Policy recommendations

  • The European Union should allow ACP countries to maintain their sovereignty and policy space in relation to the appropriate use of their own natural resources. They should be able to use investment regulations, tariff barriers and export restrictions to promote equitable, local and sustainable economic development.
  • The European Commission through its development policy should stimulate resource-rich developing countries to implement their own industrial policies, to protect their infant industries by using legitimate barriers to trade, and by introducing environmental measures. This should allow resource-rich developing countries to move up the value chain, so that the added value to (semi) processed products will remain in the country of origin and would thus stimulate economic development.
  • Within its development budget the EU should allocate sufficient resources to the building of energy and environmental infrastructure to enable developing countries to stimulate economic development.
  • The EU should use its political and economic power to set clear rules in relation to the extraction of raw materials. Like suggested in the February 2011 RMI update an EU code of conduct for EU companies operating in third countries should be developed and measures should be taken to enforce such a code of conduct.
  • In order to provide for more transparency in the supply chain and to minimize the role of European companies in fuelling conflicts over resources, the EU should implement Country by Country reporting, following the US example of the Dodd Frank Act.
  • Within the EPA negotiations the EU should be more flexible as suggested in the RMI update and make sure developing countries can demonstrate the use of export taxes as a policy tool and therefore keep using them.
  • In all policy initiatives and actions elaborated on the basis of the strategy laid down in the Raw Materials Initiative that affect developing countries, DG Development should be closely involved, and ACP partner countries and civil society organisations should be consulted.

 

 

Case: Raw Materials Initiative

24-01-2011 MEP Michel wants a European Dodd-Frank Act

Fair Politics has already referred to the American Dodd-Frank Wall Street Reform and Consumer Protection Act in previous news items, because MEPs continue to pay attention to this topic. This time Louis Michel (ALDE) asked the European Commission why the European Union (EU) has not yet introduced similar legislation. The significance of the Dodd-Frank Act is not just about reforming Wall Street. More important is the legal obligation for extractive companies to disclose information on the origins of the raw materials and whether their payments are used to fund conflicts in developing countries. Michel provides the example of the DRC as a clear case where this has happened in the past.

Introducing an European Dodd-Frank Act would be a way of protecting developing countries from the resource-curse. Instead of trying to secure access to raw materials for European companies, the EU has the obligation to support resource-rich developing countries to move up the value-chain and diversify the local economies. This is a strategy to eradicate poverty for which the EU has a legal obligation ratified in article 208 of the Treaty of the Functioning of the European Union. The Commission will publish an updated version of the Raw Materials Initiative at the end of this month. Fair Politics calls on the Commission to integrate the EUs development objectives in the new policy proposal, by introducing similar legislation as the Dodd-Frank Act.

For raising his concern about the Dodd-Frank Act, MEP Louis Michel (ALDE) is recognised as a Fair Politician. He earns one point in monitoring system.

Monitor fair: ALDE

Parliamentary questions
P-9670/2010
23 November 2010
WRITTEN QUESTION, by Louis Michel (ALDE)

Subject: Efforts to stop the Congolese conflict being funded through the illegal exploitation of mineral resources in the Democratic Republic of Congo and adjoining countries
In the USA, the Dodd-Frank Wall Street Reform and Consumer Protection Act has recently overhauled the rules governing the provision of financial services, inter alia by requiring companies listed on Wall Street to publish certain information.
For example, the Dodd-Frank Act requires companies whose products contain cassiterite (tin ore), coltan, wolframite or gold to disclose to the Securities and Exchange Commission (SEC) whether they are sourcing these minerals from the Democratic Republic of Congo (DRC) or adjoining countries.
Companies will have to detail the measures they have taken to ensure that such minerals do not directly or indirectly finance armed groups in the DRC and adjoining countries, which are guilty of massacres and other atrocities. In addition, all the information disclosed must be independently audited.
Although the EU has coordinated an international task force since 2008 to stop the Congolese conflict being funded through the illegal exploitation of mineral resources, it has not yet managed to introduce such legislation.
Why did the Commission not embark on this highly appropriate course of action just after the crisis?
What measures is it now prepared to take to bring the EU up to speed in this crucial area?