EU Regulation on Conflict Minerals Update on ongoing legislation procedure

Magdalena Freund, imds professional Julia Rickes, HPE 18 February 2016

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• U.S. Model Dodd-Frank Act

• EU Conflict Mineral Legislation - What are we dealing with?

• How is being legislated?

• Which form does legislation take here?

• Steps in legislation process so far

• An important amendment and an important difference from Dodd-Frank

• Is your company affected?

• Tools 2: IMDS Conflict Minerals Analyzer (CMA)

• Tools 1: HPE CMD-Manager

U.S. Model Dodd-Frank Act, SEC 1502

Regulates use of minerals originating in Democratic Republic

of Congo (DRC) and neighbouring countries affected by

civil war and conflicts (no prohibition but principle of due

diligence)

Aim of preventing illegal trading with such „conflict minerals“

as they are often used to finance armed groups and other

actors involved in local conflict

Conflict Minerals: 3TG = Tin, Tungsten, Tantalum and Gold

EU Legislation on «Conflict Minerals»

« 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 – C7- 0092/2014 – 2014/0059(COD))»

How is being legislated?

- Proposal COM(2014)0111 => Proposed by European Commission to

European Parliament and EU Council

- Procedure file 2014/0059(COD) => COD - Ordinary legislative procedure /

(ex-codecision procedure)

How is being legislated?

Source: http://www.publications.parliament.uk/pa/ld200809/ldselect/ldeucom/125/12504.htm

What form does legislation take here?

Article 288, Treaty on the Functioning of the European Union

“To exercise the Union's competences, the institutions shall adopt regulations, directives, decisions, recommendations and opinions.

A regulation shall have general application. It shall be binding in its entirety and directly applicable in all Member States.

A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods.”

Example Regulation from automotive industry: REACH Example Directive from automotive industry: ELV

Legislation process – steps so far

7 October 2010 EU Parliament decides to draft legislation

on Conflict Minerals

5 March 2014 EU Commission: Proposal for Regulation

(COM(2014)0111) on supply chain due diligence self-

certification of responsible importers, and Impact

Assesments (SWD (2014) 52 (Summary), SWD (2014) 53)

9 March 2015 DEVE Committee opinion on Proposal calls

for mandatory scheme for importers (2014/0059(COD))

14 April 2015 INTA Committee votes on Proposal,

Amendments: mandatory self-certification scheme of

responsible importers

Legislation process – steps so far

20 May 2015 European Parliament votes on Proposal: majority

supports mandatory compliance for all Union importers,

additionally downstream users shall be required to provide

information on their due diligence activities (P8_TA-

PROV(2015)0204)

16 June/14 July 2015 INTA Committee vote on whether to

enter informal trilogue negotiations with an aim of reaching

agreement withing1st reading postponed; majority vote on 14 July,

appointment of negotiation team More info: http://www.europarl.europa.eu/oeil/popups/ficheprocedure.do?reference=2014/0059(COD)&l=EN

http://www.europarl.europa.eu/news/en/news-room/content/20150513IPR55318/html/Conflict-minerals-MEPs-ask-for-mandatory-

certification-of-EU-importers

Listen to the EP debate at: http://www.europarl.europa.eu/sides/getDoc.do?type=CRE&reference=20150519&secondRef=ITEM-

003&language=EN

Legislation process – steps so far

25 January 2016 INTA - Lilianne Ploumen, Dutch Minister for Foreign Trade

and Development Cooperation names Conflict Minerals regulation as one of

the priorities of the Dutch Presidency in the area of International Trade Policy: «The Conflict Minerals issue is important since it affects so many people across the globe […]

The trilogue will not be easy, but I sense a willingness on all parts of the institutions to come to

a conclusion. » Ploumen urged the Committee to try to finalize this legislative process during the

Dutch Presidency.

15 February INTA, Report on ongoing trilogue negotiation: no quick

resolution in sight. First trilogue took place on1 February 2016 in Strasbourg:

no common ground regarding obligation and companies to be included;

further dates have not yet been set since the Council needs to give its

mandate for negotiations now

Weitere Infos unter: http://deutsch.eu2016.nl/dokumente/publicaties/2016/01/07/programm-der-niederlandischen-prasidentschaft-des-rates-der-europaischen-union

Important amendment by EP

- No exemptions regarding size of company: « all

companies who first place covered resources,

including products that contain those resources on

the Union market » are required to conduct and

publicly report on their supply chain due diligence

(9a) Source: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P8-TA-2015-

0204+0+DOC+XML+V0//EN

Important difference from Dodd-Frank Act

- No restriction regarding regional scope (DRC and

neighbouring countries): ”'conflict-affected and

high-risk areas' means areas in a state of armed

conflict, with presence of widespread violence,

collapse of civil infrastructure, (…)” (2e) Source: http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P8-TA-2015-

0204+0+DOC+XML+V0//EN

Is your company affected?

Source: JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL. Responsible sourcing of minerals originating in conflict-affected and high-risk areas Towards an

integrated EU approach /* JOIN/2014/08 final */, 05-03-2014

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https://public.mdsystem.com/en/web/imds-public-pages/cm-analyzer

The IMDS Conflict Minerals Analyzer (CMA)

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The IMDS Conflict Minerals Analyzer (CMA)

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A Conflict Minerals Analysis Tool for the automotive industrie

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The IMDS Conflict Minerals Analyzer (CMA)

A Conflict Minerals Analysis Tool for the automotive industrie

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