Description of sector

The water and waste sectors provide essential infrastructure and services to homes and businesses in the UK.

The Current EU Regulatory Regime

European legislation plays a greater role in determining the shape and size of the waste market than in water. Regulations include:
– those relating to activities that have a direct impact upon the general environment;
– those that impose financial and other obligations upon the producers of equipment placed on the UK market; and
– those that introduce substance restrictions.

Similarly, there is a larger set of international rules and standards relating to waste.

Legislation on provision of water and sewerage services is primarily domestic, although the sector must also operate according to EU rules on the quality of drinking water and the water environment. Both the water and waste sectors are affected by cross-cutting regulation, e.g. on the environment, procurement, competition and health and safety.

Competence in relation to both water and waste is mainly devolved, and there are significant differences in policy approach between the administrations. Waste policy is a devolved matter, but some waste management regimes are handled at a GB or UK level by mutual consent.35 Water industry policy is wholly devolved in Scotland and Northern Ireland. Most regulation-making powers in both water and sewerage are already devolved to the Welsh ministers, although some have remained reserved for UK government.

Scope of Areas Covered By Directives and Regulations

Legislation on provision of water and sewerage services is primarily domestic (in particular the Water Industry Act 1991 and the Water Resources Act 1991).
The sector must also operate according to EU rules on the quality of drinking water and the water environment.

These standards are an important driver of investment in the water industry in the UK and other EU Member States, informing how and when investment is targeted. They provide a common framework for management of shared resources. Significant pieces of legislation include:
– The Drinking Water Directive (98/83/EC, amended by Directive 2015/1787/EU) on the quality of water intended for human consumption. The Drinking Water Directive draws on other legislation which is relevant to drinking water quality (e.g. Euratom Directive 2013/51/EURATOM).
– The Urban Waste Water Treatment Directive (91/271/EEC; also Decision 2014/431/EU) which establishes collection and treatment standards for waste water treatment from sewage works and certain industrial processes before discharge to the water environment.
– The Water Framework Directive (2000/60/EC) which provides a strategic, integrated planning system of environmental water management, methodologies for assessing the overall quality of the water environment and for setting improvement objectives. ‘Daughter’ directives cover issues such as protection of groundwater (2006/118/EC) and environmental quality standards (2008/105/EC).
– The Nitrates Directive (91/676/EEC) which aims to reduce water pollution from nitrate from agriculture. It requires land draining to water that is polluted (or at risk of pollution) from nitrate to be designated as Nitrate Vulnerable Zones
– The Floods Directive (2007/60/EC), which requires Member States to assess water courses and coastlines at risk from flooding, to map the flood extent and assets and humans at risk in these areas, and to take adequate and coordinated measures to reduce this flood risk.
– The revised Bathing Waters Directive (2006/7/EC) puts in place rules to ensure that bathing waters (e.g. at beaches) are clean and safeguard public health.


Waste legislation derives predominantly from EU governance. Much is transposed into UK law via statutory instruments, although there are UK Acts of Parliament which have enabled the transposition of EU directives into UK law. In particular, the Environmental Protection Act 1990 deals with issues relating to waste on land, defines all aspects of waste management and places a duty on local authorities to collect waste. It also places a Duty of Care on anyone who produces, imports, carries, keeps, treats or disposes of controlled waste, or as a broker has control of such waste.

Waste legislation serves to provide important environmental protections as well as creating markets and encouraging resource efficiency, for example either through producer responsibility schemes (to ensure costs of disposal are met by those placing products on the market, e.g. Waste Electrical and Electronic Equipment Directive) or by encouraging greater recycling of materials.

