Closing the Gap: EU Harmonization and the Future of Ship Recycling

 

Global ship recycling no longer suffers from a lack of rules. It suffers from a failure to connect them. What is often described as a compliance gap is, in reality, a governance failure created by fragmented legal regimes that refuse to engage with where and how ship recycling actually takes place. The result is a system that is legally dense, institutionally complex, and operationally incoherent.

Bangladesh and India are today the world’s two largest ship-recycling states when measured by annual steel recovered from end-of-life vessels. In combination, they account for close to four-fifths of global ship-recycling activity. This dominance did not arise by accident, nor has it persisted through regulatory neglect. Over the past decade, both countries have undertaken extensive legal and technical reforms to align their domestic ship-recycling frameworks with international standards. These reforms were not symbolic. They followed detailed gap analyses comparing national law with the Hong Kong Convention and parallel assessments of hazardous-waste management regimes against Basel Convention requirements. Only after completing those exercises did India in 2019, and Bangladesh in 2023, ratify the Hong Kong Convention and restructure their approval systems, institutional oversight, and enforcement mechanisms to make compliance function in practice.

Under the Hong Kong Convention framework, the legal expectation is clear. Ships belonging to states parties should be recycled in facilities that meet convention standards. In response, a substantial number of South Asian recyclers have invested heavily in infrastructure, safety systems, training, waste-handling capacity, and compliance management. In India, close to 90 percent of facilities now operate within this framework. In Bangladesh, investment has followed a phased but accelerating trajectory. These developments reflect genuine regulatory convergence, not strictly paper compliance.

Yet despite this progress, the global system has reached an impasse. Roughly 30 percent of the world’s merchant fleet is owned by European shipping companies. Those beneficial owners operate under a regulatory regime that deliberately goes beyond international conventions. The EU Ship Recycling Regulation, operating in tandem with EU waste-shipment law, effectively prohibits EU-flagged ships and, in many cases, EU-owned ships from being recycled outside facilities appearing on an EU-approved list. That list currently contains no ship-recycling facilities in South Asia.

This exclusion is often framed as a question of standards. In reality, it reflects a deeper structural mismatch. EU requirements sit significantly above the Hong Kong Convention baseline, both substantively and institutionally. They assume advanced enforcement capacity, mature judicial oversight, and decades of regulatory consolidation. South Asian legal systems are improving rapidly, but they are not replicas of European governance models. That difference, however, cannot justify regulatory paralysis in an industry that depends on South Asia for its very existence.

The core problem is not that standards are too high. It is that no serious effort has been made to harmonize EU law with the geographical, economic, and industrial realities of South Asian ship recycling. The EU-approved list remains overwhelmingly concentrated in OECD states. Its aggregate capacity is negligible relative to global end-of-life shipping volumes, and its cost structure is fundamentally misaligned with the industry. Labor costs in OECD recycling facilities are commonly twenty to one hundred times higher than in India and Bangladesh. This is a significant efficiency gap. It determines, in practical terms, where ships can be feasibly dismantled at scale.

Cost, however, explains only part of the picture. Geography is equally decisive. South Asia enjoys a natural advantage that no regulatory reform can reproduce elsewhere. In Bangladesh, India, and Pakistan’s coastal belt, tidal variations of 30 to 40 feet are routine. This allows gravity-assisted beaching and dismantling, reduces dependence on heavy dock infrastructure, lowers energy demand, and permits sectional removal under controlled conditions when properly regulated. Decades of engineering, environmental, and occupational research confirm that no other region combines this tidal profile with an established industrial workforce, a secondary steel market, and deep supply-chain integration. This is not a policy preference. It is a physical constraint. No OECD coastline offers comparable conditions, and no amount of regulatory ambition can legislate geography out of existence.

Furthermore ship recycling, as per the ILO,  is the most dangerous activity and among the most labor-intensive activities in the maritime economy. As long as beaching remains the dominant dismantling method in international law , no high-income country can realistically compete with South Asia on cost, capacity, or throughput. India, Pakistan, and Bangladesh combine factors found nowhere else: extreme tidal variation, decades of accumulated technical experience, established re-rolling and resale markets, and a large workforce facing sustained employment pressure. Africa, meanwhile, is largely excluded by the Bamako Convention, while other developing regions lack comparable geography and industrial depth. Collectively, these factors make any meaningful relocation of global ship recycling beyond South Asia economically and legally unrealistic for the foreseeable future.

