The Basel Convention is an excellent accord which deserves more than a simple stamp of approval. Let us take the intent and spirit of the treaty and make it our

own.

Senator BAUCUS. The next panel, Mr. Herschel Cutler, Executive Director of the Institute of Scrap Recycling and Mr. Harvey Alter, Manager, Resource Policy Department, U.S. Chamber of Com

merce.

Mr. Cutler, why don't you proceed?

STATEMENT OF HERSCHEL CUTLER, EXECUTIVE DIRECTOR, INSTITUTE OF SCRAP RECYCLING INDUSTRIES, INC.

Mr. CUTLER. Thank you, Mr. Chairman.

My name is Herschel Cutler. I am Executive Director of the Institute of Scrap Recycling Industries, the trade association representing the private sector, for-profit recycling industry. ISRI's 1,800 members operate at over 5,000 locations, processing, brokering and consuming more than 90 million tons of recovered metal, paper, glass, plastic and textiles every year. These materials are sold worldwide as specification feedstocks which are direct substitutes for virgin materials.

The materials being exported include scrap iron and steel, paper, aluminum and steel cans, copper and copper alloys, and stainless and other alloyed steels, and account for a major positive contribution to our trade position.

Mr. Chairman, we appreciate your comments about the need for trade in such recyclables in your opening remarks.

The export market provides an essential avenue by which collected and processed recyclables can be reused. As the subcommittee has heard in previous hearings, markets are the most critical need in the recycling field. Because domestic markets are limited, it should come as no surprise that nearly 30 percent of the U.S. collection of scrap paper is exported for reuse.

Our members do not export garbage or waste. The materials we export are diverted or removed from the waste stream, processed to meet strict industry specifications, and exported in accordance with U.S. and international requirements. All of our exports must meet industry specifications or we lose the market.

The materials are not "dumped" on anyone or disposed of anywhere. They are purchased by the overseas buyer for reuse. Prices are quoted daily and published in many sources. All of our material is traded under specific contracts executed between buyers and sellers. In short, a highly sophisticated network exists to insure that recyclables move between buyers and sellers and that they arrive at the destination in the condition and on time as agreed in the contract.

If the Basel Convention and the U.S.-implementing legislation control or limit the export of hazardous or other waste for final disposal, ISRI has absolutely no objection. Our members do not export things for final disposal.

On the other hand, if recyclables are covered by Basel, the nature of the convention changes dramatically from an environmental agreement into a trade agreement. For example, the definition of hazardous waste is vague. The convention allows each nation to add whatever it wants to the list of hazardous materials.

Thus, a nation which wants to discourage scrap paper imports could simply declare paper to be hazardous and place it under Basel restrictions. The Dutch Government, for example-which has been seeking from the European Commission restrictions on the import of U.S. scrap paper-could use the Basel Convention to provide the perfect vehicle for such a restriction.

Another example, the European Community for many years insulated domestic mills from the world price for copper by instituting export quotas on copper scrap. This clearly protectionist move was struck down at the insistence of the United States in 1989.

ISRI has learned that the European Community's draft regulations implementing the Basel Convention could raise significant trade barriers. Specifically, their plan envisions two separate control schemes, one applied within the Community, and the other applied outside the Community. Thus, for example, a shipment of scrap copper moving from Spain to Germany for remelting would face virtually no trade barriers, while a U.S. shipment of the same material could be disadvantaged by cumbersome Basel controls.

Given that the United States reaps a great advantage-and the Administrator a moment ago acknowledged that, as did you in your opening remarks, Mr. Chairman-from the current trade in recyclables, the U.S. would quickly feel the impact of the restrictions on that trade.

The Basel Convention clearly authorizes the United States and others to separate traditional recyclables such as metal, paper, glass, plastic, and textiles from its coverage. Article 4.9(b) of the convention recognizes the need for nations to trade in recyclable materials.

