Introduction

The purpose of this Ministry Paper is to provide information on the new trade regulations to be introduced for the scrap metal industry. Scrap Metal was previously removed from the list of items requiring an export license in 1992, but based on recent developments in the industry it has become necessary to again regulate exports from the sector.

Background

For the purpose of this Ministry Paper, Scrap metal is broadly defined as “discarded metals suitable for reprocessing”. A more detailed definition would include “old metal, second-hand metal, discarded metal, broken metal, defaced or old metal (including machinery and plant), whether wholly or partly manufactured” and “does not include gold, silver or metals of the platinoid group”. The definition includes all metals falling under Chapters 72 – 81 of the Jamaican Customs Tariff Schedule.

The global scrap metal industry has been growing at a rapid rate over the past decade. T he industry processes more than 145 million tons of recyclable material each year into raw material feedstock for industrial manufacturing around the world, contributing over US$65 billion to global GDP in the process. The demand for the product is further supported by a high cost structure due to the escalating costs for metal ores and spiraling fuel costs to smelt ore.

The growth of this industry globally has also been reflected within the Jamaican scrap metal industry. According to figures provided by the Jamaica Exporters' Association, scrap metal exports moved from US$13.3 million in 2005 to US$99.58 million in 2006, registering an increase of over 600% in one year.

Unfortunately, this rapid growth of exports within the industry runs parallel to an alarming increase in the theft of similar metals that support the country's infrastructure. Telecommunication cables, water pumps, manhole covers, railway lines, conveyor systems and bridge railings that constitute functional infrastructure and would not usually be defined as ‘scrap metal' have been stolen across the island.

A number of both public and private enterprises have reported theft and destruction to property by criminals that supply the industry. In a report given earlier this year, Cable and Wireless noted that over the past year the cost of repairing damage caused by theft of their telephone cables has cost them in excess of $51 million. The National Water Commission over one weekend in October lost over $6 million worth of equipment due to theft aimed at supplying the industry.

The trends being witnessed in Jamaica replicate similar experiences across the world. Earlier this year, Italy experienced severe delay in their train system due to the theft of copper wires along the tracks. A number of states across the US have also been reporting theft of copper wires that support their commercial infrastructure. Here in the Caribbean the problem has also infiltrated countries such as the Dominican Republic and Guyana , which have also experienced increased criminal activities related to the scrap metal industry. The latter country opted to ban the export of the product altogether in an effort to stop the damage being caused to the country's infrastructure and other productive sectors.

In Jamaica , the fact that the industry acts as a source of foreign exchange earnings as well as its significance to a number of persons who might otherwise be unemployed cannot be denied and as a result it is not desirous for the export of the product to be completely banned. However, it is widely accepted that the industry requires more stringent regulation in order to deter the level of criminal activities currently being witnessed as well as to ensure that no further damage is done to the country's infrastructure. As a result, based on consultations among government stakeholders, it was determined that the Government of Jamaica should move quickly to implement regulatory requirements for the sector.

As an interim response to the issue an Order, entitled “The Trade (Prohibition of Export) (Scrap Metal) Order 2007” was gazetted on October 31, 2007 to temporarily prohibit all exports of scrap metal until trade regulations are introduced. The Order recognized shipments already “entered” for export into the Customs Department system up to October 30 th 2007.

Following consultations among the key stakeholders, namely officials from the Ministry of Industry, Investment and Commerce , Jamaica Trade and Invest, Trade Board Ltd., the Office of the Parliamentary Counsel, the Jamaica Customs Department, National Water Commission, Ministry of Transport and Works, Jamaica Constabulary Force and exporters of scrap metal, policy guidelines for the development of Trade Regulation to govern the Scrap Metals Industry in Jamaica have been developed. These proposed guidelines are outlined in the following sections.

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