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August 15, 1997
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Lit -TWnrSMnNFr W so W I ROW Y21; L ON W International Environmental Intelligence Brief DCI Environmental Center 15 August 1997 Contents Articles EU Seizes Illegal CFC Shipment Page India Seeking Funding from Montreal Protocol 3 DCI Environmental Center Begins Work In Brief Calendar Climate Change Talks Make Little Headway Concerns South American Project Fuels Environmental and Business Chile Struggling To Balance Environment Drought Affecting China's Grain Crops Slowly China Improving Environmental Policy APPROVED FOR RELEASEL DATE: 17-May-2011 EU Seizes Illegal CFC Shipment The EU -recently announced the seizure of more than 150 tons of illicit CFCs in the Netherlands and the arrest of a suspectin Germany cooperative effort among EU customs officials to curb the flow of illicit Russian, Chinese, and Indian CFCs through EU member states since January 1995 when CFC production was banned in the EU. Much of these illicit products are smuggled into the US. Customs authorities from Germany, Belgium, the UK, and the Netherlands-in conjunction with the EU's Anti-Fraud Unit-cooperated in the operation that uncovered the smuggled materials. The CFCs were brought into the EU from China using false certificates of origin and declared as used CFCs for recycling. Smugglers mislabel virgin CFCs as product for recycling to take _ advantage of -W rules permitting a limited quantity of CFCs for recycling to be imported under a quota system. about one-half of the 15,000 to 20,000 tons of illicit CFCs from Russia are smuggled into the US each year, much of it passing through European trading companies. In response to growing complaints from producers of ozone-safe CFC alternatives and from the Montreal Protocol Secretariat that EU inaction is fueling the CFC black market, the Commission has been looking for ways to tighten up the import licensing regime for CFCs. EU officials will highlight this seizure to underscore the Union's commitment to enforce Protocol provisions when the Montreal Conference of Parties meets next month. re India Seeluna Funding from Montreal Protocol The Indian Government is demanding s funding from the Montreal Protocol Secretariat for chlorofluorcarbon phaseout and is insisting that India be permitted to _ export CFCs to other developing countries. _ New Delhi is trying to defuse potential criticism by passing and heavily publicizing laws that encourage compliance with the Protocol. - _ .. _ __ _ -- At the June Protocol working group meetings, Indian representatives pushed for a large increase in :funding for developing countries in general -India probably sees US backing for a proposed World Bank??led project to ___ help finance the closing of Russian CFC plants as a signal that i.t rni ht ual_ify_ for sixnilar aid. In addition, India wants to repeal the Protocol clause that allows industrialized . countries to export 15 percent of their I98~ CFC output to developing countries and is demanding instead that India be allowed to produce for export. The Protocol permits India to produce for domestic consumption only. According to press reports,. the Indian_ _ _ Government in 1995 prohibited new production capacity for the manufacture of CFCs and indicated_t intended to: draft a__law banning the use of CFCs completely by 2010; both are consistent with Montreal Protocol provisions. Nonetheless, CFC producers are unlikely to engage in early phaseout activities and seem intent on expanding their domestic and international market share of CFCs while waiting for international assistance before converting production to ozone-safe alternatives. =India expanded its production capacity from 5,500 metric tons per year in 1987 to 25,000 mt in 1992 --_ Because domestic consumption amounts to about 6,400 mt per year, large quantities of Indian CFCs enter the black market; China Improving Environmental Policy Slowly Over the. past two months, China's three top senior political leaders have made positive statements about the need fox greater protection of the environment. At a recent Communist Party forum or- the environment, Jiang called on government officials to take the environment into corisicteration when making policy, according to official Chinese press reports. - Li Peng said that China should "never sacrifice the environment for- temporary [economic] growth." - In June Qiao Shi, chairman of the National People's congress (NPC), voiced similar concerns, calling for greater investments iri environmental protection and arguing that China cannot afford do .pollute now and clean up later, according to (~hinese press reports. The national legislature and local communities are showing more activism, but central and local authoritie;> appear willing to address environtnental problems only when it can be done cheaply. Last year the NPC passed environmental legislation covering air, water, noise, and solid-waste pollution and recently promised to do more this year, according to Chinese press reports. The National Environmental Protection Agency (NEPA) is showing signs