Will the EU supply chain law fail in the final stages?

After years of debate, a compromise on an EU supply chain law was reached on December 14, 2023 in the so-called trilogue negotiations. This means that EU laws are usually finalized and approval by the member states and the European Parliament is only a formality. However, the "milestone" achieved after years, which usually only requires the formal approval of the member states and the European Parliament, is now wavering. The reason for this is Germany, where two ministries do not want to support the plans for the negotiated EU supply chain law, as was announced last Thursday. Austria's approval is also still pending. Many NGOs are concerned about these developments.


It was only in December that the Council, Parliament and Commission agreed on a compromise for the EU Supply Chain Act after months of trilogue negotiations. This was preceded by a year-long process in which the Austrian Minister of Economic Affairs Kocher, together with Justice Minister Zadić, not only represented Austria in the Council, but also played a key role in negotiating the compromise.

The new EU supply chain law with its strengths and weaknesses


On February 9, this compromise is now to be confirmed in the Committee of Permanent Representatives, in theory a mere formality. This has changed due to Germany's stance. The entire set of rules could be jeopardized by a German abstention as a result of the disagreement in the traffic light coalition, because the sufficient majority for the project in Brussels is on the line. "In the Council of the European Union, this will result in Germany abstaining, which will have the effect of a 'no' vote," reads a letter from Justice Minister Marco Buschmann and Finance Minister Christian Lindner, which is available to the German Press Agency.


Failure due to abstentions?

While Justice Minister Alma Zadić firmly supports the compromise reached, Economics Minister Martin Kocher remains silent. However, after the Council vote on Friday, the Austrian position must be finalized in the next few days. However, according to media reports, Economics Minister Kocher, like the FDP in Germany, is now threatening to instruct the Austrian representative to abstain - which would be tantamount to a rejection.


If several EU countries abstain, this could result in the Council (COREPER) not reaching a majority for the compromise. As a rule, the democratically negotiated and reached compromises are then also approved by the institutions.


The German FDP's public criticism of the compromise on the EU supply chain law already represents a breach of taboo. In the course of years of negotiations, both the Council and the EU Parliament have put forward their positions. The EU Parliament's position was even adopted with votes from EPP and Renew MEPs.


"The long and complex legislative process in Brussels is designed to produce a compromise proposal that is as democratic as possible, in which all relevant ministries of the Member States, the directly elected members of the EU Parliament and the Commission have their say. Not agreeing to such a compromise now makes a mockery of this years-long process and its well-founded outcome," explains Anna Leitner, supply chain and resource expert at GLOBAL 2000.


This is one worrying aspect. The other is that responsibility for compliance with human rights and environmental standards along the supply chain could once again be put on the back burner.


Content of the Supply Chain Act

The Supply Chain Act, a flagship project of the European Union, provides for companies above a certain size to finally be obliged to monitor compliance with human rights and environmental standards along their supply chains. It is intended to make sustainable business practices the norm and hold companies accountable for violating human rights and causing damage to the environment and climate. We have already reported on this.



Inviting many to vote in favor of the directive

The fact that many companies are in favor of a strong EU supply chain law is also demonstrated by an open letter that more than 70 Austrian companies supported in the fall. Across Europe and around the world, citizens and civil society, together with sensible companies from all sectors, are finally calling for a level playing field for all.


"Instead of kneeling before representatives of big industry who want to continue exploiting people and the environment, Minister Kocher must speak out on Friday in favor of human rights, environmental protection, Austrian companies and, above all, democracy and agree to the compromise!" demands Leitner.


86% of the population agree that companies that cause or contribute to human rights violations and environmental destruction should be held legally liable. "Economics Minister Kocher should feel committed to democratic processes, the interests of the population and those companies that already produce sustainably and finally create legal certainty with the same rules for all companies in the EU," concludes Stefan Grasgruber-Kerl, Südwind supply chain expert.


The Dreikönigsaktion of the Austrian youth organization Dreikönigsaktion has also spoken out in favor of adhering to the European rules of the game and emphasizes: "It is important to stand by the European rules of the game in this delicate phase and not to side with obstructionists and blackmailers," Teresa Millesi, Federal Chairwoman of the Catholic Youth Organization and its Dreikönigsaktion. "After Germany withdrew its support at the last minute in March 2023 for the ban on cars with combustion engines from 2035, which had already been negotiated, many political observers spoke of a "dangerous precedent", a "threat to the European spirit" and "blackmailing behavior". Something similar is now threatening to happen again," she said in a press release.


160 million children worldwide affected by child labor

With regard to the latest developments surrounding the EU supply chain law, the Managing Director of Jugend Eine Welt points to the fact that, according to ILO estimates, around 160 million children, or almost one in ten, are affected by child labor worldwide. Around half of these children are forced to perform the most dangerous forms of child labor, i.e. work that poses a real risk to their physical and mental health. "These human rights violations often happen at the beginning of supply chains. The agreement reached in December guarantees an EU supply chain law that includes more transparency and due diligence obligations for companies. It cannot be in your interest for goods and products to end up in Austrian stores - and therefore in the households of Austrians, i.e. you and me - that contain hidden, abusive child labor, " Reinhard Heiserer appeals to Minister Kocher.