| Author: |
Ian Glogoski |
| Publication: |
Czech business weekly |
| Date: |
2. 7. 2007 |
There are hidden obligations in the laws for waste electrical and electronic equipment (WEEE), and paying a fee to someone else (a collective) to help you meet your obligations doesn’t fully absolve you of responsibilities at all. The law in the Czech Republic is based on an EU directive, but as with any implementation of a directive it contains specific Czech provisions and, thus, its own peculiarities are subject to local interpretation.
WEEE law is administered principally by the Ministry of the Environment. Because of the specific relevance that the law has for each business, there’s a need for a consultation process with large sectors of the business community that are affected in order to alleviate uncertainties and understand the law’s logic.
As is often the case, the business community bears the full cost of compliance and for the costs to dispose of the waste-although, eventually, these costs are passed on to the consumer in the pricing mechanism for products.
In addition to the more obvious consumer products of televisions, DVD players, stereo equipment, refrigerators, washing machines and vacuum cleaners, what else do the WEEE obligations cover? WEEE covers electronic toys, parts for cars, vending machines, slot machines and heart monitors worn by athletes. In addition to the WEEE products, there are also separate guidelines for batteries, lights and lighting, tires and other products.
A business may operate a central purchasing operation in the EU and, as a consequence, bring goods for use in its business to the Czech Republic. As such, it’s going to have a WEEE exposure.
Consider an advisory firm that imports computers for its employees; a food company that imports refrigerators to display its products at a retail site where the fridge is put at the disposal of a vendor; or a research and development unit, or quality control unit acquiring testing equipment from another state for use in a manufacturing process. That the goods are fixed assets and not stock in trade makes no difference from a WEEE perspective. In addition, WEEE from private households should be considered to include WEEE of a similar character and amount that comes from legal persons authorized to operate a business. What do you need to do-in addition to the obvious requirements-to mark a product with recyclable logos when moving the product on? The vast majority of companies with obvious WEEE obligations have entered into agreements with collectives to contract such entities to meet their practical recycling obligations, paying the collective an appropriate fee. However, such a payment doesn’t absolve a company from its own obligations to ensure that, in fact, the recycling occurs. If the recycling doesn’t meet the minimum requirements, the companies, not the collective, ultimately will be held responsible.
Thoughts of suing the collective for nonperformance under a contract has no benefit as the funding of the collective is, of course, by the same parties who may wish to sue it.
Hidden catches Companies must consider how to protect their position by ensuring the collective has taken back and recycled the appropriate amount of waste for the benefit of the company paying the fee.
Those companies buying electrical and electronic products from other “Czech“ vendors are not relieved from WEEE obligations. Given the structure of international trade and the chain transactions within an international supply chain, it’s not uncommon for a nonresident entity to be making a supply of electrical goods in this country. Take, for example, a local business charging value-added tax (VAT) but not in business here as seen by commercial law and through one interpretation of WEEE law.
In such case, the sale is not liable to WEEE obligations in the hands of the vendor but is in the purchaser. That is, a local Czech purchaser who could very easily assume that the vendor has the WEEE obligations, given the goods have been purchased in this country. How does a purchaser in such cases identify its exposure and manage its WEEE risk given there is no obligation on the vendor’s part to confirm to any purchaser that WEEE obligations have prima facie been met?
Chain transactions also impact the level of fees paid to a collective when considered in the light of the subsequent removal of goods from the Czech market. In an ideal situation, the sale for intracommunity dispatch or export results in such electronic goods not being liable for any WEEE recycling obligations in this country. A fee will, of course, have been accrued or paid in an early stage of the chain transaction which is now an overpayment of such obligations.
With the cost of the WEEE charge being often an unidentifiable component of the selling price in the chain process, the right of recovery of the overpaid WEEE fee is now a commercial consideration for the parties. Who will make the claim and how will the refund be paid to the “exporter,“ who is the last person in the chain to suffer the cost of the fee, but who, by its actions, ensured no local WEEE cost should arise?
It’s useless to look to the law for assistance. The issue of refunds or remissions of the payment of any WEEE fee is a matter of commercial consideration and of the contract the parties have entered into with the collective. Options that exist for refunds should exist within the collective contract, and procedures need to be stated clearly and followed carefully. However, it should also be possible in chain transaction arrangements, with related parties particularly, to negotiate a “net“ WEEE fee based on the chains’ activities. The benefit here is to reduce the cash flow cost of the WEEE fee for products ultimately destined for a country outside the Czech Republic. It will also reduce administrative costs in the long term as systems are created to correctly record the level of products finally put to the Czech market that are subject to take back and recycling.
WEEE obligations and liabilities are still in a very early stage of identification, clarification and quantification, both in terms of recording and reporting exposures, and paying for the cost of picking up and recycling. The cost to business will only grow as the recycling targets increase over the next years. Businesses must take a proactive approach to managing such obligations rather than simply paying a fee to a collective and assuming it’s the end of the matter.
