduce the needless dumping into landfills and increase the amount we can recycle, be it scrap metal, kitchen appliances or old toys. It is just one area of our waste management system that will allow people to make money as they return unwanted products and enable it to be used for the products of the future. We want to change the ordinary Australian’s perception of waste management and recycling. This is part of the reason we started this blog.

We have to be mindful that, Australia’s recycling culture is theoretically minimal. Much of the material we collectively ‘recycle’ is generally collected and sent to China. Much of our glass, aluminium and of course plastic, is packaged up and sent to China to be recycled or disposed of. This is why Future Recycling’s role in scrap metal and steel recycling is so vital. It is a perpetual process that creates jobs, keeps raw materials in Australia and will hopefully play a huge role in changing perceptions of correct disposal and recycling.

This decision has caught governing and regulatory bodies napping. Waste recyclers make decisions that will have a dramatic impact on how our country’s waste management system operates. It opens up many questions about our moral and ethical duty in disposing of waste. How we respond will impact the future of Australia’s environment for generations to come. That’s why the community and businesses alike need to know what’s occurring in the market but more importantly be more than just reactionary but proactive to avoid these events. If you’re concerned about this development, talk to your local MP and ask for a business that has considered recycling practices.

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