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GREAT insights Magazine

Trade as a vehicle of our values and development: The new EU Regulation on conflict minerals

July 2017

Ratso, S. Trade as a vehicle of our values and development: The new EU Regulation on conflict minerals. GREAT Insights Magazine, Volume 6, Issue 3. July/August 2017.

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The new EU Regulation on conflict minerals, which entered into force on 8 June, shows how value-based and responsible trade can help conflict regions develop sustainably.

Trade can build bridges and connect people, generating enormous benefits for communities both in and outside the European Union (EU). By basing trade policy on our values, we can also harness globalisation and help regions facing conflict and instability to develop sustainably.

As the world’s leading development contributor, the EU and its Member States donated €68 billion in 2015 to help people move out of poverty while the trillion euros’-worth of goods we purchase each year from the developing world powerfully contribute to the same ends. In this way, trade and development go hand in hand, upholding our values at home and projecting them globally.

In particular, the EU has recently strengthened its approach to the responsible sourcing of minerals originating in conflict zones by developing clear rules. In 2014, we proposed an “integrated EU approach” to avoid trade in these minerals fuelling and financing conflict. The new EU Regulation 2017/821 puts supply chain due diligence obligations on EU importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas. This is an important step to break the link between the trade in minerals and the financing of conflict. This approach on conflict minerals is part of a philosophy that is and will continue to pervade EU trade policy: a policy based on values.


The new EU Regulation


Under the Regulation, EU importers in the upstream section of the supply chain for these products will face mandatory due diligence. They must “do their homework” and take care that their materials are not financing conflict, nor mined with forced labour. The regulation covers at least 95% of import volumes of the minerals and metals in scope, while excluding importers below a certain threshold as well as operators further downstream.

The Regulation draws on well-established rules laid out in the Organisation for Economic Co-operation and Development (OECD) Due Diligence Guidance and will apply as of 1 January 2021. EU importers will have to carry out their due diligence from that date. They are nonetheless encouraged to do so as soon as possible.

The Regulation aims to curtail the opportunities for armed groups and unlawful security forces to trade in these minerals and metals – as has in the past too often happened, in particular, in the Great Lakes region of Africa. It is designed to provide transparency and certainty as regards the supply practices of EU importers sourcing these minerals.

On the basis of the information disclosed, the European Commission will publish a list of the smelters and refiners concerned; EU member state authorities will then have to carry out the oversight needed to ensure all importers in scope comply with the obligations set out by the Regulation. The Commission will continue to monitor this system to ensure it works effectively.


Trade supporting development


These new rules do not sit in isolation, but form part of an “integrated EU approach” to maximise their impact. That includes political, diplomatic and development cooperation measures to address the main dimensions of the problem.

A €20 million development aid package includes support for gold projects in West Africa through the EU’s Foreign Policy Instruments, which will contribute to peace-building and stabilisation efforts in this mineral-rich and fragile zone; including in Burkina Faso, the Central African Republic and Côte d’Ivoire. As part of our work on development and external action, we will also support technical assistance, training and pilot interventions to strengthen the capacity of local actors. In line with the OECD’s guidance, our approach is not limited to the Great Lakes Region, but embraces all conflict-afflicted areas.

The EU is at the forefront of promoting supply chain excellence and responsible sourcing. But, to effect a real change, our leadership needs to be echoed around the world. We are therefore taking this issue forward with our main trade partners, and have already seen countries like China moving in the right direction. Work is also ongoing with the governments of the Great Lakes Region itself: their commitment to ‘responsible sourcing’ is as vital as anything we can do. Moreover, we call upon all OECD members, as well as European and global industry, to actively push forward this agenda.

Globalisation should benefit us all. With the EU’s approach on conflict minerals, we have proved that it is possible to shape change across the world and use trade as a vehicle for our values.

The views expressed herein are those of the author and do not necessarily reflect an official position of the European Commission.


About the author

Signe Ratso is Director of Trade Strategy and Analysis, Market Access, DG Trade, European Commission.


This article was published in GREAT Insights Volume 6, Issue 3 (July/August 2017).

 

Economic Transformation and TradeEU Development Policy and PracticeExtractive SectorsMining

External authors

Signe Ratso