The EU agreed an outline deal late on Wednesday on a law to clean up the commodities supply chain to stem the use of gold and other metals from conflict zones.

Human rights campaigners said the agreement indicated progress after months of argument but did not go far enough. Industrial users of the commodities in question said the compromise deal had struck the right balance.

EU importers will have to check the origin of the relevant raw materials to see if they come from any conflict zone, but the agreement is not binding on imports of finished products that may contain the minerals. Members of the European Parliament and European Commission officials who brokered the deal said it would improve the lives of those living in conflict zones and marked a shift in the focus of trade law to supply chains.

“We need to step up to our responsibilities and finally break the vicious cycle between the trade in minerals and the financing of conflict,” EU Trade Commissioner Cecilia Malmstrom told reporters on Thursday.

“It (the deal) opens the door for new momentum in trade policy,” said Bernd Lange, a German Social Democratic politician who took a lead role in the talks.

The EU rules will cover conflict minerals from anywhere in the world, going further in geographic scope than US Dodd-Frank legislation finalised in 2012, but they are only binding on imports of raw materials, not finished products.

The US law insists on the scrutiny of imports of gold, tantalum, tin and tungsten from Democratic Republic of Congo and nine neighbouring countries as raw materials, and when used in products such as mobile phones, electrical goods and cars.

Downstream

The European Automobile Manufacturers' Association (ACEA), which represents firms such as Volkswagen, Peugeot and Ford, said it supported transparency in minerals trade, but it was right to focus on the raw materials, not finished products, known as the downstream.

“Compliance obligations for downstream companies should be avoided as they are extremely burdensome and costly in case of highly complex supply chains,” ACEA said in a statement.

In an open letter this week, a group of 130 non-governmental organisations urged the European Union to use its leverage as the world's largest trading block and a significant destination for minerals that fund conflicts. It called for mandatory checks by “all companies bringing these minerals into the EU, in whatever form".

The outline deal is based on guidelines for responsible supply chains established by the Organisation for Economic Cooperation and Development (OECD).

Tyler Gillard, an OECD legal adviser, said it was, “an important step towards ensuring business avoids contributing to conflict".

The preliminary agreement will now require months of technical work before it can be implemented as EU law. Two years after it is completed, the law will be followed by a review to decide whether it needs to be widened in scope.

Related Topics