Significant pieces of legislation include:
– The Landfill Directive (1999/31/EC), which sets out the rules for the type of waste that can be landfilled and the technical requirements for the operation of landfill sites. The purpose of the Directive is to prevent or reduce the negative effects on the environment, in particular the pollution of surface water, groundwater, soil and air, as well as the global environment and the risk to human health. The Directive has been instrumental in incentivising diversion from landfill, creating markets in energy from waste and recycling.
– The Waste Framework Directive (2008/98/EC), which sets out a framework for waste management, detailing the basic concepts and definitions, such as those
for waste, recycling and recovery. It explains when waste ceases to be waste and becomes a secondary raw material (known as end-of-waste criteria), and how todistinguish between waste and by-products.
– The Industrial Emissions Directive (2010/75/EC), which regulates polluting emissions from industrial installations, as air pollutants, discharges of waste
water and the generation of waste from industrial production processes account for a considerable share of the overall pollution in Europe. The Directive aims to achieve a high level of protection of human health and the environment taken as a whole by reducing harmful industrial emissions across the EU, in particular through the better application of Best Available Techniques (BAT).
– The Waste Shipments Regulation (EC/1013/2006), which sets out the procedures for the transboundary shipment of waste within the EU and between the EU and other countries. It also places a ban on the export of hazardous wastes to countries not in the OECD as well as a ban on the export of waste for
disposal. This implements the UK’s international obligations under the UN Basel Convention on the Control of Transboundary Movement of Hazardous Wastes and their disposal and the OECD decision establishing a control system for wastes destined for recovery (C(2001)107/FINAL).
– The Mining Waste Directive (2006/21/EC), which sets out rules for the management of waste resulting from the prospecting, extraction, treatment and
storage of mineral resources and the working of quarries (extractive waste). Its purpose is to prevent or reduce as far as possible any adverse impacts on the environment, in particular water, air, soil, fauna and flora and landscape, and any resultant risks to human health.
– The Ship Recycling Regulation (EU/1257/2013) sets out a number of requirements for European ships, European ship owners and ship recycling facilities wishing to recycle European ships. It aims to reduce the negative impacts linked to the recycling of EU-flagged ships. It covers the obligations of
the international Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships (not yet in force).
– Producer responsibility legislation, including:
o The Packaging and Packaging Waste Directive (94/62/EC), which was the first ‘Producer Responsibility’ Directive. It aims to ensure that those that manufacture, import and sell products in the European Single Market take responsibility for the end of life/waste disposal costs and impacts. The Directive aims to provide environmental protection from packaging waste, but also ensures the functioning of the internal market by removing any potential barriers to trade (the same definitions and substance restrictions of lead, mercury, cadmium and hexavalent chromium apply)and either the distortion or restriction of competition. The most recent amendment to the Directive came last year with the adoption of Directive
EU/2015/720, which addresses the use and consumption of lightweightcarrier bags.
o The End of Life Vehicles (ELV) Directive (2000/53/EC), which aims to minimise the impact of dismantling and recycling cars, when disposed of by the last owner. It sets targets for the reuse, recovery and recycling of end of life vehicles, but also place restrictions on the level of hazardous substances (lead, mercury, cadmium and hexavalent chromium) that can be used in the manufacture of new vehicles to help with the end of life treatment operations.
o The Waste Electrical & Electronic Equipment (WEEE) Directive (2012/19/EU), which addresses the potential environmental and healthproblems impacts of the fastest growing waste stream in the EU. It is also designed to raise the levels of resource efficiency and promote a morecircular economy, as well as improving the collection, treatment and recycling of this equipment at the waste disposal stage. The WEEE Directive also has a ‘sister’ Directive, (the Restriction of the use of certain Hazardous Substances in electrical & electrical equipment (RoHS) Directive – 2011/65/EU), which restricts the same four heavy metals, plus two families of brominated flame retardants as both the Packaging and End of Life Vehicles Directives.
o The Batteries and Accumulators Directive (2006/66/EC), which contributes to the protection, preservation and improvement of the quality of the environment by minimising the negative impact of batteries and accumulators and waste batteries and accumulators. Like the Packaging,
End of Life Vehicles and Restriction of Hazardous Substances Directives, it also ensures the smooth functioning of the internal market by harmonising requirements as regards the placing on the market of batteries and accumulators.

Main Cross-Sectoral Rules, Technical Requirements and Frameworks


For the water sector, the primary areas are:
– environmental/public health law, both in relation to the water environment but also other areas (e.g. the Habitats Directive);
– procurement rules, in relation to awarding contracts above a certain value; and
– competition law, which affects the design of markets within the UK (e.g. Services Directive).

Other cross-cutting issues (e.g. employment law, state aid, consumer protection) are not expected to have a disproportionate impact on the water sector.


For the waste sector, the primary areas are:
– environmental law, particularly in relation to waste (see above);
– procurement rules, in relation to awarding contracts above a certain value;
– health and safety rules, for example to minimise the impacts of ill health from potentially hazardous substances or microorganisms during collection and sorting activities; and
– competition law (see below).

Many operators have developed economic activities connected to the specific characteristics of this sector, in so doing, creating a host of markets.
Competition considerations would cover: the prevention of anti-competitive practices such as market sharing or price fixing; the assurance of a framework which allows choices between several waste management systems for the companies obliged under national legislation to recycle their waste; and the avoidance of exclusive arrangements of all kinds without solid and convincing economic justification.

