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Circular Economy Plan and European Industrial Strategy Take Shape, Featuring Green Policies and “Robust Trade Defence”

More details have recently surfaced about the European Commission’s Industrial Strategy and the new Circular Economy Action plan. These plans, which the Commission intends to publish by March, complement each other in setting out measures to maintain European industry’s competitiveness while achieving greater sustainability. Hong Kong traders may like to know that these plans may affect textiles and electronics as key sectors, and may be coupled with more assertive trade defence practices on behalf of the European Union.

The European Commission is set to publish a new action plan on the circular economy on 4 March this year. This plan follows from the 2015 Action Plan for the Circular Economy and is part of the “European Green Deal”, which is a key policy of the new Commission. Hong Kong traders should be aware that the plan is set to focus on high-impact sectors such as textiles, plastics and electronics, according to Virginijus Sinkevičius, the Commissioner for the Environment, in a speech delivered before the European Economic and Social Committee late last month.

The Commissioner emphasised that the new action plan for the circular economy is set to be adopted simultaneously with a new industrial strategy, signalling the need for “a widespread transformation”. The roadmap that sets out the Commission’s intentions reveals measures designed to extend products’ lifetimes, including a “right to repair”, and improved information to consumers on the durability and repairability of products.

The new plan is also reported to “tackle the sourcing and processing of raw materials, revise sectoral waste legislation and waste shipment rules, set a framework for bio-based plastics and address microplastics”. In addition, the plan is said to include a review of the EU Batteries Directive.

The Commission has consulted several stakeholders and invited comments on its intended action plan. For example, the supportive position of the Textiles recycling Branch of the European Recycling Industries Confederation (“EuRIC”) was reported in Regulatory Alert-EU, Issue No. 238/2020.

Furthermore the  European Association for the Coordination of Consumer Representation in Standardisation (“ANEC”) emphasised the need for enhancing “the chemical safety of products […] to avoid hazardous chemicals stay[ing] in the material cycles” and fostering labelling policies to improve consumer information in order to make sustainable product choices.

The promotion of chemical recycling also finds support with chemicals industry lobby group Cefic, while the International Chemical Secretariat (“ChemSec”) and environmental group ChemTrust jointly called for the phase-out of “all substances of concern as input chemicals in products” and the adoption of the same standards for virgin and recycled material, so that secondary materials do not “become a new source of pollution”.

RREUSE, an international network representing social enterprises active in re-use, repair and recycling, supports measures that would stimulate second-hand markets in consumer electronics, and measures to “prevent environmentally harmful products from being placed in the EU market and identify options to prioritise reuse and repair before recycling”.

These stakeholder comments may mould the final action plan.

In addition to the circular economy plan, the European Commission intends to also publish a “comprehensive industrial strategy” in March. The Strategy, which has been in the works since 2017 and builds on the 2017 Industrial Policy Strategy, is intended to safeguard Europe’s industry in the global economy. It is widely understood as reflecting the assessment that Europe needs to take a more hands-on approach in its economy if it wants to keep up with innovation and foster indigenous champions able to compete with Chinese and American counterparts.

The draft Industrial Strategy, which is intended to safeguard Europe’s industry in the global economy, introduces tighter trade and procurement measures. Hong Kong traders might like to know that the draft also mentions work on a foreign subsidies instrument and has raised speculation about whether the Commission could place the burden of disproving the conferral of a benefit consisting of state subsidies on the foreign exporter.

The Strategy will also include a softening of state aid rules for Important Projects of Common European Interest (“IPCEI”) such as the recent example concerning the French production of car batteries. A similar exemption for micro-electronics is reportedly being considered. Furthermore, the European Commission is reported to be leveraging new procurement legislation in trade and investment negotiations in order to secure equal access for European industry to foreign markets. The draft paper also mentions a number of other policies including support for the development of “key technologies such as robotics, 5G, quantum computing, nanotechnologies” and legislation “in support of fully digital processes at the border”.

For Hong Kong traders, the Commission’s work on the Action Plan for the Circular Economy and the comprehensive Industrial Strategy should signal that the European Union means business regarding its sustainability policies in the electronics, textiles and plastics sectors. It is also clear that the European Commission is set to become more assertive in using legislative instruments to promote indigenous technology and leverage equal market access.

Content provided by Picture: HKTDC Research
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