European green directives expected to hit hard Taiwan's economy

May 23, 2005 Ι Industry In-Focus Ι Furniture Ι By Ken LPM, CENS
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Taipei, May 23, 2005 (CENS)--The three European environmental-protection directives--WEEE, RoHS and Eup--will likely impact 3.92% of Taiwan's gross domestic product (GDP) once they are put into force beginning in the second half this year, the Ministry of Economic Affairs (MOEA) estimates.

The ministry estimates the three directives to hit an estimated NT$400 billion (US$12.9 billion at US$1:NT$31) worth of Taiwan-made electronics and electrical products, which is tantamount to 3.92% of the island's GDP.

Currently, Taiwan ships around NT$330 billion (US$10.6 billion) worth of electronics and electrical products to Europe a year. The ministry estimates that the three directives will put a damper on 44 items of Taiwan-made electronics and electrical products, which account for nearly a half of the 81 items put under the governance of the three directives, by increasing the Taiwanese manufacturers' spending on reclamations and environmental-friendly materials as well as components.

WEEE (Waste Electrical and Electronic Equipment) and RoHS (Restriction On The Use Of Certain Hazardous Substance) request all imported electronics and electrical products meet the rule stipulating that the products must be 55% to 75% recyclable in materials, components and processes. Otherwise, they are not allowed into the European Union.

Impacted range, the ministry adds, will expand further if the Europe-bound products are manufacturers by Taiwanese investors in mainland China are taken into account.

In the meantime, the ministry warns that mainland China is drafting rules similar to the WEEE to prevent foreign suppliers from dumping poisonous electronics products and household appliances to the mainland, shutting the door to foreign suppliers intending to ship Europe-rejected products back to the mainland.

Germany will begin to implement WEEE in August this year, making it the first European Union country to put the green directive into effect. The Union plans to start conducting RoHS directive on July 1 next year. European Parliament is still reviewing Eup (Directive For Setting Eco-Design Requirement For Energy-Using Products).

Taiwanese suppliers, MOEA suggests, may make most of the delayed implementations of the three directives that EU grants to its 10 new members in eastern Europe as a buffer for their preparations for the directives. Czech, Hungary, Latvia, Lithuania and Slovak to roll over the implementation deadline by 24 months.

Taiwan Electrical and Electronic Manufacturers' Association (TEEMA), which represents the majority of the island's manufacturers of electronics and electrical products, points out that most of the island's big manufacturers have been well prepared for the directives whereas its small and medium-size manufacturers have not. The association adds that the small and medium-size manufacturers account for around one third of Taiwan's exports of electronics products.
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