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EU Supply Chain Law: Neither the SPÖ approval request nor the FPÖ rejection request finds a majority in the EU subcommittee (PK0128/02/15/2024)

Vienna (PK) – Economy Minister Martin Kocher recently announced that Austria would abstain from the so-called EU supply chain law. In the EU subcommittee of the National Council, both the SPÖ and FPÖ today presented a request for a statement on this matter – with opposing positions. From the SPÖ's point of view, it is important to prevent supply chain law from failing at European level. This must be expressed by the Federal Government in all votes, agreeing with the European Supply Chain Law. The FPÖ, in turn, called on the Minister of Justice, Alma Zadić, who had consistently spoken out in favor of supply chain law at European level, to reject the planned directive proposal. The SPÖ had already requested that the matter be placed on the subcommittee's agenda in the short term.

None of the motions received a majority in the committee. Therefore, only the SPÖ itself voted in favor of the SPÖ motion, and only the FPÖ voted in favor of the FPÖ motion. Carmen Jeitler-Cincelli (ÖVP) emphasized that the objective of the supply chain directive is important, but that the instruments go overboard in terms of practicality and proportionality. That's why she supports Kocher, who wants to return to the negotiating table. Stephanie Krisper (NEOS) also spoke out in favor of the goals of the supply chain law, but not its bureaucracy. NEOS would advocate a different supply chain law than the current one, for example with the possibility of “white lists”, and would therefore reject both requests. Petra Steger (FPÖ) sees a “sudden change of opinion” in the ÖVP. The FPÖ stated from the beginning that the supply chain law was harmful for localization and the economy and was a “bureaucratic monster”. It would also increase inflation and cause companies to migrate to third countries, thus failing the objective.

Jörg Leichtfried (SPÖ), on the other hand, sees that a historic opportunity for human rights and climate policy will be missed if the ÖVP now pleases “super-rich big companies”. From his point of view, SMEs, consumers and farmers in particular would benefit from the directive if the “giants” finally had to adhere to these rules. Ewa Dziedzic (Greens) also stated that SMEs would be largely excluded from the directive and would benefit. In her opinion, it would be time to balance the interests of big companies and the demands of human rights. The Greens are therefore anything but happy that the departments were unable to reach an agreement, Dziedzic said. She hopes they return to the negotiating table.

State Secretary Susanne Kraus-Winkler, representing Economy Minister Kocher, emphasized to the committee that she would advocate a strong but implementable guideline for the supply chain. The current project cannot be implemented, especially because many obligations and liability risks are transferred to small and medium-sized companies, which are often suppliers to “big companies”. Given that Austria's economy is 99% made up of SMEs, it sees the danger of them being forced out of supply chains around the world. It is therefore a matter of returning to the negotiating table to achieve improvements and a viable solution.

EU supply chain law and different departments' positions

The proposed Directive on Corporate Sustainability Due Diligence, as the Supply Chain Law is officially called, aims to oblige large companies to respect human rights and environmental protection throughout the entire supply chain.

The directive, which was debated today alongside the current Council document, should generally apply to companies with 500 employees or more and an annual turnover of 150 million euros. For certain “high-impact sectors”, such as the textile industry or agriculture and forestry, the rules should apply to those with 250 employees and a turnover of 40 million euros. Furthermore, companies not based in the EU should also be allowed to operate if they have a net annual turnover in the EU of more than €150 million, or companies with a net annual turnover in the EU of more than €40 million, if they have at least 20 million euros.€ in one of the “high impact sectors”.

According to the Ministry of Economy, the proposed directive contains obligations for companies regarding actual and potential negative impacts on human rights and the environment in relation to their own business operations, the operations of their subsidiaries and the activities of chain partners. of global value with which the company has a commercial relationship. In addition to administrative sanctions and penalties, it also establishes rules on civil liability for violations of these obligations. There will also be an obligation for large companies to create a “climate plan”.

Although Justice Minister Alma Zadić “expressly welcomed” the proposal presented to the EU subcommittee of the National Council in October last year, Economy Minister Martin Kocher recently expressed concerns. The Ministry of Economic Affairs states that it supports a uniform EU approach to creating binding regulations and supports the objectives of this proposed Directive. They are also convinced that the integration of corporate responsibility standards into the core business of companies and risk-based due diligence in value chains promote the resilience and success of Austrian companies and thus strengthen their competitiveness. However, some points are of particular importance to Economy Minister Kocher with regards to a potential agreement. For example, he is in favor of a “safe harbor clause” as well as against disproportionately high penalties and “excessive liability regulations.” It is also important to avoid potentially negative development policy effects caused by companies leaving certain third countries. (Continued by the EU Subcommittee) mbu