The European Union (EU) institutions have reached broad agreement on trade rules for so-called "conflict minerals". While the technical details still need to be established, we summarize the expected new EU rules below.
On 15 June 2016, the three EU institutions (i.e. European Commission, European Parliament and EU Council) reached a political understanding on a future EU Regulation on trade in tin, tungsten, tantalum, gold (used especially in the automotive, electronics, aerospace, packaging, construction, lighting, industrial machinery, jewellery and tooling industries in the EU).1 The chief aim of this new EU "conflict minerals" legislation – which stems from an original proposal from early 20142 – is to mandate due diligence checks by EU importers in line with OECD guidelines3 in order to cut off financing for conflicts and human rights abuses.
The agreed new EU conflict minerals framework involves (i) a mandatory certification system for importers, smelters and refiners; and (ii) voluntary reporting on sourcing practices by bigger EU manufacturers and sellers. There would be no requirements for transporters or other intermediaries, end-users, or investors in impacted sectors.
Preliminary reports indicate that unlike conflict minerals rules in the United States, the new EU rules would apply to all conflict-affected and high risk areas in the world without specific geographical limitations. Experts will draw up a "Handbook for Operators" with an indicative and non-exhaustive list of relevant geographical areas and to address other due diligence issues.
Small volume importers (e.g. for dentistry) will be exempt from the due diligence scheme. Recycled materials, existing EU stocks and by-products will also be excluded from the scope.
There is now political agreement on the future EU Regulation, but the precise technical details are still pending so the timing of future enactment is uncertain. The aim is to conclude informal legislative negotiations in the Summer, and finalize the legislative text after that. The new EU Regulation will also need to be adopted jointly by the EU Council and the European Parliament before it can be published in the EU's Official Journal and enter into force.