Other cross-cutting issues (e.g. employment law, state aid, consumer protection) are not expected to have a disproportionate impact on the waste sector.
International Rules and Standards Water

EU rules interpret international rules and standards for wate and sewerage services. The latter are relatively limited, in part reflecting the varying international quality (and availability) of water and sewerage services. These include:
– U.N. Human Rights Council Resolution on The Human Rights to Safe Drinking Water and Sanitation, A/HRC/71/53/Add.1 (29 September 2016); and
– U.N. General Assembly Resolution on the Human Rights to Safe Drinking Water and Sanitation, A/Res/70/169 (17 December 2015).


International rules are more developed for waste. They include:
– The Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal is an international treaty that aims to reduce the movements of hazardous waste between nations and specifically to prevent transfer of hazardous waste from developed to less developed countries.This prohibits the export of hazardous and certain other wastes (such as mixed municipal wastes) to non-parties to the Convention, unless specific bilateral
arrangements have been made that have at least similar standards to the Convention.
– The OECD Decision C(2001)/107/FINAL establishes control procedures for the shipment of wastes destined for recovery between OECD countries. This allows for an active market in waste recovery to be established with OECD countries that are non-Parties to Basel, such as the US. The UK’s obligations under both the Basel Convention (including an amendment to the Convention that has not yet entered into force that prohibits the export of hazardous wastes to non-OECD
countries) and the OECD decision are implemented through the EU Waste Shipment Regulations. The EU Waste Shipment Regulations also prohibit theexport of wastes for disposal outside the EU.
– The Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships. The Hong Kong Convention is not yet in force but is aimed at ensuring that ships, when being recycled after reaching the end of their operational lives, do not pose any unnecessary risk to human health and safety or to the environment. Efforts are being made to ensure that the EU Ship Recycling Regulation fulfil the obligations that would arise under that Convention.
– Regulation (EU) No 1257/2013 of the European Parliament and of the Council on Ship Recycling aims to reduce the negative impacts linked to the recycling of ships flying the flag of Member States of the Union. The Regulation brings forward the requirements of the 2009 Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships, therefore contributing to its global entry into force.

The European Committee for Standardization (CEN) and the European Committee for Electrotechnical Standardisation (CENELEC) are officially recognised by the European Union (EU Regulation 1025/2012) as European Standardization Organizations (ESOs) responsible for developing and defining standards at European level. Voluntary CEN and CENELEC standards ensure conformity with relevant legislation and ensure access to and free movement of goods across the European Single Market. The ‘CE’ mark is the visible declaration ofconformity placed on the product or equipment by the manufacturer. CEN and CENELEC closely cooperate with their international counterparts, respectively the International Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC).

Trade Rules


As noted earlier, trade in water and sewerage services is currently very limited. The trade of inputs to the relevant supply chains (e.g. chemicals, technology, construction, professional services, business services, financial services) is coveredin other sectoral assessments.

Market reform in England means that trade in water and sewerage services could increase in future. Further work is needed to assess the rules that would affect entry of businesses outside the EU into the UK market for water and sewerage services, since the retail market has only opened as of April 2017.


Trade in waste services is much more significant36. To enter UK or EU markets, businesses in non-EU countries must comply with the same requirements as businesses in the UK or other Member States.

The UK is a party to both the Basel Convention and the OECD Decision in its own right. Therefore, once the UK leaves the EU a key change is that the EU will no longer be able to export waste to the UK that were destined for disposal. While the UK Plan for Waste Shipments already prohibits the shipment of waste into and out of the UK for disposal there are some exceptions (such as where there are no sound disposal options within the UK or EU country of origin) which might be adversely affected. Waste shipments between the UK and the EU would become subject to customs procedures. The Government’s vision for a future partnership on customs is set out in the Future customs arrangements future partnership paper.

Devolved Areas of Responsibility

Most European Single Market legislation automatically applies to the devolved administrations and Gibraltar. The Crown Dependencies are not members of the EU, but certain aspects of EU law relating to the trade in goods and the Customs Union apply to them and are set out in Protocol Three to the UK’s Treaty of Accession.

The issues in this paper have particular relevance for Northern Ireland and Ireland. In August 2017, the UK government published the Northern Ireland and Ireland position paper outlining the UK’s position on addressing the unique circumstances of NorthernIreland and Ireland in light of the UK’s EU withdrawal. The UK and the EU have mapped out areas of cooperation under the Belfast (‘Good Friday’) Agreement that
function on a cross-border North-South basis. This detailed work demonstrates a wide range of cooperation across different aspects of the economy, public services, and the environment.


Water industry policy is wholly devolved in Scotland and Northern Ireland.

