Congressional Hearing: Unintended Consequences of Conflict Minerals Law

On Tuesday, May 22, in the U.S. House of the Representatives, the Committee on Financial Services Subcommittee on Monetary Policy and Trade held a hearing titled, “The Unintended Consequences of Dodd-Frank’s Conflict Minerals Provision.” In his opening statement, Subcommittee Chairman John Campbell (R-CA) noted that many Congolese derisively refer to Section 1502 as “Loi Obama” – Obama’s Law – because it has made economic conditions in the country worse without ending the violence.

David Aronson, a writer who has worked in central Africa throughout the past 25 years, testified that Section 1502 is “a case study in how good intentions can go awry.”  He added, “The law imposed a de facto embargo on mineral production that impoverished the region’s million or so artisanal miners.” Witnesses also emphasized there is no evidence that Section 1502 has reduced violence and that the roots of the conflict are much deeper and that industry cannot be part of the solution until the governments address the ongoing security issues. A number of Congressmen asked very pointed questions, including Congressman Mick Mulvaney (R-SC) who noted that no hearing was held on this topic before it was “slipped into” the Dodd-Frank legislation in 2010.

In May 2012, IPC Chairman of the Board Steve Pudles testified before the  Subcommittee on this issue stating, “IPC supports the underlying goal of Section 1502 — but quite frankly, I am concerned that the SEC’s draft regulations will have unintended negative consequences.”

IPC filed extensive comments on the Securities and Exchange Commission’s (SEC’s) regulations, including a comprehensive analysis of the financial impact on electronics manufacturers.  Since the promulgation of the rule, IPC has focused on helping member companies comply with the rule, most recently by publishing a compliance guide, and developing a data exchange standard.  Additionally, IPC will hold a workshop and conference on June 3–4 in Boston, Mass.

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