On 20 May 2015, the EU Parliament adopted (by 402 votes to 118, with 171 abstentions) important amendments to a proposal for a Regulation of the European Parliament and of the Council setting up a Union system for supply chain due diligence self-certification of responsible importers of tin, tantalum and tungsten, their ores, and gold originating in conflict-affected and high-risk areas (COM/2014/0111; the Regulation). These amendments, when duly incorporated into the proposed Regulation, would ban all products containing tungsten, tantalum, tin and gold sourced from conflict regions in Africa and elsewhere in the world. The metals subject to the proposed Regulation are commonly used in many consumer products in the EU, in particular, in the electronics, aerospace, jewellery, industrial machinery and tooling industries. The proposed Regulation is itself based on the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (OECD Due Diligence Guidance) and section 1502 of the United States Dodd-Frank Wall Street Reform and Consumer Protection Act (Endnote), which aims to prevent extraction of "conflict minerals" in the Democratic Republic of Congo and nine adjoining countries.
The amended measures in the Regulation have been proposed in order to ensure that EU importers do not fuel conflicts and human rights abuses in conflict areas by financing armed groups who have control of mineral trading in conflict regions. The EU Parliament believes that "breaking the nexus between conflict and illegal exploitation of minerals is a critical element in guaranteeing peace, development and stability" in such conflict regions.
Key obligations proposed through the amendments include:
- Publicly reportable supply chain due diligence procedures for all companies placing the said minerals, or products containing the said minerals in the Union market,
- A mandatory certification system which issues the "European certification of responsibility" once all supply chain due diligence obligations are complied with,
- Conformity with OECD Due Diligence Guidance with respect to conduct of supply chain due diligence,
- Further obligations on downstream companies to ensure that there is no risk of minerals being obtained from conflict regions in their supply chains, and
- A mandatory, independent, third-party audit process coupled with penalties for non-compliance to ensure that smelters and refiners have adequate due diligence practices in place to identify the origin of the minerals.
The Commission is to make publicly available an updated list of the names and addresses of responsible importers of minerals and metals, which in turn, need to ensure that all smelters and refiners in their supply chain conform to the provisions of the Regulation. Various accompanying measures will need to be set out by the Commission in a legislative proposal within the transition period (currently proposed to be two years) to enhance the effectiveness of the Regulation. Chief amongst them is the Parliament's request to the Commission to support small and medium-sized enterprises which responsibly source for minerals by granting financial support towards their certification procedures from the COSME programme (the EU programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises). This is because, the new regulations, when implemented, will potentially affect about 880,000 EU manufacturers, most of which are expected to be small or medium-sized industries.
It must be noted that these amendments resulted in a surprising departure from the EU Commission's earlier "self-certification" approach for EU importers that was meant to be merely voluntary in nature. There are now concerns that these mandatory obligations might cause businesses to entirely pull out of conflict regions, leading to further degradation of livelihood in these regions.
The EU Parliament has decided not to close the first reading position for the Regulation and is expected to enter into informal talks with the EU member states to seek agreement on the final version of the law and to ensure smooth passage of the Regulation through the EU parliamentary process.
For further details:
Please refer to the EU Parliament's press release on the vote here.
Please refer to the actual amendments adopted by the Parliament in the text of the proposed Regulation here.
Please refer to the procedure file of the proposed Regulation in the EU Parliament here.