The Detroit News editorializes on the new rules required by the Dodd-Frank financial regulation law to require publicly traded companies to report their use of select minerals that might come from the regions of Africa involved in the Congo war. The paper analyzes “Another burden on automakers,” with the secondary headline, “Demanding the industry trace the origin of the metal used in car parts adds billions in costs”:
Proposed new rules requiring manufacturers — in particular auto parts suppliers — to identify the origin of some of the common minerals in their products could impose heavy additional costs on an industry that’s just now getting its head above water. The well-meaning goal of the rules is to limit the use of minerals from war-ravaged central Africa, but the expense could impose additional hardships here….
Rick Goss of the U.S. Information Technology Council, at a meeting on the issue in Washington last month, reportedly called the law a “sledgehammer” that could create what amounts to an embargo on mineral products from a major portion of Africa. Once the metal is refined in smelters, Goss was quoted as saying, there is no way of identifying the country of its origin. The only way to the assure the SEC that the metals don’t come from central Africa, he said, is to refuse to do business with anyone “who touches central Africa,” the Voice of America reported….
The law ought to be repealed. The auto industry and its suppliers shouldn’t be encumbered with the duty of solving the internal problems of central Africa.
At the very least, any regulations ought to allow manufacturers to report minerals as of an “indeterminate origin” until they are able to develop techniques for tracing and indentifying the raw materials in a more cost effective manner.
The National Association of Manufacturers submitted formal comments (here) to the Securities and Exchange Commission on March 2, estimating it will cost industry $9-16 billion to put the new regulations into effect.