Brussels
EU states agree on supply chain law – Germany abstains
The Supply Chain Act is intended to hold large companies accountable if they profit from child or forced labor outside the EU
© Joerg Boethling / Imago Images
Now the European Union supply chain law is coming. The FDP in particular opposed this. But there is still one hurdle.
After a long struggle, a sufficient majority of people support EU states have a weakened European supply chain law to protect human rights. The Belgian Council Presidency announced this on Friday. This meant that Germany, which abstained from the Committee of Permanent Representatives of the Member States, was outvoted. An abstention in the committee acts as a no vote.
In the federal government, the FDP urged that Germany not agree. The Liberals fear, for example, that companies will withdraw from Europe for fear of bureaucracy and legal risks. Politicians from the SPD and the Greens, however, support the project. The disagreements led to an open exchange of blows in the traffic light coalition.
The EU Parliament still has to approve the supply chain law
Negotiators from the European Parliament and the EU states had already agreed on a supply chain law in December. The aim is 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 their business model and strategy are compatible with the Paris Agreement on climate change. The EU Parliament still has to approve the project. A majority is considered likely here.
Because the agreement from December initially did not find a sufficient majority among the EU states, the plan was significantly weakened again. Instead of as originally planned, it will no longer apply to companies with more than 500 employees and at least 150 million euros in sales.
According to the information, the limit was raised to 1,000 employees and 450 million euros – after a transition period of five years. This scope should be approached gradually. After a transition period of three years, the requirements will initially apply to companies with more than 5,000 employees and more than 1.5 billion euros in sales worldwide; after four years, the limit will drop to 4,000 employees and 900 million in sales. The EU Commission should publish a list of affected non-EU companies. The requirements could apply to them if their business generates a certain turnover in the EU.
The law has been significantly weakened
In addition, so-called risk sectors were deleted, i.e. economic sectors in which the risk of human rights violations is considered higher, such as in agriculture or the textile industry. Companies with fewer employees could also have been affected. However, it is still planned that companies can be held accountable in European courts if they profit from human rights violations.
Germany already has a supply chain law. Despite the weakening, the EU version goes beyond its requirements. German law precludes companies from being liable for breaches of their duty of care.
The chairwoman of the Internal Market Committee in the EU Parliament, Anna Cavazzini, criticized: “Deals between governments and ever-increasing weakening of a negotiated text have disregarded the established legislative procedure and duped the European Parliament.” The FDP maintained its blockade stance until the end, although the proposed compromise met their demands. A Federal Chancellor who is responsible for such great damage should examine his European political compass, said the Green politician.
The FDP European MP Svenja Hahn told the German Press Agency: “The bottom line is that the supply chain law remains impractical because fundamental problems, such as unclear liability rules, remain outside of one’s own sphere of influence.” However, it is thanks to the FDP that the law has been improved in many areas.