Documents considered by the Committee on 11 January 2017 Contents

3Import of minerals from conflict areas

Committee’s assessment

Politically important

Committee’s decision

Not cleared from scrutiny; further information requested; drawn to the attention of the International Development Committee and the Foreign Affairs Committee

Document details

(a) Proposed Regulation 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; (b) Joint Communication: Responsible sourcing of minerals originating in conflict-affected and high-risk areas: Towards an integrated EU approach

Legal base

(a) Article 207 TFEU; QMV (b) —

Department

Foreign and Commonwealth Office

Document Numbers

(a) (35879), 7701/14 + ADDs 1–9, COM(14) 111; (b) (35908), 7704/14, JOIN(14) 8

Summary and Committee’s conclusions

3.1The draft Regulation (document (a)) covers tin, tantalum, tungsten, their ores, and gold, whose supply chains have been identified as contributing to armed conflict, particularly in the eastern Democratic Republic of Congo. This is part of the Commission’s response to the 2011 OECD Due Diligence Guidance. In its proposal—published in 2014—the Commission proposed a voluntary due diligence scheme, but one that would be binding on companies once they had volunteered.

3.2The accompanying Communication (document (b)) sets out an overall integrated approach, of which the draft Regulation is a part, to the responsible sourcing of minerals originating in conflict-affected and high-risk areas.

3.3While Member States were supportive of the Commission’s voluntary approach, the European Parliament pushed for a mandatory approach. In his latest letter, the Minister for Europe and the Americas, (Sir Alan Duncan), reports that a compromise has been struck whereby large importers will be required to carry out due diligence while importers of smaller quantities are exempt.

3.4The Minister does not set out the Government’s view of the compromise, although the Government did consider the informal political understanding in June (which signposted the likely direction of compromise) to be “satisfactory as a basis for future discussions” given that the proposal “ensured that the overall administrative burden was slight while maintaining the efficacy of the Regulation”.

3.5Writing on 13 December, the Minister explains that the informal agreement reached with the European Parliament was due to go to the Committee of Permanent Representatives (COREPER) on 7 December. His letter gives no indication of the outcome of that meeting. He states that the European Parliament is expecting to vote on the text in early 2017, with the text then passing to the Council for final agreement. Finally, the Minister promises to send the full text of the agreement along with an Explanatory Memorandum later in the process, when the Government is certain what the final text will be.

3.6In the Committee’s last Report on these documents, of 8 June 2016,5 the Committee reminded the Government of its expectations concerning the prior scrutiny of the latter stages of negotiations. Noting the increasing tendency to agree dossiers before they go to Council for formal agreement, the Committee considered it imperative to hear from the Minister beforehand. It did not wish to be presented, on the eve of a Council meeting, with a text that had already effectively been agreed.

3.7We are pleased that a compromise has been reached in order that this important legislation may enter into force.

3.8The obligations will apply to companies from 2021, by which time the United Kingdom is expected to have left the European Union. Can the Minister indicate whether or not the UK will wish to apply the terms of this legislation to the UK post-Brexit? If he is not in a position to respond at this point, it would nevertheless be helpful if the Minister could set out the issues that would be taken into account in making that decision.

3.9We note that the Minister is writing to us well before any Council agreement, as we asked. Nevertheless, we suspect that the text has already been effectively agreed, despite our request for further information prior to effective agreement. We ask that the Minister confirms the status of the agreement and, if he does not expect either the European Parliament or the Council to re-open discussions, tell us why he did not communicate with the Committee towards the end of the trilogue process and in advance of the COREPER meeting. Best practice in keeping Committees informed as negotiations move towards final agreement has clearly not been applied.

3.10Ironically, the Minister commits to depositing the final text of the agreement with Parliament, along with an Explanatory Memorandum. While we would appreciate sight of the final text, the Minister’s commitment suggests a misunderstanding of parliamentary scrutiny of EU documents. Parliament scrutinises the Government approach to draft EU legislation and it is for that reason that we require the most comprehensive information possible as negotiations proceed. The Committee cannot effectively scrutinise the Government’s approach once a final text has been agreed.