It is important to note that the Administration bill, S. 1082, and the major competing bill in the House, the Synar-Wolpe bill, both exempt metal, paper, glass and plastic from any such export restraint. ISRI notes that similar language is contained in your proposed RCRA reauthorization introduced during the 101st Congress. We certainly encourage the subcommittee to retain this language. In summary, our goal in this field is the same as that of RCRA, to expand markets for traditional recyclables, such as metals, paper, glass, plastic, and textiles. I'll close by reminding the subcommittee that none of the Basel controls proposed to be imposed on recyclables would affect their virgin counterparts in the least. Thus, any border controls placed on recyclables but not also placed on virgin materials, clearly favor exploitation of natural resources and disposal domestically over reuse somewhere in the world. Thank you, Mr. Chairman.

Senator BAUCUs. Thank you very much, Mr. Cutler.
Mr. Alter.

STATEMENT OF HARVEY ALTER, MANAGER, RESOURCE POLICY DEPARTMENT, U.S. CHAMBER OF COMMERCE

Mr. ALTER. Thank you, Mr. Chairman.

I am pleased to be here to represent the membership of the U.S. Chamber and to add the support of the Business Recycling Coalition in which the Chamber plays a large role. This is a coalition of about 50 businesses and trade associations concerned with the recy

cling of industrial materials, including trade in these materials and their products, some of which would be classified as hazardous if they were destined for disposal.

The Chamber and the Coalition support ratification and implementation of the Basel Convention. We recognize that bills before Congress to implement the convention have some shortcomings and I will cover these in a few moments. However, there are three aspects of the Basel Convention that must be stressed.

The first is that it suffers from a semantic confusion in the word "wastes" refers to either disposal or recycling. According to a 1988 OECD decision, to which the U.S. is party, the definition of wastes includes materials destined for recycling as well as for disposal. This definition was adopted in the convention.

In both documents, substances or objects, subject to the disposal and recycling operations listed, are wastes unless national law specifically exempts or omits them. The U.S. can exempt paper, glass, scrap metal, plastics, et cetera.

However, when we discuss waste shipments, we are also discussing materials being sent for recycling or reclamation. As shown in my written statement, this includes exports of about 19 million tons a year for recycling.

Claims that the U.S. is exporting tremendous quantities of wastes does not mean that we are sending materials outside of the country for disposal. Indeed, as has been mentioned, this is less than 1 percent-my calculation is about 0.7 of one percent that would have been materials that would have been hazardous if sent for disposal. Disposal is probably only to Canada, not other countries. În 1990, this decreased compared to 1989. We know of no waste sent for disposal to developing countries. The EPA tracking system has rejected some shipments. We have a system-or the hint of a system-that works.

The second aspect of the Convention that may be confusing is that in order to maintain our trade in secondary materials, which shows a positive U.S. trade balance of about $4.8 billion annually, we need international agreements, bilateral or multilateral. To that end, we support the framework of S. 1082 and the activities now ongoing in the OECD to establish a waste classification and notification system.

The third point to raise is that we, too, draw attention the key phrase "environmentally sound." In our written statement, we offer eight criteria for judging and clarifying what may be environmentally sound management for recycling.

Our statement covers many aspects of the framework of the convention and responds to the subcommittee's questions. In my brief time allocation, I would like to touch on the bills before Congress, the three different approaches offered.

The first, by Mr. Towns, obviously is a ban. Given the definitions in the convention and by OECD, this approach would impose economically inefficient disposal on industries now exporting to Canada for disposal, would similarly affect Canadian waste exports to the U.S., would cease as much as $7 billion in U.S. trade worldwide, and could divert as much as the 19 million tons we presently export for recycling. This would happen as many RCRA proposals,

such as Senator Warner's recent S. 1473, call upon the government to increase recycling and exports.

Mr. SYNAR AND MR. Wolpe's approach has two strictures: one, no less strict than RCRA and the second, prescribes management options equivalent to those required by RCRA. As Mr. Reilly so effectively pointed out, this is, in effect, a requirement that other countries adopt RCRA, which is an extraterritorial imposition. Both approaches we reject.

S. 1082 has the double check mark of both meeting the convention requirements and the bilateral agreements.

In conclusion, we support the approach in S. 1082 with the following suggestions. One, the U.S. must act quickly to ratify and implement. The first meeting of the convention parties is tentatively scheduled for May of next year. We need U.S. participation. Two, S. 1082, we believe, should be amended to offer guidance as to what environmentally sound means. Again I call attention to the criteria we suggest in our written statement, which would eliminate sham operations. Similar criteria can be used for disposal. Obviously, RCRA standards are not appropriate inasmuch as we're talking about recycling except for disposal trade with Canada.

