Under the mandate of WCO (World Customs Organization) in 2020, customs agencies play a pivotal role in supporting sustainable supply chains globally: “Customs fostering Sustainability for People, Prosperity and the Planet”. Governments in many countries published guidelines and regulations pertaining to the import and export of waste and scraps; this is to support the transboundary movement of waste, and to ensure that import/export activities follow the regulations imposed by the international convention. Companies in the recycling or textile & garment industries which are involved in cross-border trade will need to be mindful of such controls as mandated by relevant competent authorities within their markets of operations. It is also critical for enterprises within the electronics industry, due to electronic waste such as lithium batteries or fridge compressors.
Similarly, in order to prevent any dumping of used machines that may be harmful to the environment, governments in many countries have imposed strict controls on the importation of such second-hand equipment. Some possible challenges are: (a) Valuation of used machines, (b) Certificate of conformity issued by recognized regulatory authorities, (c) Complete import ban for used machinery and equipment. Multinational corporations planning to relocate their factories or warehouses in different countries in order to hedge against risks in their supply chain operations will have to take such regulations into consideration so as to avoid any delays or regulatory violations.
Since 2023, 184 countries and territories have agreed to join the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). This multilateral treaty aims to protect endangered plants and animals from the threats of international trade. The buying and selling of animal parts such as elephant ivory, rhino horn or shark fin is prohibited under CITES in many countries. For importing or exporting products using leather from animal skins or timber wood, the traders will need to obtain a CITES permit/certificate by the issuing authority, to certify that the conditions for authorizing the trade are fulfilled; this means that the trade is legal, sustainable and traceable as per the relevant regulation.
Last year, the European Union announced a plan to impose a tax on imports based on the greenhouse gases emitted during manufacturing processes. Intended to come into full force on January 1st, 2026, this tax is defined as a carbon border adjustment mechanism, and would be the world’s first border tariff on imported carbon-intensive products. The tax is calculated based on the Scope 1 and Scope 2 emissions associated with the production of goods, and would initially apply to those products whose manufacturing is the most energy-intensive, such as iron, steel, cement, aluminum as well as fertilizer; before expanding to other sectors in the coming years. The newly-proposed carbon import tax could have profound implications to all major exporters trading with their European customers.
It is necessary to review existing supply chain strategies in order to reduce the overall carbon emission footprint of such products. Some manufacturers may choose to move their production lines away from developing countries with less stringent emissions rules.