Conflict Minerals (Compliance) (Northern Ireland) (EU Exit) Regulations 2020
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Lord Ahmad of Wimbledon
That the Grand Committee do consider the Conflict Minerals (Compliance) (Northern Ireland) (EU Exit) Regulations 2020.
Relevant document: 31st Report from the Joint Committee on Statutory Instruments (special attention drawn to the instrument)
The Minister of State, Foreign, Commonwealth and Development Office (Lord Ahmad of Wimbledon) (Con)
My Lords, these regulations, laid on 15 October, are necessary for the application
“to and in the UK in respect of Northern Ireland”
of the EU Conflict Minerals Regulation, which is listed in Annexe 2 of the Northern Ireland protocol. The regulation establishes the due diligence obligations of the largest importers of tin, tantalum, tungsten, and gold, or “3TG”. Supply chain due diligence here is absolutely crucial. A large proportion of these so-called conflict minerals originate from conflict-affected and high-risk areas. The EU regulation makes voluntary guidance set by the OECD mandatory. It aims to break the link between armed conflict and the exploitation of 3TG and to put an end to abuses of local communities, including mine workers, which are often linked to violations of human rights.
Parts of the EU Conflict Minerals Regulation have applied in the UK since 2017. However, its key operative provisions do not apply until 1 January, after the end of the transition period. These include the relevant obligations on business and member state competent authorities to ensure its effective implementation throughout the EU. Those key provisions will not take effect in Great Britain and will not form part of retained EU law. The regulations we laid before Parliament make that provision for Northern Ireland, as required under the protocol, and establish an enforcement framework for non-compliance.
This means that from the 1 January 2021, the largest importers into Northern Ireland of tin, tungsten, tantalum and gold will need to demonstrate due diligence to ensure that their imports have been mined and processed responsibly. They will have to demonstrate that they are managing any risks that their supply chains are linked to human rights violations or to the fuelling of conflict.
To enforce this in Northern Ireland, we are proposing powers for the Secretary of State to require businesses to report on their due diligence systems. The regulations also make provision for inspectors to enter business premises to inspect documents, data and records. These powers are necessary to ensure that the largest importers of “conflict minerals” into Northern Ireland do so in a way that is fair to everyone in the supply chain.
The regime follows a civil sanctions route and provides for a power to issue civil compliance notices and financial penalties where businesses do not comply. The decision to impose a financial penalty may be appealed to the First-tier Tribunal. The regime does not impose penalties for substantive breaches of due diligence obligations, as this is considered outside the scope of the EU Conflict Minerals Regulation. As required by the regulations, we will publish guidance at the earliest opportunity on how the civil sanctions will be used.
We accept the comments by the Joint Committee on Statutory Instruments that Regulation 8, which enables the Secretary of State to serve a notice requiring “a person” to produce information, is only enforceable against “Union importers”—importers into Northern Ireland—and that the regulations do not make provision for enforcing a requirement under Regulation 8 that is imposed on a person who is not a “Union importer”. We also accept as a point of principle that the imposition of obligations in statutory instruments should be accompanied by enforcement measures with equivalent scope.
It is necessary for these regulations to be made before the end of the transition period to meet the UK’s obligations under the Northern Ireland protocol. We are proceeding with the regulations as currently drafted but will bring forward as soon as possible amending legislation to amend Regulation 8, as I said.
This amendment will make explicit that the power to require the production of information can be exercised only in relation to a “Union importer”—an importer into Northern Ireland. In the meantime, the Secretary of State undertakes not to exercise the power to require production of information under Regulation 8 against persons other than “Union importers”. When the amending regulations are laid, they will also implement some minor administrative and clarifying corrections.
Our intention through these regulations is to allow businesses to operate responsibly in conflict-affected and high-risk areas. 3TG minerals are key components for much of our technology and our view is that, under the right conditions, their mining can build prosperity and security for local communities. Conducting due diligence, in accordance with OECD guidance, is key to managing the risks and to ensuring that businesses along the supply chains behave responsibly.
