Sparks fly as compromise sought over packaging

Date: 01/05/1997

EIGHTEEN months after its first warning to the Bonn authorities, the European Commission has sparked anger across the Union by negotiating a compromise with Germany on its disputed packaging law.

The issue is being seen as a vital test of the Commission's willingness to take powerful member states to task for breaking EU rules, as well as for environmental legislation in the sector.

In financial terms, its effects are enormous. An estimated 63&percent; of the 850-billion-ecu worth of goods traded between member states is packaged before sale.

Amid widespread condemnation of Germany's packaging regime by half the EU's member states, opponents of the system fear the compromise being thrashed out will allow the Commission to shy away from legal action against Bonn for a breach of single market rules.

But Germany's problems are far from over. Last week, the upper house of the German parliament (Bundesrat) unexpectedly threw out changes to the country's 1991 packaging ordinance aimed at bringing it fully into line with EU legislation.

The Commission will now have to decide whether the unrevised ordinance complies with Union packaging laws which finally came into force last year. If not, Bonn could face yet another legal challenge from Internal Market Commissioner Mario Monti.

Meanwhile, Commission and German officials have been discussing ways to avoid a legal battle over the country's regulation that 72&percent; of its drinks market must be reserved for goods sold in refillable packaging.

In December 1995, Monti threatened legal action unless Bonn could provide proof that this was fully justified on environmental grounds.

The Commission's concerns are shared by a number of member states, which believe the measure is a form of indirect discrimination aimed at preserving market share for home-produced drinks.

Finland, France, Italy, Spain and the UK all sent Bonn 'detailed opinions' questioning the legality of the rule. The Netherlands and Sweden also criticised it.

The Commission nevertheless appears prepared to strike a deal which would exempt from the quotas two products - mineral waters and wines - exported to Germany over a certain minimum distance and fulfilling other precise preconditions.

The fate of the German legislation and, some believe, the Packaging Directive rests on a meeting on 19 June, when the Commissioners' advisers on infringement cases meet to decide whether to proceed with legal action.