3.11The Minister’s response to us should include confirmation of the outcome of the COREPER agreement on 7 December, the position taken by the UK’s representative at that meeting and the position that the Government intends to take in Council. The proposal remains under scrutiny. It is therefore imperative that the Minister responds as soon as possible—ideally by the end of January—in order that the Committee may give due consideration to scrutiny clearance ahead of Council.

3.12We retain the documents under scrutiny and draw them to the attention of the Foreign Affairs Committee and the International Development Committee in order that they are aware of the compromise reached.

Full details of the documents

(a) Proposed Regulation 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: (35879), 7701/14 + ADDs 1–9, COM(14) 111; (b) Joint Communication: Responsible sourcing of minerals originating in conflict-affected and high-risk areas: Towards an integrated EU approach: (35908), 7704/14, JOIN(14) 8.

Background

3.13The 2011 OECD Due Diligence Guidance sets out a process to be followed by countries interested in developing responsible sourcing capabilities. In 2011, the EU took a political commitment in the OECD framework to support the further uptake of the Guidance.

3.14The Commission is proposing a voluntary scheme, but one that would be binding on companies once they had volunteered. Such companies would be required to present, annually, evidence from a third-party auditor that they had carried out due diligence in line with the OECD guidance on the smelters or refiners in their supply chain. Member States would report annually to the Commission on implementation, and provide information on self-certified responsible importers. The Commission would use the information to develop a list of responsible smelters and refiners. The Regulation would be global in scope. The scheme would be evaluated after three years, and the results used for determining the ongoing EU approach—including amendments to the regulatory framework, making it mandatory, if appropriate, on the basis of a further impact assessment.

3.15The full background thus far is set out in detail in our earlier Reports, including those of our predecessors (see “Previous Committee Reports”).

The Minister’s letter of 13 December 2016

3.16The Minister explains that an “informal political understanding” was reached in June 2016. This formed the basis of the compromise later agreed (see below). The Government considered the June proposal to be “satisfactory as a basis for future discussions.” He goes on to explain:

“Given the possibility of covering the vast majority of imports into the EU by imposing a mandatory due diligence requirement on only a small minority of companies, the concept ensured that the overall administrative burden was slight while maintaining the efficacy of the Regulation.”

3.17On the progress of discussions since June, the Minister says:

“Discussions have in recent months advanced significantly. An informal agreement was reached in trilogue negotiations on 22 November, in line with the above-mentioned political understanding of June 2016. This text is going to the Committee of Permanent Representatives (COREPER) on 7 December. The European Parliament is expected to vote on the text in Plenary early next year. The text will then be passed back to the Council for final agreement.”

3.18The Minister describes the key elements of the compromise in the following terms:

3.19He concludes by making a commitment to sending “the full text of the agreement along with an Explanatory Memorandum later in the process, when we are certain what the final text will be”.

Previous Committee Reports

Fourth Report HC 71-iii (2016–17), chapter 3 (8 June 2016), Sixteenth Report HC 342-xv (2015–16), chapter 7 (6 January 2016), Tenth Report HC 342-x (2015–16), chapter 3 (25 November 2015), Fourth Report HC 342-iv (2015–16), chapter 6 (16 September 2015), Thirty-ninth Report HC 219-xxxvii (2014–15), chapter 11 (24 March 2015), Eighth Report HC 219-viii (2014–15), chapter 6 (16 July 2014) and Forty-sixth Report HC 83-xli (2013–14), chapter 5 (9 April 2014).


5 See (35879), 7701/14 + ADDs 1–9 and (35908), 7704/12: Fourth Report HC 71-iii (2016–17), chapter 3 (8 June 2016)




13 January 2017