New regulation on conflict minerals makes EU responsible under WTO law for detrimental impact on tradePublished 4 July 2017
With the recently adopted Conflict Minerals Regulation, the EU bears responsibility under WTO law for possible detrimental impact that it generates, according to Asser researchers Enrico Partiti and Steffen van der Velde. The new EU regulation may lead to discrimination which is inconsistent with WTO obligations; such discrimination can be attributed to the EU even if it stems from the OECD Guidance which it incorporates, and from the behavior of economic operators implementing their due diligence obligations. In addition, the EU may find it hard to justify its measure under the Security Exception, or by claiming the Regulation implements international law obligations.
EU Trade policy and the protection of public values
The presence of minerals in a conflict-affected area can further fuel armed conflicts and undermine sustainable development, good governance and the rule of law. This is why the EU recently adopted new Regulation laying down supply chain due diligence obligations for EU-importers of tin, tantalum, tungsten and gold. It is the latest addition to a growing group of EU measures aiming at indirectly pursuing public values in jurisdictions outside the EU by means of trade relations. Under the Regulation, the EU incorporates the Due Diligence Guidance for Responsible Supply Chain of Minerals form Conflict-Affected and High-Risk Areas (CAHR) of the Organisation for Economic Cooperation and Development (OECD) and makes it mandatory for EU importers to prevent them from dealing in conflict minerals.
Detrimental Impact on trade
As a result of the Regulation, non-compliant suppliers of the minerals mentioned in the Regulation may lose market access or experience detrimental impact as defined in the WTO Agreements. In their research, Partiti and Van der Velde conclude that the EU may be responsible for such detrimental impact in spite of stemming from an OECD act and the private behaviour of economic operators. In addition, the Regulation lays down supply chain due diligence obligations for CAHR areas based on the Due Diligence Guidance of the OECD, but it broadens the definition of CAHR areas so that the regulation is not restricted and limited to specific conflict-affected. The researchers conclude that in a possible WTO dispute, the EU would be prevented from invoking Art. XXI:c GATT as an exception.In order to do so, the scope of application of the EU regulation should be brought it in line with Resolution 1952 of the UN Security Council that includes guidelines for due diligence for importers, processing industries and consumers of Congolese minerals.
Doing Business Right
The T.M.C. Asser Instituut carries out research on developments in international and European law and its potential for serving the cultivation of trust and respect in the global, regional, national and local societies in which the law operates. The round table on sustainable garment is part of the newly established research project of the ASSER Institute on ‘Doing Business Right’, which is part of the broader research strand ‘Advancing Public Interests in International and European Law’.
Read our blog on Doing Business Right.