GOVERNMENT & POLICY STASH CFC-12, the most smuggled ozone-depleting substance, is seized from a residence in Fort Lauderdale, Fla.
NATIONS FIGHT CFC SMUGGLING Despite efforts to combat illegal trading, it remains a problem that threatens ozone recovery BETTE HILEMAN, C&EN WASHINGTON
B
Y MOST MEASURES, T H E MON-
treal Protocol on Substances That Deplete the Ozone Layer has been a very successful treaty As chlorofluorocarbons (CFCs) have largely been replaced with substitutes in the industrialized world, the levels of ozone-depleting substances in the lower atmosphere have declined and seem to be stabilizing in the stratosphere. The ozone hole over the Antarctic is expected to recover by the middle of this century But illegal trade in ozone-depleting substances threatens this success. If the illicit trade in CFCs and halons (brominated halocarbons) continues unabated or increases, it could slow or even reverse recovery of the stratospheric ozone layer. Except for essential uses and feedstocks, the sale of virgin CFCs was banned in the U.S., the European Union, and other developed countries in 1996. And CFC production was frozen in developing countries in 1999. But banning or severely restricting any substance creates a black market if the substitute costs more or requires expensive retrofits or equipment replacements, as is the case with CFCs. CFC replacements, such as hydrofluo30
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rocarbon-134a (CH2FCF3), are not more expensive. But using HFC-134a in pre1993-94 auto air conditioners designed for CFC-12 (CC12F2) requires retrofits costing $150 to $800. And for fire fighting, especially on aircraft: and in certain military applications, it is difficult to develop a fire suppression system as effective as that which uses the ozone-depleting halon 1301 (CBrF3), says Lary Cook Larson, a trial attorney at the Justice Department who has worked on many CFC-smuggling cases. Klaus Tôpfer, executive director of the United Nations Environment Program (UNEP), says that an estimated 16,000 to 38,000 metric tons of illegal CFCs was smuggled worldwide in 1995. This amounted to about 15% of the total CFC trade at that time. The Justice Department estimates that a total of 60 million lb of CFCs, which has a profit margin second only to cocaine, has been smuggled into the U.S., says Bruce Pasfield, chairman ofJustice's CFC smuggling initiative. Since the mid-1990s, the US. and Europe have taken a number of steps to combat illegal trade in CFCs and halons. The U.S. has vigorously stepped up enforcement efforts. Five agencies—the Environmental
Protection Agency theJustice Department, the U.S. Customs Service, the Federal Bureau of Investigation, and the Internal Revenue Service—started cooperating about five years ago to combat this environmental crime. The result has been a great many high-profile arrests and convictions. In the mid-1990s, "we did some very successful prosecutions and the market for illegal product somewhat stabilized," says Pasfield. The EU has concentrated its antismuggling efforts on sales and use. In a recent regulation, it outlawed the sale and use of any CFC, whether virgin or recycled, except for so-called essential uses and feedstocks, such as for military fire suppressants and metered-dose inhalers. Although the EU has not convicted a single smuggler, the ban on sales may have deterred some illegal trade. BesidesJapan, "the US. is the only country in the entire world that has actually convicted people of illegally importing," says Thomas H. Land, chief of EPA's Stratospheric Implementation Branch. To date, 114 people have been convicted of illegal CFC-import schemes. They have been sentenced to a total of 56 years of prison time and $65 million in fines. In 1997, in an effort to combat this illegal trade, the parties to the Montreal protocol passed the Montreal amendment. Countries that ratify the amendment must set up a licensing system to control imports and exports of CFCs and other ozone-depleting chemicals. They also must set up a system of prior informed consent for exports. So far, the amendment has been ratified by 63 countries. Last year, UNEP conducted seven workshops to train customs officers in how to detect illegal imports. SOME EXPERTS believe the steps taken to combat smuggling have caused the illegal trade to decline since the mid-1990s. Others say that overall smuggling has probably declined in the US. and perhaps in the EU, but that the improvement has been offset by increases in the developing countries and inJapan. The 1999 freeze on production of CFCs in developing countries, for example, created a black market in India, China, and other developing nations. Officials at both theJustice Department and U.S. Customs say smuggling of CFCs into the US. went through several phases. In the mid-1990s, very large quantities were being brought in. When the initial phaseout started, "people were literally HTTP://PUBS.ACS.ORG/CEN
