The EU plans are in jeopardy; as things stand, the traffic light coalition in Brussels cannot agree due to resistance from the Liberals. In the end, the rules could even fail because of this.
The planned new EU supply chain law threatens to fail due to resistance from the FDP. The Liberal-led ministries of justice and finance opposed the plans shortly before the final consultations.
Federal Labor Minister Hubertus Heil (SPD) then presented new proposals to avoid Germany abstaining from the EU vote. If Germany abstains due to the disagreement in the traffic light coalition, the entire set of rules could fail. It is not the first time that the FDP has put the brakes on a negotiated EU compromise.
In a letter from Justice Minister Marco Buschmann and Finance Minister Christian Lindner (both FDP) regarding the latest status of negotiations on the EU project, it is stated that both houses “cannot support the result”. “The Pioneer” first reported on the attitude of the FDP ministries. Heil then said to the coalition partner: “I am asking for approval.”
The EU Supply Chain Act aims to hold large companies accountable if they profit from child or forced labor outside the EU. Larger companies should also be more obliged to comply with the Paris climate goals to limit global warming.
FDP fears liability risks
Buschmann and Lindner criticized that the EU law would lead to companies being significantly liable under civil law for breaches of duty in the supply chain. In addition, significantly more companies would be affected than under the current German legal situation.
The construction sector should also be classified as a so-called risk sector. This could be a threat to the existence of small and medium-sized companies in this area in particular. “In our opinion, many companies simply do not have the appropriate human and financial resources,” argue the ministers. “It is to be feared that even less will be built in Germany in the future.”
Buschmann told the German Press Agency that “the protection of human rights is part of the EU’s self-image.” He therefore fully supports the aim of the directive to ensure better protection of human rights and the environment in the supply chains of European companies.
However, this goal should not lead to a “self-strangulation of our business location”. “Our concerns have not been allayed; the risks for the European and German economies outweigh them.” In the Council of the European Union, this resulted in Germany abstaining, which ultimately seemed like a “no” vote.
For now, Chancellor Olaf Scholz is leaving it open as to whether he will accept his coalition partner FDP’s no to the planned EU supply chain law without further discussions. “First of all, I have to acknowledge that there is no consensus in the government that everything we have achieved in terms of understanding in Europe is enough,” said the SPD politician on the sidelines of the EU summit in Brussels. He “can’t give any other report right now.” “Progress is a snail,” he added.
Heil promotes uniform standards
Heil countered that uniform standards were in the interests of competing German companies. “But it is also in the interest of our values and human rights.” Child and forced labor would be combated. With his new proposals he now wants to “build bridges” and reduce bureaucratic burdens. Heil suggested German regulations in the event of the planned EU law being implemented.
With his proposals, Heil wants to change German supply chain regulation. Companies’ annual reporting obligations are to be suspended by the German Supply Chain Act. According to Heil’s key points, around 3,000 companies are affected. Today, companies must regularly publish a report on the fulfillment of their due diligence obligations against child labor and human rights, which is checked by the Federal Office of Economics and Export Control.
Greater consideration should also be given if there is a lower level of legal enforcement in a country in which products are manufactured for the German market. There should be more space for initiatives from entire sectors that can relieve the burden on individual companies.
Greens support Heil, business associations support the FDP
Green parliamentary group leader Katharina Dröge praised Heil’s suggestions. “In doing so, he addresses the concerns of the FDP. Germany should now also agree to the European supply chain law.” It’s about Germany’s reliability in European politics. The vote comes at the end of a long negotiation process.
The Green negotiator in the European Parliament’s Trade Committee, Anna Cavazzini, warned: “With the sudden emergency braking in the last few meters, the FDP would damage Germany’s reputation at the European level.” During the dispute over an end to new cars with combustion engines, Germany had already made additional demands – primarily at the insistence of the FDP.
Employer President Rainer Dulger, on the other hand, called Germany’s abstention announced by the FDP “good news for our business location and its companies.” BDI President Siegfried Russwurm said: “It is good that this wrong path is not supported by Berlin and that a further expansion of bureaucracy and administrative-intensive reporting obligations of companies is put a stop to this.”
In a letter to Chancellor Olaf Scholz (SPD), several leading associations demanded that approval of the new EU supply chain law be refused. The Protestant and Catholic churches had called on the federal government to give its consent.
The general manager of the Main Association of the German Construction Industry, Tim-Oliver Müller, said that the EU’s planned classification as a high-risk sector would be painful for construction. Left leader Martin Schirdewan, however, called on Scholz to give his say on the EU supply chain law.
German abstention causes majority to wobble
An EU diplomat told the German Press Agency that with Germany abstaining, it was unclear whether there would still be a sufficient majority among the EU countries for the project. There is speculation that other countries will follow Germany’s decision and now also do not agree to the project.
This means that one of the flagship projects of EU trade policy is in jeopardy. According to another EU diplomat, the Belgian Council Presidency will continue to push the project forward. An agreement is being worked on, it said.