This reality exposes a structural contradiction in the current legal framework. EU-flagged ships may, in limited circumstances, be recycled outside the OECD if the receiving facility is EU-listed. Non-EU-flagged ships face a far more restrictive pathway. Once a vessel becomes waste within EU territory, the Basel Convention and, for many states, the Basel Ban Amendment effectively prohibit its export to non-OECD countries. This legal trap affects the remaining 70 percent of the global fleet that is not EU-flagged but nonetheless enters EU jurisdiction at end of life.

The result is regulatory gridlock. EU ships cannot access South Asian capacity because those yards are not listed. Non-EU ships cannot legally reach South Asia once classified as waste in EU territory. Both channels are blocked simultaneously. Shipowners are left navigating a compliance maze that no amount of good faith can resolve. In this context, harmonization is no longer a policy option. It is an operational necessity.

If the Basel Convention and the Basel Ban Amendment, which prohibit the export of hazardous waste from OECD to non-OECD states for any purpose including recycling, the Hong Kong Convention, which places no territorial restriction on the export of ships for recycling, and the EU Ship Recycling Regulation are to operate as a coherent system, new legal architecture is unavoidable. The most realistic path forward is a deliberate policy decision by OECD and EU states to extend their ship-recycling standards beyond their own territories through a system of certified equivalence.

Specifically, OECD states must recognize that ship-recycling facilities located outside the OECD may be treated as compliant for Basel purposes where they demonstrably meet OECD-level environmental, safety, and enforcement standards. In parallel, the EU must establish a formal pathway under its Ship Recycling Regulation for EU-standard certification of non-OECD facilities, particularly in South Asia, where global capacity actually exists.

Such an approach, arguably, does not dilute the Basel regime. It preserves its underlying logic. Basel was never intended to impose a blanket territorial prohibition divorced from performance. Its purpose is to prevent hazardous waste from being transferred to substandard facilities. Where a facility outside the OECD demonstrably operates at OECD standards, the scientific and legal justification for prohibition falls away. Compliance should turn on outcomes, not postal codes.

Under this model, EU-flagged ships recycled in EU-certified facilities outside the EU would remain fully compliant with EU law. At the same time, non-EU ships that become waste within EU jurisdiction could lawfully be exported to OECD-standard facilities in South Asia without breaching Basel obligations. The present contradiction dissolves. Both EU and non-EU ships gain access to safe, regulated recycling pathways aligned with global capacity.

This approach is practical, legally defensible, and grounded in existing regulatory practice. South Asian yards have already demonstrated that compliance trajectories can be managed through phased authorization, strict monitoring, and measurable benchmarks. Bangladesh’s recent experience with conditional approvals and structured reform illustrates that improvement is not speculative. What has been missing is international recognition of that trajectory.

The remaining question is financing. Upgrading and sustaining OECD- and EU-level compliance in South Asia will require long-term investment. How that investment should be structured, whether through polluter-pays mechanisms, shipowner levies, green transition funds, shared responsibility models, or blended public-private financing, is a legitimate and necessary next stage of research. Funding design, however, should follow legal clarity, not precede it.

Absent this policy shift, evasion will remain rational. Flag hopping will increase. Cash buyers will continue to dominate end-of-life transactions. Ownership chains will grow more opaque. Environmental and labor risks will remain concentrated in South Asia, while regulatory credit is claimed elsewhere. From a sustainability perspective, this arrangement is incoherent. Sustainability is not achieved by exporting responsibility while retaining moral authority. It is achieved by aligning law, economics, and geography.

For more than four decades, South Asia has been the nerve centre of global ship recycling. It will remain so for the foreseeable future. There is no alternative region with comparable capacity, workforce, market depth, and natural conditions. Unless ship recycling is reconceived as a permanently subsidized public service in high-income states, the global fleet will continue to rely on South Asia. The international community must acknowledge that reality. The real choice is no longer between regulation and flexibility. It is between functional governance and legal fiction.

Dr. Ishtiaque Ahmed is a Professor and Chair of the Department of Law at North South University, Bangladesh. A former Merchant Marine Engineering Officer, he holds a J.S.D. (Doctor of the Science of Law) from the University of Maine School of Law, USA, where he specialized in International Ship recycling laws and policy. He contributed to the drafting of Bangladesh’s Ship Recycling Rule 2025 (proposed) and revising Bangladesh Ship Recycling Act 2018 as the sole Legal Consultant. Dr. Ahmed is also a qualified Barrister of England, an active member of Chartered Institute of Arbitrators (MCIArb) in London and an Advocate of the Supreme Court of Bangladesh. His expertise lies at the intersection of maritime law, environmental regulation, and sustainable ship recycling practices. He can be reached at [email protected].