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Manufacturers Concerned About EU Proposal on Conflict Minerals

Thursday, October 17, 2013
Sandler, Travis & Rosenberg Trade Report

More than two dozen manufacturing groups wrote to senior U.S. officials recently to express concern about the scope of a forthcoming conflict minerals proposal from the European Union. The letter to U.S. Trade Representative Mike Froman, Commerce Secretary Penny Pritzker and Secretary of State John Kerry said the U.S. should work toward regulatory coherence on this issue as part of the Transatlantic Trade and Investment Partnership negotiations.

Under an August 2012 final rule from the Securities and Exchange Commission, companies that file reports with the SEC under the Securities and Exchange Act of 1934, whether foreign or domestic, will have to use a new Form SD to disclose their use of tantalum, tin, gold or tungsten originating in the Democratic Republic of the Congo or an adjoining country if those minerals are necessary to the functionality or production of a product they manufacture or contract to manufacture. These minerals are used to produce a wide range of goods such as cell phones, computers and video game systems, medical equipment, high-speed tools, machine parts, glass and lamps. Subject companies will have to comply with the SEC rule for calendar year 2013 and the first reports will be due May 31, 2014. Products can be labeled “DRC conflict free” if certain criteria are met.

The manufacturing groups said in their letter that they are increasingly concerned by reports that the EU’s conflict minerals disclosure regulation may be even broader than the SEC rule and include reporting requirements for products imported into the EU that are not applicable to like products made in EU member states. Such a requirement “would likely be at odds with the basic non-discrimination rules of the international trading system, highly damaging to manufacturers throughout the United States, and entirely inconsistent with the goals of the TTIP negotiations.”  It would also be burdensome for manufacturers to have to comply with two divergent regulations, the groups said, especially since compliance with the SEC rules has proven “enormously challenging.”

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