A European effort to bar the use of potentially hazardous ship recyclers in India, Pakistan and Bangladesh has run aground, stalled by an outcry from the South Asian countries.
The proposed legislation would bar ships flying European Union flags from "beaching" old ships, that is, steaming them onto shore, where they are dismantled by hand at informal shipyards. The low-cost, ship-scrapping industry of India, Pakistan and Bangladesh is a multibillion-dollar business employing about a million workers, and the three countries account for more than 70% of the global ship-recycling industry.
The European Parliament has approved measures that would ban beaching and fine EU shipowners for violations. Advocacy groups have criticized beaching for its poor safety and environmental record, preferring that ship breaking, as the broader vessel-recycling industry is known, be conducted in dry dock or at piers so that waters aren't exposed to toxic spills.
The EU initiative comes as the deadly April collapse of a garment-factory near Dhaka, Bangladesh, fuels concerns about the price that people in emerging economies can pay when they take on work from developed countries.
But amid pressure from South Asia, the European Council has opposed the ban on beaching. Approval by the council, which includes the heads of EU member states, is necessary to ratify the legislation. European Parliament lawmakers and the council are scheduled to hold talks Monday, having conducted a preliminary round of talks last month.
"We are coming closer to a deal," says Carl Schlyter, of Sweden's Green Party.
Asian scrap yards generated $6.3 billion from beaching last year, according to shipping-industry data provider Lloyd's List. European shipowners sent a record 365 vessels to South Asia's beaches last year. Turkey and China also recycle ships but they don't pay as well for scrap and their capacity is limited. Yards in Turkey and China buy ships for scrapping at $300 to $340 a ton of steel, depending on the grade, compared with $410 in South Asia.
Ships usually are sold to middlemen who then sell the vessels to ship breakers who can sell the scrap steel. South Asian ship breakers typically will recycle not only the steel, but the contents of a ship, for example its furniture and dinnerware, as well.
The NGO Shipbreaking Platform, a coalition of 18 environmental, labor and human-rights nongovernmental organizations, has led the campaign against beaching.
"When ship breaking takes place directly on the beaches, full containment of the pollutants is impossible," says platform Executive Director Patrizia Heidegger. The World Bank estimates that 79,000 tons of asbestos and 250,000 tons of other carcinogenic chemicals will be dumped on Bangladesh's beaches alone over the next 20 years.
Ms. Heidegger says her group recorded 40 deaths in India, Bangladesh and Pakistan last year, compiling reports from trade unions and local media. "No adequate emergency response is available. How can an ambulance reach a vessel stuck in mud?" she says.
Shipowners, recyclers and the three South Asian governments say a ban on beaching would be counterproductive, undermining existing international efforts to improve the industry's performance and exacting a huge cost to the economies of India, Bangladesh and Pakistan.
"The EU is asking for something that will cripple the economy of South Asia," says Shafi Chaudhari, who ran one of Bangladesh's first beaching operations and now operates a small maritime cargo operation, Comfort Shipping Line. "It is a way for keeping our economies permanently poor."
Yasmin Sultana, deputy secretary of policy at Bangladesh's Ministry of Industries, says jobs could be at stake. "I can't stop the business suddenly.…There are 300,000 people dependent on the industry," she says.
An EU ban could threaten a global proposal—the 2009 Hong Kong Convention—meant to regulate the scrapping industry by establishing standards that are safe for workers and environmentally sound. That agreement awaits ratification by national parliaments, which is expected to take about six years.
"If sense does not prevail in Europe, we will lose all motivation to adopt the Hong Kong Convention," says Nikos Mikelis, a nonexecutive director of Global Marketing Systems, a middleman in the shipbreaking industry. Mr. Mikelis, a former executive of the United Nations' International Maritime Organization who helped draft the convention, says owners would circumvent the EU ban by changing the flags on their aging vessels. European-flagged ships account for around 15% of the global merchant fleet.
Amatave Banerjee, chief surveyor of India's Directorate General of Shipping, says India is pursuing ratification of the Hong Kong Convention.
In the shoreline scrap yards of western India, workers who moved 1,000 miles from home say the work is dangerous but they accept the hazardous conditions because of the wages and steady jobs. Conditions are getting safer, they say. (Please see accompanying article.)
Shipyard operators say they have made improvements, such as outsourcing the handling of hazardous waste, undergoing periodic audits by regulators and getting medical checkups for workers. But the operators complain that it is never enough for European regulators.
"The safety measures are very good. We have introduced a number of precautionary steps before ships are allowed to beach," says J.K Sinha, a member of India's National Disaster Management Authority. "Accidents may occur once in a while, but there is no scope of disasters," he said.
Source: The Wall Street Journal. By COSTAS PARIS in London and BIMAN MUKHERJI in Alang, India. 13 June 2013http://online.wsj.com/article/SB10001424127887324423904578522982568438250.html?mod=pls_whats_news_us_business_f