bringing in thousands oftons," Pasfield says. Some Europeans claim their system of Because of the successful prosecutions, banning sales and use of stockpiled and rehe says, "in 1998-99, we saw a significant cycled CFCs and halons is providing a dedecrease in smuggling. Now we're seeing terrent to illegal trade. However, critics an increase," but it is not at the level of the doubt that the EU system is working very mid-1990s. Now, people are bringing in well. 'The presumption that illegal imports 30-lb cylinders, sometimes on pleasure into the EU are no longer a problem is bad boats from the Bahamas to ports along the logic," Land says. "If you have equipment South Coast, he says. Each cylinder can that still uses CFCs and you don't want to sell for $800 to $1,000. buy new equipment, it doesn't mean you Pasfield expects a certain amount of won't try to get the stuff, especially when smuggling to continue in the U.S. because you have no enforcement. Environmental the demand for CFC-12 is outstripping laws are only as good as the enforcement." the supply According to EPAs "Report of In Central and Eastern Europe and in the Supply and Demand of CFC-12 in the developing countries, smuggling seems to United States," there are still about 27 mil- be proceeding at an alarming rate. And in lion vehicles on the road that have air con- the late 1990s, EIA found sophisticated ditioners cooled with CFC-12, and stock- networks supplying illegal CFCs and piles of CFC-12 produced before 1996 are halons mainly from China and Russia to nearly used up. markets in the U.S. and the EU Over the next three years, the number Since then, the multiagency U.S. task of cars on the road with CFC-12 air con- force on smuggling has deterred many inditioners will decline dramatically to about volved in the illicit trade from trying to 7 million in 2005. But in the meantime, about 9.3 million lb of CFC12 will be needed in 2002 and 6.9 million lb in 2003 for recharging those air conditioners, unless a significant number of these are retrofitted. Another factor keeping demand up is that many auto mechanics do not recommend retrofitting the car's air-conditioning system to use HFC-134a because, they say, retrofitted systems do not work very well. So these mechanics need to keep a supply of CFC12 to use when the coolant needs to be recharged. If CFC-12 demand outstrips the U.S. supply "smuggling is going BUSTED A customs agent finds CFC-12 being to meet the demand," Pasfield ex- smuggled into the U.S. on a boat. plains. The smuggled material would probably come from India, China, smuggle into the U.S., Clark says. Mexico, or Venezuela, where CFC-12 can But the U.S. remains a target for some be manufactured legally until 2010, he says. smugglers, and the EU is still a transshipIn the EU, it is very hard to know the ment point and market for illegal CFCs, he trends in illegal CFC trade because little ef- says. In a recent case uncovered by EIA, fort has been made tofindsmugglers, and CFCs were being moved from the Asianone has been convicted. "It is a different Pacific area through two European ports. strategy We've gotten to the end user," says Shipping papers said the declared destiEzra Clark of the Environmental Investi- nation was a Carribean island, but the U.S. gation Agency (EI A), which has been con- was the actual ultimate destination. In ducting detailed research into the world- 2000, a CFC shipment seized in Florida wide trade in CFCs since the mid-1990s. was found to have been manufactured by EI A is a nongovernmental organization a British firm, HRP Refrigerants. headquartered in London. The EU sales and use ban is being sab-
otaged by smugglers, Clark says. Cylinders of CFC-12, labeled as HCFC-22 (which does not deplete ozone), have been smuggled from Lithuania, Poland, and Russia and sold to refrigeration companies in Denmark, he says. EI A also has uncovered a huge amount of smuggling along the border between India and Nepal, an activity motivated partly by the high import fees India imposes on CFCs. "Between early 1999 and March 2000, around 880 metric tons of ozonedepleting substances were smuggled into India," says an EI A report titled "Unfinished Business." NEPAL HAS a special arrangement with India that allows it to import goods through India without paying the Indian import fees. Cargo lands at an Indian port, is sealed by Indian customs, and taken to Nepal. CFCs were imported into Nepal and eventually smuggled back into India in this way. According to EIA, Nepal imported 422 metric tons of CFCs in 1999 and 2000, compared with its usual annual consumption of about 50 tons. Alarge part of the imports were produced in Spain by Elf Atochem (now Atofina) and transshipped via Dubai or Singapore to India and then to Nepal. EIA began undercover operations to determine how the IndiaNepal smuggling schemes were carried out. In one type of operation, 13.6-kg cylinders of CFCs in cardboard boxes were imported into India and transported to storage facilities in Birganj, Nepal, on the border with India. They were moved between different storage areas before being packed in sacks. The disguised cylinders were then taken to the village of Inarwa near the border with India. These were then smuggled into India in small batches at night. Many other methods are used in India to carry out illegal trade in CFCs. Some involve hiding CFCs in ships that are headed to India for shipbreaking, or recycling of the material in the ship. Nepal has recently passed legislation to control its CFC imports. "But we are not entirely sure yet whether the legislation will be effective or not," Clark says. "We are not sure whether Nepal is enforcing it.
