On May 20, the European Parliament voted to reject the proposal of the European Commission and the Parliament’s Committee on International Trade (INTA) for a voluntary system of self-certification for importers of conflict minerals into the EU. The amended draft regulation marks a significant departure from the proposed draft regulation, calling for mandatory compliance by all importers of tin, tantalum, tungsten and gold from conflict affected areas. Members of the European Parliament (MEPs) called for a mandatory approach to due diligence for smelters and refiners, to ensure that their practices do not fund conflicts and human rights violations in conflict affected areas. Furthermore, MEPs argued that downstream companies using these materials in the manufacturing of goods must comply with the rules and assess their supply chains for risks, providing information on their due diligence procedures.

As originally proposed by the Commission, the draft regulation would have covered only importers of conflict minerals into the EU. Amending the regulation so that it is also applicable to downstream companies will expand the application of the regulation from 400 European importers, smelters and refiners. Instead, hundreds of thousands of European companies will be required to gather data, make inquiries, review and analyze responses of suppliers.

An expansion of the scope of the regulation to include a much larger group of European companies would place a substantial administrative burden on these companies. The resulting time and expense of complying could have a negative impact on business and operations of European companies, especially smaller companies. Furthermore, more companies may avoid sourcing from third world and developing countries altogether, which would not achieve the desired results of the draft regulation. None of these concerns will likely be addressed in the negotiations to develop consensus around the draft regulation.

The Parliament will now enter into informal talks with the Member States of the EU to reach consensus on what the final language and provisions of the regulation will be. At this stage in the process, a re-adoption of the voluntary scheme that had originally been proposed by the Commission seems unlikely. Furthermore, it seems unlikely that the larger geographic scope of the regulation (covering all conflict affected areas and not only central Africa) will change. However, negotiations may result in some reprieve from compliance obligations for smaller European companies that would be covered by the EU regulation.

According to its draft agenda, the INTA committee will consider the draft regulation again at its meeting on June 16, 2015.