of __ becoming more aggressive in enforce- ment. In April NEPA closed 62,561 enterprises identified as severe,polluters in 21 provinces; however, most of the plants were small smelters, coking plants, and papermills without much political influence or a large work farce. - In prosperous cities, the public is beginning to speak out on environ- mental issues, and local governments are sometimes responding. In Guangzhou, with the country's highest urban per capita income, public demands for a cleaner city led the municipal government to devote more resources to environmental cleanup. - A Beijing citizens' protest last manth against a local garbage dump for polluting air and groundwater led the ~ environmental protection municipal agency to investigate. Nonetheless,- ensuring economic growth and high levels of employment continue to take precedence over environmental concerns. We have yet to see movement on key indicators of policy reform such as the central government endowing NEPA with greater enforcement authority or an increase in spending on environmental technology. The central government pledged to invest $21 billion in environmental programs and equipment during the current Five-Year Plan (1996-2000), but Western press reports indicate it has spent only a small fraction of that amount. ~~ei~ -Chinese officials have identified 2010 as the year when China will be sufficiently developed to dedicate more resources to environniehtal protection. cret Drought Affecting China's Grain Crops hina's grain production is 480 million rnetric tons, about 23 million tons less than the record last year. This is slightly lower than Beijing's official forecast of 484. million rnt. --- Major losses in the corn and spring wheat crops are expected in the provinces bordering o~i North Korea, the east coast provinces of Shandong and Jiangsu, and in the southern province of Jiangxi. - A record harvest of early grains this sumrner-=mainly winter wheat and the first of three rice crops-represents only a fourth of total production and will not compensate for drouglrt-related losses. The shortfall is unlikely to have a signi- ficant impact on Chinese grain imports or inflation, however. With record grain imports in 1995 and a ban on corn exports for the past two years, China's stocks have risen to nearly 150 million tons -These supplies are likely to be drawni down to keep meat anel processed food prices stable. Without an increase in Chinese cereal imports; slow US grain sales-historically a driver of US exports to China _ will contribute to the expandin?; trade deficit. In the first five months of this, year, US cereal exports declined more than 95 percent as compared with the same period last year. $16.9 billion in May and should reach $53 billion this year. Tighter supplies in China could reduce its barter exports and aid to North Korea. Because food accounts for roughly half of average household expenditures, according to o, fficial Chinese press reports, grain shortfalls in the past have had a substantial effect on general inflation. Falling grain prices this year have helped push inflation. close to zero-retail prices rose 0.8 percent an the year through May. Chile Struggling To Balance Environment and Busirxess The resignation last month of the director ____ __ of Chile's National Environmental Commission (CONAMA) reflects the Frei administration's dilemma of promoting economic development while protecting the environment. Press reports suggest the former director was pushin g for stricter environmental controls on a controversial dam project that Frei supports. -The new director has little relevant experience acid is Likely to take a less critical stance on tie government's gradualist approach to environmental protection. Since its establishment in 1994, CONAMA has only marginally altered Santiago's reliance on ad hoc regulatc-ry bodies with blurred lines of authority. The commission has few enforcer~nent mechanisms or resources---its annual budZ;et in_ 1995 was only $11 million-and its. decisions are sometimes challenged in the courts. ---The Supreme Court in March annulled CONAMA's approval of a US-based _ firm's forestry investrent and a local court delayed the startup of the GasAndes natural gas pipeline linking Chile acid Argentina, a project that includestwo US firms. Despite such difficulties, Frei last week announced a new $600 million pollution control plan for the capital, which will levy fees on large factories failing to reduce emissions. CONAMA is analyzing 51 pending investment projects worth $5 billion, and strict guidelines enacted in April expand the number of companies required to submit environmental impact studies. Santiago's environmental regime is one of -the region's most advanced, a point officials will stress when Chile's eligibility for NAFTA accession is debated. Chilean businesses generally are opposed to including environmental standards in a trade agreement, but they are unlikely to risk scuttling a deal unless the conditions become too onerous. ~'S~tTSil- cre South American Project l~ uels Environmental Concerns A Belgian company has started the first phase