If illicit trade in CFCs continues unabated or increases, it could slow or even reverse recovery of the ozone layer. HTTP://PUBS.ACS.ORG/CEN
C & E N / M A R C H 2 5 . 2002
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GOVERNMENT & POLICY Nepal has a huge border with India that is almost a lawless area," he explains. In addition to Nepal and India, EIAhas found that smuggling of CFCs is on the rise across much of South Asia. Part of the motive for the illegal trade has been to increase the apparent domestic consumption of CFCs so when the treaty-mandated phaseout begins, the country will be phasing out from an inflated baseline, Clark says. Another motive is to avoid the high taxes charged by some countries. Various elements of the Montreal protocol have contributed to the prevalence of the illegal CFC trade, says Gilbert Bankobeza, a senior legal officer at UNEP's Ozone Secretariat. The most obvious is that developed and developing countries do not have the same phaseout schedules. This allows developing countries to continue to produce certain CFCs while developed countries must phase them out. So, if a developing country is shipping CFCs to another developing country, that may be legal, but if it ships to an industrialized country, that is probably illegal. These complications make it difficult for customs officers to distinguish
between legal and illegal shipments. Another complication is that recycled CFCs can be sold in most developed countries. So if a shipment of CFCs is being shipped to the U.S., it may be legal if it is recycled. But there is no definitive test a customs officer can use to distinguish between recycled and new materials. SMUGGLERS have taken advantage of these complications in the protocol to engage in illegal trade, Larson says. CFCs produced in Mexico maybe shipped legally to India, for example. Then the shipment is disguised and shipped to an industrialized country where it is sold on the black market. Smugglers sometimes disguise shipments by simply labeling the material as a hydrochlorofluorocarbon, for example, which is not an ozone depleter. Another trick is to use a cylinder within a cylinder. A legal material is placed in the small inner cylinder that has exterior valves on the top for inspection, "while the larger cylinder contains the illegal CFCs and has hidden valves in a secret compartment on the bottom," Larson says.
For several years starting in 1996, Russia was one of the major sources of illegal CFCs coming into Europe and the U.S. Although Russia had a domestic CFC consumption of only 21,000 metric tons, its factories had a production capacity as high as 100,000 metric tons. To stop this trade, the World Bank gave Russia a grant of $26.2 million in 1998 to close its CFC factories and compensate the firms for lost production. World Bank personnel inspected the factories last year and concluded that their equipment had indeed been destroyed. However, there are still huge stocks of CFCs in Ukraine that are being smuggled into Eastern Europe. EIAs Clark believes that the only way to sharply reduce trade in ozone-depleting substances is for the UN Ozone Secretariat to set up an illegal trade prevention task force. The task force would consist ofpersonnel with frontline enforcement experience and would engage in site visits to gather information and assist national enforcement efforts. EIA will be presenting this proposal at the next Montreal protocol conference, Clark says. •
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