Curbing the trade in conflict minerals requires a realistic approach

mineral-gold In 2014, the European Commission introduced a proposal for legislation to combat the trade in minerals which is used to finance conflict. This is an issue of great concern, especially in central Africa, mainly in the Democratic Republic of Congo and the Great Lakes Region countries. The trade in gold, tungsten, tantalum and tin is used by violent non-state actors to finance their operations, using the profits for example to buy arms. The aim of the proposed legislation has been to break this link between the trade in minerals and conflicts in the region and to promote the use of 'conflict-free minerals' by companies that operate in the European Union. Gold, tungsten, tantalum, and tin are used in small amounts in many of the products we buy and use every day, such as mobile phones, laptops, cars and aeroplanes. The Commission came forward with a proposal which would put in place a scheme of reporting and supply-chain transparency which European companies could voluntarily sign up to. The full text of the proposal can be found here, and a document with frequently asked questions here. In the European Parliament, the issue has been intensely debated over the past months leading upto the vote in the International Trade Committee on 14 April. In this vote, the committee supported the position of the Alliance of Liberals and Democrats (ALDE) to strengthen the Commission's proposal in key areas. While the Commission's proposal was designed to be purely voluntary, the INTA committee supported an approach which would create a mandatory scheme for the companies which smelt and refine gold, tantalum, tungsten and tin. In this way, the regime could target only a relatively small amount of companies, but still cover a large amount of the supply chain. After all, these large companies stand right at the beginning of the supply chain and are responsible for the largest percentage of the imports of gold, tungsten tantalum and tin. At the same time, a voluntary scheme would be created for those companies which operate further down the supply chain, from car or hearing-aid manufacturers to the local shop selling gold jewellery. To create an extra incentive to sign up to this voluntary scheme, a system of labelling can make sure that consumers know that they are buying a product that is conflict-mineral free. The proposal would also set up financial support for small and medium size enterprises who want to participate. Others had been calling for a system that is fully mandatory for every economic operator in the EU. While the idea behind this sounds very sympathetic, there are some fundamental problems with making this approach actually work. The supply chain for minerals is very complex. This means that companies in the downstream of the chain using the minerals would be hard-pressed to prove that the products they use are indeed conflict free. Especially for small and medium sized enterprise, which often lack staff and technical expertise, this would be very difficult and costly. Many use various minerals from various sources, as well as half-products. But also big companies, like Airbus, which makes aeroplanes using thousands of components containing these minerals, would have difficulty to certify every single part. For a company like Amazon, it would mean certifying every product that is available on its website and contains the materials. Further, it is questionable whether it would even be possible to effectively audit and check a mandatory scheme. The European Commission estimates it would cover 800,000 businesses and even more products. The differences between capacities of EU member states would further complicate this and could cause fragmentation within the internal market. In fact, there is evidence that a fully mandatory scheme is not a realistic or effective option. The United States implemented such a scheme under the Dodd-Frank act in 2010. Because of the sudden implementation of a mandatory scheme and the difficulties in complying with it, many companies decided to opt for 'Congo-free' minerals, rather than 'conflict free'. This substantially damaged the legitimate trade in minerals in the region, hurting the local economy and population. The legal exports of covered minerals from Congo actually dropped by ninety per cent when Dodd-Frank was implemented. In an open letter to governments, academics have argued that the Dodd-Frank act has actually led to a worse situation on the ground in Congo and has not had the desired effect on armed groups. Given these serious questions about a full mandatory regime, it seems more sensible to look for an option which is implementable and has a better effect in Congo itself. The proposal of the INTA committee also contains a review clause, which will allow a more gradual implementation of further obligations for businesses, once the effects and results of the current legislation have been assessed. That will also give companies, especially small and medium-sized ones, the time to adapt and comply. The legislation to combat the trade in conflict minerals is sometimes represented as a magic bullet which can solve many of the conflict related problems in Central Africa. However, we should acknowledge that the trade in minerals is often not the cause of conflict. Conflicts are the result of complex dynamics which need to be addressed by much broader measures than rules which focus on the EU's market. The EU needs a comprehensive strategy to tackle the many problems that Congo and other countries in the region face. This is not only a challenge for trade policy, but also development, foreign and security policy. Addressing the trade in conflict minerals must be a component is this strategy, but in a realistic way which considers the situation on the ground and the effects in the EU's market. The ALDE proposal which was supported in the INTA committee will be voted on in the European Parliament's plenary session in May.