of~a project to widen`and deepen the ~~ Parana River, which runs. through Brazil, Argentina, and Paraguay. -The $700 million undertaking will facilitate intraregional trade, but environmental groups argue it will severely damage Brazil's Pantanal region, one of the largest wetlands in the world. - The Brazilian Government, which is _ _ .jointly funding the project with its _ _ neighbors, tends to agree with the environmental groups as not empere its support. Paraguayan President Wasmosy, the waterway's most ardent supporter, has published his own environmental study tliaf concludes the impact will lie relatively benign. During his recent tour of similar projects in the US, Wasmosy asked Washington for $2.5 million to fiend additional impact studies, apparently to defuse opposition. -Construction is likely to continue, as public support for the project's economic benefits outweighs concerns about its environment;~l impact. ecret Climate. Change Tallcs Make Little I3eadway The talks that ended lasf week in Bonn to formulate a negotiating text for a protocol to_ the climate chap a convention made slow progress The protocol effort aims to cone u e an agreement to reduce carbo~z emissions from fossil fuel combustion by a.December ___ _ ministerial meeting in Kyoto. Argentina and Brazil were willing to cooperate with developed countries on emissions trading and joint implementation, but other _ governments tended to resl.ate their own positions rather than to compromise. -Australia and Norway-both major fossil fuel producers--insisted on differentiated targets teased on GDP _ energy intensity, per capita~carbon emissions, or trade dependence on fossil fuels as the only equitable way to reduce emissions. -Thailand (for the Group of 77 developing countries) continued to ~~ demand significant carbon reductions from developed countries before LDCs would commit to any donstraints on their own growing emissions. The UK (for the EU) and Firance defe_ nded_ the EU approach for one emissions reduction target to fit all. Tokyo concentrated its effort on increasing the pressure on China to rriake emissions commitments and on attackin the EiJ's approach In addition, Japan accepted the US emissions target budget concept for multiyear emissions accounting. Slow progress this summer has given urgency to ministerials and summits in the autumn to prepare for Kyoto. New Zealand _ has proposed a meeting for October in Toronto to thrash out differences, and Japan is urging a small ministerial of major OECD countries plus Russia for November. re DCI Environmental Center Begins Work The new DCI Environmental Center-wh ch will be fully operational by 1 October-will _ comprise members of the Intelligence Community and~reIated civil grid defense agencies. -The Center's objectives are to _ assess the national security implications of environmental issues, including the role of environment in exacerbating regional instability, conflict, and economic decline. --~ It will provide direct support to - policymakers on environmental crime, treaty compliance, and negotiations. In Brief East Asia because of opposition from business groups. from $10 to $4,000 er offense and bans toxic-waste . imports Suharto may not sign bill - Indonesian legislature passed revised environmental protection bill ... includes increase in fines on polluters - Russia last week ratified Antarctic Treaty's Protocol on _.._ - -- - -Environmental Protection ... 25 of 26 Consultative Parties - on board ... Protocol makes area natural reserve and promotes safe waste management ... __ .. _ _ - - - Americas -- Brazilian senate recently passed first ever environment ....crime law imposing fines, imprisonment for illegal logging, -- _ .- _ _ _ pollution ... needs approval of the Chamber of Deputies to become law ... if enacted, will help deter worst violation _ __ _ lack of resources could impede_effective enforcement. raziI to auction timber extraction rights in . _._an_ Amazonian national forest through regulated concession system to deter illegal logging manpower, equip- ment, and budget will hamper enforcement ... harvest to begin _. by late next month. 11 Calendar -- Selected International Environment-Related Meetings Forum 10-18 September -Ninth Conference of Parties to the Montreal Montreal Protocol 22.24 September WTO Committee on Trade and the Geneva Environment 28 September--10 October l~rst Conference of Parties to the Rome Desertification Convention 7-14 October Fifth Conference of Parties to the Basel Kuaia Lumpur Convention 13-17 October Ad Hoc Expert Group Meets on Biosafety Montreal 13-22 October Eleventh World Forestry Congress Turkey 20-25 October I7NECE Convention on a Protocol on Geneva Persistent Organic Pollutants -Working Group 27-28 October NATO Committee on Challenges to Modern Society (CCMS), FaII Plenary 27.31 October Nineteenth Meeting of Parties to the 1972 London London Convention for the Prevention of Marine Pollution by Waste Dumping APEC Workshop on Environmental Osaka Technology Exchange 30 November Defense Ministerial of the Americas Cartagena Third Conference of Parties _ to the Cliinate~hange Convention 12 re'