Mar 29, 2021

Law 20.920 is known as the EPR Law, and it was published approximately 5 years ago. It enacted the first law that tackled waste management and requires national priority product producers to manage their products at the end of their useful life when they become waste. However, the EPR Law made compliance with this obligation subject to a Supreme Decree that defines Collection and Recovery Goals ("Goal Decree").

"Packaging" is a priority product that extends producer responsibility to more than 40,000 companies, since producers include every company that supplies packaged goods to the domestic market. Therefore, this Goal Decree was eagerly awaited by the industry. It also contained exemptions, for example companies that produce less than 300kg of packaging per annum, and micro companies.

The Packaging Goal Decree was published on March 16. This decree sets goals for producers regarding the collection and recovery of their containers and packaging that become waste in proportion to the amount they supplied to the market. The regulations distinguish between household and non-household waste, and establish packaging subcategories within each, with different associated goal and time frame. The goals for household waste are distributed gradually over 12 years, while the time frame for non-household waste is 9 years. Both will become effective in September 2023, which is 30 months after the Decree was published in the Official Gazette.

Compliance with these obligations will first require a management system. The Decree establishes that the Environment Ministry has 18 months from publication in the Official Gazette to authorize a system based on a management plan, which is by September 2022.  Therefore, it is clear that the first challenge for packaging producers will be to choose how they will manage their waste and meet their obligations, using either an individual or collective management system.

One of the main differences between these two systems is that both individual and collective management systems comprised of less than 20 producers will only be able to meet their collection and recovery obligations using their own priority products that eventually become waste. However, collective systems comprised of 20 or more producers will be able to meet their goals using any packaging waste, regardless of who supplied it.

Another substantial difference between these two management systems is that only the collective system must be incorporated as a legal entity that cannot distribute profits to its members. Its articles of incorporation must ensure that it accepts any container and packaging producer that meets objective criteria, and it grants them equitable treatment, supported by a report from the Chilean Antitrust Court.

International experience regarding this treatment is diverse. For example, the Netherlands requires producers to join a single collective management system, with no profit distribution and no distinction between waste categories (Afvalfonds Verpakkingen). Producers of household waste in Spain must join a non-profit collective management system, while non-household waste management systems are voluntary. Germany has similarly regulations, with the difference that collective management systems for household waste distribute profits. Finally, Belgium has not mandated a specific system, but each producer can choose how to manage its waste. As can be seen, the system followed by Chile is the latter.

However, the Goal Decree did not resolve several specific public policy decisions, which will require addressing in the future. Firstly, the Packaging Decree does not establish who will be responsible for managing waste from imported products purchased online and sent by foreign producers direct to the final consumer in Chile for personal use. This issue should be addressed by the authorities, given the growth in these transactions. Comparative law provides various solutions. Non-resident foreign companies in Belgium and Germany must also participate in a management system. In contrast, these companies are not obliged to manage their waste in the Netherlands, as it is managed by the country's management systems, which gives them a competitive advantage over resident local companies.

Secondly, the coexistence of large collective management systems comprised of 20 or more producers is a challenge for the environmental authority. Although the Goal Decree grants producers the freedom to join a collective management system or to set up an individual one following the Belgian model, it does not regulate a scenario where there is more than one large collective management system (GRANSIC in Spanish) for the same priority product. A subject for discussion is whether recovery goals can be transferred between systems and the potential collateral effects of effective compliance on extended producer responsibility or on the distribution of demographic zones for the purpose of meeting collection and recovery goals. The German experience is particularly illustrative, since collective management systems coexist for household packaging, and a clarification centre has been set up for this purpose Clearinghouse – "which determines the participation percentages for each”.

However, regardless of the method chosen by packaging producers, or the practical solution adopted to resolve these problems, extended producer responsibility in the packaging market is already beginning to appear, and if all stakeholders fully collaborate, then we will move closer to a circular economy.