Freedom for The Supply Chain

The German right wing liberal FDP has successfully sabotaged the European Supply Chain Law

Tomasz Konicz, 22.06.2024

Germany’s business associations have once again been able to assert their interests at the EU level. After lengthy negotiations, the EU’s Supply Chain Law, which was due to be voted on by the Council of the European Union on February 9, has been postponed. After Germany announced that it would not vote in favor of the legislation, several countries had doubts. As a result, a majority in favor of the legislation was no longer considered certain.


The directive, which had been in the pipeline for years and was intended to impose binding minimum civil standards on European companies when sourcing raw materials and manufacturing primary products outside of Europe, had already passed the European Council, the EU Commission and the European Parliament before it failed due to an objection from FDP ministers.

Germany’s abstention, which has the same effect as a rejection, is the result of a coalition dispute that erupted in January. FDP ministers Christian Lindner (finance) and Marco Buschmann (justice) opposed the new EU directive, saying it would be detrimental to the German economy. It would entail too much bureaucracy and legal uncertainty, which Germany could not afford in this time of economic weakness, the FDP leadership said.

The Liberals are thus in line with the German business associations, which are protesting “massively” against the EU directive, according to the Handelsblatt newspaper. Christoph Werner, CEO of the drugstore chain DM, even called the proposed legislation “intrusive” in an interview with N-TV.

Labor Minister Hubertus Heil (SPD) and Economics Minister Robert Habeck (Greens), who supported the EU law, had previously called on Federal Chancellor Olaf Scholz to make use of his authority to issue directives and put his foot down – in vain. Anton Hofreiter (Greens), chairman of the European Affairs Committee in the Bundestag, also called for this and warned of a loss of European prestige for Germany: “It is unacceptable that Germany repeatedly abstains from important European decisions at the last minute.” Scholz must prevent this from happening in the future, Hofreiter demanded.

On February 7, however, the FDP announced that it would also block a fully negotiated EU regulation on CO2 reduction targets for trucks and buses at the last minute, forcing the postponement of what had been considered a mere formality. However, previous German governments have also pursued similarly obstructive, interest-based policies. Under Chancellor Angela Merkel (CDU), for example, CO2 limits for cars were watered down for years to benefit the German auto industry.

Die Zeit expressed the opinion that the FDP’s approach was convenient for Chancellor Scholz, as the EU Supply Chain Law also went too far for him. Scholz could speculate that the liberal obstructionists would soften the EU directive to the point where it would come close to the corresponding German Supply Chain Act.

Germany already has a supply chain law that the German economy can live with very well. After all, if children are killed or entire regions are poisoned during the extraction of raw materials in a supply chain somewhere in the Global South, German law does not provide those affected with a basis for claiming compensation from German companies.

According to the FDP, the same should apply to the EU directive. Carl-Julius Cronenberg, SME spokesperson for the FDP parliamentary group, called in the Handelsblatt for a “safe harbor regulation” for the German economy that would significantly reduce civil liability of companies – making the EU Supply Chain Law as ineffective as the German Supply Chain Act.

The German Supply Chain Act, which came into force in 2023, requires companies with at least 3,000 employees and, as of this year, 1,000 employees to respect human rights and environmental standards, although these “due diligence obligations” have many gaps and loopholes – especially with regard to biodiversity and climate protection. However, the Federal Office of Economics and Export Control can impose fines on companies that generate billions in revenue if they fail to comply. Violations with a fine of at least 175,000 euros can even lead to exclusion from public contracts. Lindner told T-Online last week that he also wants to relax the German Supply Chain Act in the future.

Originally published in jungle world on 02/15/2024

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