House Hearing to Examine Costs and Consequences of Dodd-Frank’s Conflict Mineral Provision
Washington,
May 9, 2012 -
A House subcommittee on Thursday will examine an obscure provision buried deep in the 2,300-page Dodd-Frank Act that threatens to disadvantage U.S. manufacturers and has resulted in a de facto U.S. embargo of a war-torn African country.
The provision requires thousands of U.S. companies to disclose what steps they are taking to ensure that their products do not contain certain minerals mined in the Democratic Republic of the Congo, defined as “conflict minerals” by the Act.
The requirement has the potential to affect all of the nearly 6,000 publicly-traded companies in the U.S. because these “conflict minerals” are used to make a vast array of products, including consumer goods that contains electronic parts –such as cell phones, computers and music players.
“The conflict minerals provision was added to the Dodd-Frank Act with the best of intentions, but the unintended consequences are impossible to ignore. There are reports this provision is further impoverishing the very people it was supposed to help while doing nothing to stop the violence,” said Financial Services Committee Chairman Spencer Bachus.
The Subcommittee on International Monetary Policy and Trade, chaired by Rep. Gary Miller, will examine the provision and its impact on U.S. manufacturers and the people of Congo.
“I have called a hearing on this provision because it has the potential to kill thousands of American jobs and bury American companies under a mountain of paperwork. In addition, instead of reducing the conflict in eastern Congo, as hoped, it is making an already terrible situation even worse,” said Chairman Miller.
The Democratic Republic of the Congo has been in a state of civil war ever since it gained independence in 1960. In 2000, a United Nations group linked the civil war to the mineral trade, reporting factions in the war use proceeds from the sale of the minerals to buy weapons.
The Securities and Exchange Commission (SEC), which is directed by Dodd-Frank to issue the conflict minerals disclosure rules, has received comment letters from more than 30,000 individuals and organizations, representing a wide range of industries that stand to be affected. The SEC is still in the process of finalizing the regulations, which were originally due on April 15, 2011. The SEC has informed Congress it is grappling with a complex subject matter beyond its usual area of expertise.
However, in anticipation of those rules, most mineral procurement companies no longer purchase minerals from Congo. This de facto embargo has not ended the civil war nor improved the “daily lives of most Congolese,” writes Dr. Laura Seay, assistant professor of political science at Morehouse College, who will appear as a witness at the Subcommittee’s hearing.
Another witness who will appear at the hearing, Mvemba Dizolele, a Distinguished Visiting Fellow at Stanford University’s Hoover Institution, argued in the Huffington Post that the mineral trade is just one source of revenue for the armed groups but the source of income for many of the nation’s poor.
“Oversimplification of issues often produces inadequate, counterproductive policies. Dodd-Frank and its proponents who seek to curb U.S. companies penalize the people of eastern Congo, but do little to curtail the militias and their backers,” Dizolele wrote.
The Subcommittee hearing will take place on Thursday, May 10 at 10 a.m. in room 2128 Rayburn House Office Building.
A full list of hearing witnesses can be found here.
