Why few are willing to raise a stein for German

By Karen Carstens

Date: 23/10/03

Germany seems oblivious to the furore caused by its mandatory deposit scheme, writes Karen Carstens

YOU can always reason with a German. You can always reason with a barnyard animal, too, for all the good it does."

These words, uttered by American political satirist P.J. O'Rourke in his hilarious Holidays in Hell travelogue, may not be politically correct, but they conjure up old cultural stereotypes that die hard.

And many would agree that this is exactly how Berlin has been acting during the ongoing drinks deposit furore that has seriously irked the packaging and beverage industries, as well as most member states.

Internal Market Commissioner Frits Bolkestein, meanwhile, has been chomping at the bit to take some tough action against the mandatory scheme in Germany, where since 1 January this year all non-refillable containers for beer, water and carbonated soft drinks have carried a deposit charge.

But he has been thwarted, insiders say, by both high-level political machinations between the EU executive and the German government, and by internal opposition from Environment Commissioner Margot Wallström.

"It's a farce," said Julian Carroll, head of packaging industry body Europen.

"There's no question it's a disruption of the internal market. It's been happening since 1 January and the Commission is still waffling around."

Toine Manders, along with fellow MEPs Klaus-Heiner Lehne and Willi Rottley, challenged the Commission in a debate on Tuesday (21 October) in Strasbourg to finally take action on the matter by immediately launching infringement proceedings.

"I'm in favour of deposit systems because they are good for the environment and good for industry," said Manders. "But we also need an internal market system that works."

The Commission did, however, blow the lid off the system on Tuesday, by announcing it would fire a first warning shot against Germany for failing to meet a 1 October deadline for Berlin to set up a nationwide collection scheme for the bottles and cans.

The Commission had announced a three-week extension of this deadline on 1 October, buying the German government more time to come up with a sane solution.

Commission spokesman Jonathan Todd said that a "letter of formal notice", the first step in legal action against a member state, would be sent to Germany.

But setting up such a nationwide system - collection schemes have been fragmented to date and many stores and supermarkets have stopped stocking the cans and bottles affected by the new system - could be costly.

Retailers have estimated that total costs, including setting up safeguards against fraud, would be around €1 billion.

Since the deposits of 25 euro cents on containers up to 1.5 litres and 50 euro cents on larger containers were introduced, a handful of returns systems have been introduced.

Some accept all containers of certain specification, others are bottler or retailer specific, but so far these systems have only handled a small percentage of all containers, according to specialist online news site ENDS (Environment Daily).

So far, said Manders, 2,500 jobs have been lost and 15,000 are currently at stake. Moreover, he added, some €400 million in deposits have not been paid back to consumers.

The practical ramifications of the system are that if you buy a bottle of water or a can of cola at a train station kiosk, then you can usually kiss your deposit fee goodbye because the container must be returned to the place of purchase to get the deposit back.

Manders said the Commission has been slow in reacting largely for political reasons.

To patch up badly hurt German-Italian relations after insults lobbed by Prime Minister Silvio Berlusconi's government against Berlin, Commission President Romano Prodi promised Chancellor Gerhard Schröder to go easy on the deposits issue, said Manders.

Carroll concurs with this widely held view, adding that it is a shame that what should essentially be a "trade issue" has morphed into a sweeping political debate.

"The farcical thing is that here is Germany, on its knees - at least in economic terms - they've got four million people out of a job, they've got a huge deficit and they're wasting all this time on a purely trade issue."

Recycling rates are already quite high in Germany - only 4% of packaging ends up in landfill sites.

Todd said the problem is "particularly acute" for manufacturers located outside the country.

"Ninety-five percent of Germany's imported beverages are in one-way [non-refillable] packages," said Todd. "This [deposit scheme] doesn't make environmental or economic sense.

"In many ways, one-way packaging can be more environmentally friendly than reusable packaging," he said, adding that one-way packaging is often lighter and made from materials that are easy to recycle.

Germany's environment minister and many green groups would beg to differ, but even Green MEPs like Manders are wondering if the German "solo solution" was such a good idea.

Manders said that an EU-wide strategy focusing on promoting totally recyclable bioplastics and other ecologically sound packaging would make more sense.

The decision to introduce the deposits scheme in Germany has its roots in a 1991 decree, brought in under a Christian Democrat-led government. This stated that if the proportion of refillable glass and plastic bottles in circulation fell below a set level - which it did in the late 1990s - the deposits would kick in.

The German government tried to negotiate an agreement with business between 1998 and 2001 to increase the proportion of refillable bottles in use. Having failed, it then tried to get a law passed in 2001 and 2002 but failed again.

Last year, German Environment Minister Jürgen Trittin decided to get tough and imposed the deposit.

So far, the scheme has mostly favoured small south German brewers, most of whom are too puny to invest in can-filling lines. Beverage Can Makers Europe says that 7.2 billion cans were sold in Germany last year, more than half of them containing beer.

The market is worth some €580 million per year, and Ratingen-based Ball Packaging Europe commands around half of it. The association estimates that sales of cans in Germany fell by about 50% in the first half of this year. Ball Packaging Europe, which sold 13 billion cans in 2002, saw its German sales drop by 60%.

Meanwhile, the companies with the greatest exposure to cans - Hannen, Oetiinger, Radeberger and Brau & Brunnen - are being hit the hardest.

"Our rulers are behaving like apprentice sorcerers," an outraged Ulrich Kallmeyer, chief executive of Radeberger, Germany's third largest brewer, thundered at the company's annual meeting earlier this year. "Europe is once again marvelling at this original German custom: the self-destruction of a well-functioning market."

Article forms part of a survey on recycling. Germany seems oblivious to the furore caused by its mandatory deposit scheme on non-refillable containers for beer, water and carbonated soft drinks.

http://www.europen.be/whatawaste.doc http://www.europen.be/whatawaste.doc

---