Image: JAMES ARTHUR GEKIERE (BELGA/AFP)
An agreement on the EU supply chain law is still a long time coming. The directive was not on the agenda of the panel of 27 EU ambassadors in Brussels on Friday. The day before it had looked like this at times. Meanwhile, Economics Minister Martin Kocher (ÖVP) once again explained his reservations about the planned supply chain law. “There are still efforts to find a solution,” he said at a press briefing on Friday. It’s about finding a better solution – the aim is not to “turn off” the directive.
- Read here: Struggle over EU supply chain law
It was unclear until recently when the latest compromise text could be voted on. Belgium, which currently holds the presidency of the Council (body of EU states), recently presented a new proposal. On Thursday, Finland, at least one country that had previously opposed the supply chain directive, said it could agree to the new proposal.
The Belgian compromise proposal stipulates that only companies with over 1,000 employees (previously: 500) and a turnover of over 300 million euros (previously: 150 million) should be affected by the directive. In addition, there should be no separate rules for risk sectors and the rules regarding company liability have also been weakened.
The EU supply chain law is intended to hold large companies accountable if they profit from child or forced labor outside the EU. Larger companies must also create a plan to ensure that their business model and strategy are compatible with meeting the Paris climate goals to limit global warming.
List model instead of bureaucracy
Kocher fears that the new rules will burden companies with too much bureaucracy. He once again advocated positive and negative lists and so-called ‘safe harbor’ clauses. The idea is that various third countries – for example Japan – would be declared fundamentally unproblematic. European companies would therefore no longer have to check suppliers from these countries. The list approach is similar: here, a list of (un)objectionable suppliers would be created by the authorities and the companies would be partially relieved of their due diligence obligations.
- Read here: Supply Chain Act: New idea aims to reduce bureaucracy for companies
The EU supply chain law is on hold after several states – including Austria – expressed reservations about the compromise negotiated with the EU Parliament. In view of the upcoming EU elections, it is becoming increasingly unlikely that the supply chain directive will be passed before the election – especially the longer it takes the states to reach an agreement and the further they deviate from the agreement with Parliament.
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