Three, the U.S. must continue to support strongly current activities in the OECD. Finally, four, S. 1082, we believe should be amended to assure that the required bilateral agreements include national treatment for the U.S. and that trade will be within current international uniform customs practices.

We offer our cooperation in all of these matters. Thank you very much.

Senator BAUCUS. Thank you very much, both of you.

Basically, what's your greatest concern with the Administration's proposal?

Mr. ALTER. I think the silence on national treatment is very important and I do think

Senator BAUcus. National treatment with respect to recycling? Mr. ALTER. To trade and recycling. To avoid something that Mr. Cutler pointed out, which is somebody perhaps capriciously defining a material as hazardous.

We cannot impose our regulations; that's extraterritorialism clearly. However, I think the Congress can give guidance as to how the bilaterals can be negotiated.

Senator, you mentioned the leadership role of the United States. We have an opportunity, especially if we are able to ratify and implement before the conference of the parties, to start the discussion of environmentally sound by offering criteria for bilateral agreements. My understanding is that the UNEP secretariat for Basel will begin to discuss environmentally sound definitions with staff starting this October.

Senator BAUCUS. Have you begun to develop these criteria?
Mr. ALTER. They are in my written statement.

Senator BAUCUs. Could you tell me roughly what they are?

Mr. ALTER. It has to do with the recognition that a recycling operation is a commercial operation, as Mr. Cutler discussed, the kinds of records that are kept, that there be controls on shipping dangerous materials, that there be controls on the storage; that

there be inventory controls and most important, for definition of recycling, that a product is returned to the economic mainstream.

Senator BAUCUS. You said there'd be controls or standards. Do your criteria get into what those standards and controls actually are?

Mr. ALTER. No, sir, because, again, if we start imposing what those controls and standards are, we might as well pass laws for other countries to adhere to.

Senator BAUCUS. Have you discussed these proposed criteria with environmental groups on the other side who tend to think we shouldn't be sending anything that may be potentially hazardous? Mr. ALTER. Yes, we have begun. Those groups that just want to adopt Mr. Towns' approach, no, we're not going to talk to them. The poles are so far apart, we're on different planets on that. In fact, I think that such groups who just want to ban, not recognizing the 54 nations who don't want to ban, probably more than 54, would sacrifice the trade recyclables-$7 billion for the U.S., $40 billion for the OECD-and would sacrifice the beneficial recycling and reclamation of what otherwise would be waste.

Senator BAUCUS. Do you have any comments, Mr. Cutler?

Mr. CUTLER. I think the last point Mr. Alter made is extremely important, that banning the export of a recyclable to a country that has developed an industry making product from it, doesn't mean that industry is going to stop. They will find an alternative source of input and if they can't find it in a recyclable from another country, they're going to find it in the virgin material, so the effect could well be-and most likely would be-that the industry importing it will continue to exist; they will now encourage additional exploitation of natural resources; and the United States will end up with these millions of tons-19 or 20 million tons of perfectly recyclable material for which there is no market in the United States which will be come waste. That seems to me to be the issue I've not heard an answer to that from the people who are proposing a ban.

Mr. ALTER. If I may, just two interjections. One is that Basel recognizes specifically if a country needs the material as an input to their industry, that's one of the ways in which recycling is addressed.

The second is, with all the discussion we've had about what the EC may and may not do, last May I was privileged to be a part of a USTR delegation to a meeting with the EC on this subject. We met with people from DG1, DG3, DG12, all of whom are involved-in other words, State, Commerce, and Environment. They are struggling, as we are. I do not foresee that there are going to be any kinds of bans and their attempt to do what Mr. Cutler discussed-a somewhat recent attempt to put up a fortress Europe situation in secondary materials has, for the time being, and I hope permanently, been rejected. They, too, recognize the importance of importing secondary materials in order to keep their industry going. They, too, are struggling with this semantic problem I mentioned of what's a waste and what's a recyclable because they too are wedded to the OECD definition.

The EC waste directive of last March instructs the Commission to classify and define wastes. They are way behind what we did