Most regulation-making powers in both water and sewerage are already devolved to the Welsh Ministers, although some have remained reserved for UK Government. The original Welsh devolution settlement reflected the fact that several water companies cross the national border and that water from Wales supplies some customers in England. Regulation has been made on the basis of a water company being “wholly or mainly in England” or “wholly or mainly in Wales”. The Wales Act 2017 sets up a revised devolution settlement and a new reserved powers model. When the relevant provision is implemented there will be an alignment of the national boundary on both water and sewerage and regulation will be primarily on an England or Wales basis.

Policy on the water environment is fully devolved to Wales, Scotland and Northern Ireland, with some arrangements for cooperation in cross-border areas. EU rules on the water environment provide for the management of cross-border catchments between Member States, including across Northern Ireland and Ireland.

97. EU water quality, industry, and flood risk legislation is generally applicable to Gibraltar but not Crown Dependencies or other Overseas Territories. Water services in Gibraltar have been partly privatised and are delivered under licence by a subsidiary of Northumbrian Water. Gibraltar is not dependent on Spain for water supplies.


Although transposition of most directives is done at a UK level, many aspects of EU waste legislation and implementation are devolved. For example, each of the four UK administrations has its own approach to managing municipal waste, for instance setting its own targets for recycling – in some cases more ambitious than those set at EU level. Some aspects of waste management policy are managed at a UK level, but in close cooperation with the devolved administrations – for example, the UK Government leads on tax measures to encourage recycling. While environment policy is generally devolved, policy on the shipment of waste falls within the exportand import reservation.

EU waste legislation is generally applicable to Gibraltar, except for legislation with a Single Market legal base. For example, Gibraltar produces waste management plans to fulfil the requirements of the Waste Framework Directive. Waste services in Gibraltar are heavily interlinked with Spain, which currently receives waste from Gibraltar.

EU waste legislation does not apply to Crown Dependencies or other Overseas Territories.

Existing Frameworks for How Trade in Water and Waste is Facilitated Between Countries

The arrangements described in this section are examples of existing arrangements between countries. They should not be taken to represent the options being considered by the Government for the future economic relationship between the UK and the EU. The Government has been clear that it is seeking pragmatic and innovative solutions to issues related to the future deep and special partnership that we want with the European Union.

This section has already discussed the international rules and standards which exist in the water and waste sectors. As a general principle:
– international trade in water as a good is not facilitated by any particular agreement, though there are some international agreements in place; and
– some rules on the trade of waste as a good are set at an international level;specific bilateral or multilateral agreements on trade then tend to reflect those international rules, rather than containing specific text relating to trade in waste.

As context, it is important to note that it is typical for trade agreements to contain best endeavours commitments in relation to sustainable development. For instance, the European Commission’s current trade strategy, published in 2015, states that:The Commission makes a clear pledge that no trade agreement will ever lower levels of regulatory protection; that any change to levels of protection can only be upward;and that the right to regulate will always be protected.

Similarly, the 2009 Recommendation from the Commission to the Council to open negotiations on CETA underlines:The commitment of the parties to sustainable development and the contribution of international trade to sustainable development in its economic, social and environmental dimensions.39
104.Chapter 22 of CETA – Trade and Sustainable Development – therefore requires the
parties, inter alia, to aim to:
– promote sustainable development through the enhanced coordination and integration of their respective labour, environmental and trade policies, and measures; and
– promote dialogue and cooperation between the Parties with a view to developing their trade and economic relations in a manner that supports their respective labour and environmental protection measures and standards; and to upholding their environmental and labour protection objectives in a context of trade relations that are free, open and transparent.


Very few FTAs touch on trade in water.41 CETA, for instance, states that water in its natural state is not a ‘good or product’ for the purposes of the agreement, and is only therefore subject to Chapters Twenty-Two (Trade and Sustainable Development) and Twenty-Four (Trade and Environment); and a number of exceptions and reservations exist in relation to the collection, purification, and distribution of water.International standards for water and sewerage services are relatively limited.
Important international rules in this space are the:
– U.N. Human Rights Council Resolution on The Human Rights to Safe Drinking Water and Sanitation, A/HRC/71/53/Add.1 (29 September 2016); and
– U.N. General Assembly Resolution on the Human Rights to Safe Drinking Water and Sanitation, A/Res/70/169 (17 December 2015).


As discussed above, the UK’s involvement in trade in waste is more significant.There are numerous international agreements covering the movement and trade of waste, which are also described in more detail above, but which include:
– the Basel Convention on the Control of Transboundary Movements of HazardousWastes and their Disposal; and
– the OECD Decision C(2001)/107/FINAL.
108.Existing international agreements to facilitate trade tend to seek to ensure the effective implementation of these extant multilateral environmental agreements, rather than create new commitments on the trade in waste. Waste does not tend to be included on its own terms in Free Trade Agreements.

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