Jim Hamilton reports:
Urging the SEC to quickly implement the conflict minerals disclosure provisions of the Dodd-Frank Act, Senators Patrick Leahy (D-VT) and Christopher Coons (D-DE) emphasized that the final regulations must require company conflict minerals reports to be filed with the Commission not furnished. In a letter to the SEC, the Senators also advised that the filed reports should contain enough substantive information so that investors can understand what actions a company has taken to make a reasonable country of origin inquiry. Reports that do not clearly list a company's activities, they said, and SEC regulations allowing a category of ``indeterminate’’ would undermine the congressional intent of Section 1502 of Dodd-Frank. The letter was also signed by House Members Jim McDermott (D-WA) (a co-author of Section 1502), Harold Berman (D-CA), Gregory Meeks D-NY), Donald Payne (D-NJ) and Karen Bass (D-CA).
Section 1502 of the Act requires companies that report to the SEC to disclose the measures they use to certify that their products do not contain conflict minerals. Companies also have to track their supply chains back to a mineral's origin.
I've been writing about the conflict mineral disclosure requirement for a while.
In February 2011, I quoted a discussion of the issue by Broc Romanek and opined that:
My guess is that the costs of providing this disclosure are going to vastly exceed the benefits to investors. As such, it is yet another example of how narrow interest groups were able to hijack the legislative process during Dodd-Frank's drafting so as to advance an agenda wholly distinct from the financial crisis. It's thus also an example of how Congress keeps raising the cost of being public. It's thus yet another example of why American capital markets are losing their competitive standing in the global economy.
In May 2011, I quoted an earlier BNA report predicting that conflict mineral disclosures were going to be hugely expensive to prepare and noted that:
Congress seems to love what I call Kumbayah laws. Everybody on the Hill gets around in a circle, holds hands, condemns some (often admittedly heinous) abuse, sings a couple of choruses of Kumbayah, and then dumps the problem in somebody else's lap. Congress gets to feel good, NGOs pat them on the back, and it costs Congress nothing.
But somebody pays. Consider, for example, the mandate in Dodd-Frank that companies "certify that their products contain no conflict minerals from the Democratic Republic of the Congo (D.R.C.) and adjoining countries." BNA reports that this mandate is going to prove hugely expensive for companies--especially tech companies--and amount to a de facto embargo on such minerals ....
I continued:
Last year President Obama pledged to double US exports by 2015. As the Economist recently commented in a report on the declining value of the US dollar, however:
For Americans concerned about their country’s export prospects, the depressed value of the greenback ought to be good news. In February, the most recent month for which trade data are available, the dollar was 4.5% cheaper in real terms than a year earlier. But although America’s trade deficit did fall in February, it was only because exports fell less steeply than imports. That month’s deficit was still $6 billion higher than a year earlier, when Barack Obama announced a plan to double exports in five years. Achieving that will take more than a cheap currency.
One thing that would help top achieve that goal would be to stop heaping these sort of costs on US business. How about a 4 year freeze on Kumbayah laws?
