On November 22nd, the EU Council, Commission and Parliament reached an informal final agreement on a conflict minerals regulation. Last month’s agreement builds upon the “political agreement” reached during June.
The origins of the agreement
The trilogue negotiations between the European Commission, European Parliament and Council started after agreeing on their respective negotiating mandates. The three institutions reached a political understanding in June 2016 on a number of key elements of the conflict mineral legislation. At that point in the negotiations, the obligations on upstream companies in the conflict minerals supply chain were set. After reaching this political agreement, the negotiations continued on a more technical level and finished on November 22nd, 2016.
The consequences of the agreement
The regulation will generally require EU smelters and refiners and direct importers of gold, tantalum, tin and tungsten into the EU to conduct due diligence using the OECD Guidance framework if they are sourcing from conflict-affected and high-risk areas anywhere in the world, of which the Democratic Republic of Congo and the Great Lakes region are the most obvious examples.
The EU press conference and press releases following the final agreement provide details of the regulation. This agreement between the European Commission, European Parliament and Council will first impact importers: due diligence checks will now be mandatory for importers of tin, tungsten, tantalum and gold and their ores from conflict and high-risk areas. Authorities in EU member states will be responsible for ensuring compliance by companies and also for determining penalties for non-compliance, to be monitored by the Commission.
However, the EU mentioned that the smallest importers (e.g. dentists and jewellers) will not be obliged to comply with this scheme, in order to avoid unreasonable bureaucratic burdens. Recycled metals, existing EU stocks and by-products are also excluded from the regulation.
European Parliament adds that big EU firms (above 500 employees) that buy tin, tantalum, tungsten and gold to use in their products will be encouraged to report on their sourcing practices based on new performance indicators. These businesses will be able to join an EU registry and report voluntarily on their “due diligence" practices.
What next?
The final agreement now has to be confirmed by the EU member states. The International Trade Committee and the full House will vote on the final agreement early next year. Thereafter, the final regulation will move to the Parliament for a vote expected during the first half of 2017. The regulation will take effect on January 1, 2021. This is a longer transition that the two year transition contemplated in earlier proposals. The transition period is intended to allow sufficient time to establish procedures, control mechanisms and prepare guidance.
Would you like to know more on this topic?
Do not hesitate to check the European Parliament‘s website as well as our page on the traceability of substances. You can also reach our experts by calling +33 (0)1 83 64 20 54 for Europe or +1 (778) 231 1607 for North America or by email contact@ecomundo.eu if you have any questions!
