The EU regulation on conflict minerals

1. The EU regulation on conflict minerals Dr. Jeroen Cuvelier Postdoctoral Fellow Special Chair for Humanitarian Aid & Reconstruction (HAR) Wageningen University

2. Overview of the presentation • Introduction • Chronology: different stages in the creation of the EU conflict minerals regulation • Theoretical observations • Concluding remarks

3. Introduction • The EU is a big importer of sensitive material -25 per cent of the global trade in the 3Ts -15 per cent of the global trade in gold • Two factors that made the EU take an active stance on conflict minerals -Dodd-Frank 1502 -the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas

4. Chronology: different stages of the creation of the EU conflict minerals regulation • March 27th-June 26th 2013: public consultation round on potential EU conflict minerals legislation • March 2014: draft regulation of the European Commission

6. 20 May 2015: Plenary vote in the European Parliament in favor of a mandatory due diligence law covering both importers of raw materials and products containing those minerals + independent third-party audit of the due diligence practices of smelters and refiners January-June 2016: Dutch presidency of the EU: 4 “trilogues” between the Commission, the Parliament and the Council to find a consensus on the regulation

7. 15 June 2016: political understanding on the EU mineral regulation • Mandatory due diligence reporting requirements for smelters, refiners and direct importers of minerals and metals from conflict-affected and high-risk areas • Voluntary reporting by downstream companies (i.e. manufacturers, importers of components and finished products) • Recognition of existing initiatives that meet the European criteria • Point of reference: OECD Due Diligence Guidance • List of conflict-affected and high-risk areas drawn up in consultation with external experts • Transition period • Interim assessment by the Commission

8. Combining trade & development: the Dutch idea of a public-private partnership between industry, civil society, EU member states (“European Partnership for Responsible Minerals”) -increasing demand for minerals in Europe + increasing supply from local mines -improving working and living conditions in and around the mines “Legislation alone will not enable us to directly improve the situation of miners in conflict areas, but this public- private partnership will!” (Christiaan Rebergen, Dutch Ministry of Foreign Affairs”)

9. Theoretical observations • The EU mineral regulation is premised on technocratic principles • Growing involvement and integration of the private sector into conflict management and post-conflict reconstruction (Haufler 2010) • Globalization of a standard model for “good resource governance” serious underestimation of the influence of local politics & power dynamics

10. Paradox: although one would expect the reforms initiatives to have the effect of reducing the state’s control over the mining sector, they may – in some cases and to a certain extent - also have the opposite effect -expansion / strengthening of state bureaucracy (cfr. Ferguson (1990), ‘Anti-politics machine’) -by agreeing to implement the initiatives and paying lip service to internationally agreed transparency standards, the Congolese government is able to build up a positive reputation in the international arena -the reforms may also allow Congolese state actors to retain (or win back) control over resource-rich areas situated in the periphery, where resistance against the central regime has always been strongest (cfr. Chalfin 2010)

11. Concluding remarks • Combination of voluntary & mandatory elements ( Dodd-Frank 1502) • Disappointment among NGOs and left-wing EU politicians -Doubts about the use and effectiveness of a voluntary reporting procedure for downstream companies -Critique on loopholes in the system -risk of stigmatization of certain countries • Following the beaten track