Our proposed regime for Northern Ireland is in line with the spirit of OECD guidance, incentivising businesses to continually improve their due diligence processes. The approach taken in the regulations, including the financial penalties for failure to co-operate with procedural requirements, corresponds with the European Commission’s stance on the scope of the EU regulation. We consider that this approach to the implementation of the EU conflict minerals regulations in Northern Ireland will meet our obligations under the protocol. I beg to move.
Lord Ahmad of Wimbledon (Con)
My Lords, first, I am grateful to all three noble Lords for their participation; I hope that the noble Baroness, Lady Northover, can hear me clearly. As all noble Lords have acknowledged and as I mentioned in my opening remarks, the EU Conflict Minerals Regulation comes into full force on 1 January 2021 and imposes a legal obligation on EU importers over the 3TG. We will also, in accordance with OECD guidance, issue further guidance in this respect in the early part of 2021 to ensure adherence.
Various questions were raised and I will seek to answer them as specifically as I can. First, on the report and the regulations mentioned, in particular the additional amendments we will seek to make in line with the committee’s report on Regulation 8, I do not have a specific date but I will of course endeavour to ensure that noble Lords are updated at the earliest opportunity to ensure that we are fully compliant in this respect. However, to answer the specific questions from the noble Lord, Lord Collins, these regulations will ensure we comply fully with our obligations under the Northern Ireland protocol.
The noble Lord, Lord Bradshaw, raised the competent authority that will operate for the Northern Ireland inspectors, who will be appointed on behalf of my right honourable friend the Foreign Secretary to exercise his powers with respect to entry and inspection. For the purposes of the regulations, the Foreign, Commonwealth and Development Secretary will take the role of the competent authority. This is also part and parcel of our fulfilling our obligations in this respect.
The noble Lords, Lord Collins and Lord Bradshaw, and the noble Baroness, Lady Northover, also rightly raised the issue of other parts of the UK, since we are taking these regulations forward only in Northern Ireland, in line with the Northern Ireland protocol. They asked specific questions on this. Outside of the EU, the UK is not obliged to enforce the substantive provisions of the EU conflict minerals regulation. However, the UK will continue to be an active member of the OECD and to promote the OECD’s due diligence guidance. In this respect, the UK Government fully expect all UK businesses to adhere to the OECD guidance. Since the EU minerals regulation is listed in Annexe 2 of the Northern Ireland protocol to the withdrawal agreement, the UK Government, in introducing the SI, are taking the necessary steps to ensure that the regulation is implemented and enforced in Northern Ireland. We will in due course consider what, if any, further regulatory framework might be appropriate for Great Britain.
In this regard, the noble Lord, Lord Collins, also asked about our work elsewhere in the world. We have of course been very effective in bringing regimes across the world to the fore regarding this issue. In particular, the UK is committed to addressing risks around conflict minerals through promoting and encouraging compliance with the OECD’s due diligence guidance, which has been issued for responsible mineral supply chains for conflict-affected and high-risk areas. We will of course continue to be a member of the OECD outside of the EU and we expect all businesses to take appropriate steps.
The UK is also a founding member of the European Partnership for Responsible Minerals. This initiative aims to increase the proportion of responsibly sourced minerals by working across the whole of the supply chain. In this regard, the UK Government funded projects, including in the African Great Lakes region, and supported the development of a due diligence hub to provide information for businesses to progress their supply chain due diligence.
The noble Baroness, Lady Northover, specifically flagged the importance of the Kimberley process. I have worked directly on this so I can reassure her. The Kimberley process, as noble Lords know, groups 55 like-minded participants, covering 82 states, with framework regulations designed to prevent the flow of conflict diamonds, which is also pertinent to our debate. We have been part of the Kimberley process since 2002. The UK remain committed to the policies and principles of the Kimberley process. We will become an independent participant at the end of the transition period.
I trust that I have answered most if not all of the questions raised. As I said, I will come back to noble Lords on the specific timetabling of the related amendments under Regulation 8. We seek to do that as soon as practicable and possible. I am sure that we will update noble Lords through the usual channels. With that, I once again thank all noble Lords for their participation. This is another important step forward in the passing of these regulations to ensure our compliance with the obligations under the withdrawal agreement as we prepare for the end of the transition period.