On 20 May 2015, a plenary meeting of the European Parliament voted in favour of pursuing a mandatory compliance scheme for conflict minerals.
During the plenary meeting, the Parliament voted in favour of amending the European Commission’s draft law so as to introduce a mandatory compliance regime for all importers of tin, tungsten, tantalum and gold into the EU from conflict-affected areas across the world.
More controversially, it also voted in favour of introducing a requirement on all “downstream companies” within the EU – potentially up to 880,000 operators who process and use the minerals to make products such as mobile phones – to report on measures they have taken to identify and address conflict mineral risks in their supply chains.
The surprise vote establishes far stronger requirements than the initial Commission proposal for a voluntary self-certification scheme for EU importers of the minerals (published in March 2014) and is much more akin to the US Dodd-Frank Act regime. It also goes further than the amendments recently suggested by the International Trade (INTA) Committee (the Committee appointed by the Parliament to review the original Commission proposal) which suggested making the Commission’s voluntary scheme into a mandatory one.
Despite the Parliament clearly favouring a much tougher regime than that originally envisaged by the Commission, it has, importantly, not yet adopted its first reading position on the proposal. Instead the Parliament has decided to enter into informal discussions with the EU Member States in order to reach a compromise position first.
It is, therefore, quite possible that the proposal produced by these discussions may take a much softer approach towards certification and supply chain due diligence not least because of concerns that such mandatory requirements would risk disproportionately burdening small and medium-sized enterprises and creating a defacto embargo on sourcing these minerals from any conflictaffected areas because of the cost of compliance.
The Parliament’s press release can be accessed here and its proposed amendments to the Commission’s original proposal accessed here.