The Trump administration’s hostility toward the 2010 Wall Street Reform and Consumer Protection Act (aka the Dodd-Frank Act) should come as no surprise, given Trump’s campaign promise to dismantle the entire law. Last month, the Republican-controlled US House of Representatives gutted the law with its own bill, the Financial CHOICE Act. While it’s highly unlikely that anything resembling the House bill will pass in the Senate, the administration’s determination to upend the Obama-era law could usher in the complete repeal of some provisions – including section 1502, which regulates conflict minerals. Under section 1502, companies that buy particular minerals must demonstrate due diligence by documenting their supply chains to the US Securities and Exchange Commission (SEC), showing whether or not those components originate from a mine controlled by an armed group in the Democratic Republic of the Congo (DRC) or a neighboring country.
If the administration is successful in repealing section 1502 of the Dodd Frank Act, what might that mean for the DRC?
In a draft executive order published by the Guardian back in February, Trump claimed “Mounting evidence shows that the disclosure requirements… have instead caused harm to some parties in the Democratic Republic of the Congo and have thereby contributed to instability in the region and threatened the national security interest of the United States.” On the other hand, international rights groups, Congolese activists, and the Congolese government have all come out strongly against the repeal of 1502, saying that it will bring armed groups back to the mines. So which is it? Would a repeal of the law be a solution to unintended complications caused by its implementation, or would it just be a “gift to warlords and corrupt businesses,” as described by the advocacy group Global Witness?
As always where the DRC is concerned, opposing sides are highly polarized and the reality is a lot messier. For one thing, if Americans are concerned about the minerals in their electronics being sourced ethically, this goes way beyond armed groups. For example, section 1502 only deals with minerals “determined… to be financing conflict” in the DRC, and singles out tin, tantalum, tungsten, and gold (page 843 of the Act). Yet cobalt – another mineral needed for consumer electronics – is commonly mined without the presence of armed groups, but still under lethal working conditions and grave human rights violations including child labor.
When the Dodd-Frank Act was passed in 2010, much of the criticism surrounding its implementation was concerned with the de facto embargo that occurred when companies stopped sourcing from Congo all together, as well as the Congo government ban on mining. This had the effect of putting already poor artisanal miners out of work and driving the extraction of minerals underground. Those who became unemployed as a result, ironically, would have become susceptible to recruitment into an armed group. Other criticisms included the concern that armed groups would simply rely more heavily on the other ways they made money such as kidnapping and extortion; that Congolese military personnel also illegally exploit miners; and that verifying a mine as “conflict-free” would be extremely difficult since it’s not just at the site of the mine where armed groups make money from the mineral trade. The law only applies to companies registered with the SEC, so mining firms from other countries don’t necessarily have to comply with the due diligence measures. Academics, journalists, and a coalition of 70 Congolese civil society groups spoke out to caution against the dangers of what became known in Congo as “Obama’s Law.” And business interests feared that the compliance measures would be too costly.
However, after six months the Congolese government lifted the blanket ban on mining; and American companies came on board and complied with the due diligence measures. In fact, complying with the law was not as expensive as feared and many companies now oppose the repeal of 1502. Some, like Apple and Intel, have said they will continue to exercise due diligence regardless of what becomes of the Dodd-Frank Act. According to Bloomberg, Congo’s Chamber of Mines also said that “Congolese exporters will continue to track minerals from mines to buyers even if the US legislation is repealed.”
Implementation of 1502 got off to an extremely slow start, but given the difficult and time consuming tasks of verifying supply chains and establishing the institutional framework to coordinate transparency measures – this was more or less unavoidable. By 2014, several publications had come down hard on section 1502 for achieving very little except to make life more difficult for artisanal miners (here, here, and here for example). With artisanal miners out of work or suffering from falling prices, they could no longer afford hospital care or school fees. A UN University study found infant mortality near regulated mines had increased 143%. On the other hand, the advocacy group The Enough Project reported in June 2014, according to the BBC, that Dodd Frank, “together with other reforms and the recent defeat by UN troops of two powerful rebel groups, has helped significantly in reducing the number of mines run by militias.” The National Bishops Conference of the DRC, Ambassador Ambeyi Ligabo of the International Conference of the Great Lakes Region (ICGLR), and Congolese activists have all recently spoken out in favor of section 1502 and its role in regulating the mineral trade and mitigating violence.
This sharp division – between the view that 1502 has made things worse and the view that it has made things better – has persisted into 2017.
Interestingly, although Congolese President Joseph Kabila was quick to congratulate Trump on his electoral victory – apparently assuming his administration would pay much less attention to the country than Obama’s did – the Congolese government has come out against a repeal of the Dodd-Frank Act. With the high stakes the Congolese political elite have in legit mining companies, as evidenced by a new report by the Congo Research Group, it makes sense that they would like to see a better regulated mining sector under government control.
The most vocal proponents of a repeal of “Obama’s Law” at the moment are Trump administration officials. The draft executive order published by the Guardian calls for a two-year repeal of section 1502. This option is contained in a clause within 1502, should the present administration deem there is a threat to national security. In fact, the reason for the attempt to repeal the law is more likely to do with the Trump administration’s fixation with deregulation and vendetta against anything Obama-related.
On the ground in Congo, I suspect both sides are right – 1502 has caused loss of income and attendant suffering for many people; and it has resulted in armed groups controlling fewer mines. Dynda Thomas, a legal expert on section 1502, said on RFI, “I think there’s probably evidence of both things happening.” Regulation appears to have been working at least in terms of the 3Ts – tin, tungsten, and tantalum – and whether or not mines themselves are controlled by armed groups. The fourth mineral explicitly regulated by Dodd-Frank is gold, and it has been far more difficult to verify as “conflict free” since a small amount is worth a lot and it is much easier to smuggle. And it’s not clear to me whether any part of the supply chain other than the source mine itself is systematically and accurately vetted as being conflict free.
The biggest challenges, I think, are that there are so many simultaneously occurring factors, and so much contradictory data, and circumstances are always changing. It’s hard to establish causation with any kind of certainty. Three years into Dodd-Frank, the UN supported an intervention force that took an aggressive approach with a major rebel movement. Its leader is now in custody of the International Criminal Court. Many see this as a contributing factor to lower levels of armed group activity. There has also in recent years been a rise in activity and visibility of peaceful protest movements, most famously LUCHA, which has put pressure on the government for democratic reform and given people a different avenue for voicing their grievances than joining an armed group. And, ultimately, it is politics and power struggles at regional, national, and local levels that continue to drive violent conflict. The recent crisis in Kasai is one example.
So would a repeal of 1502 result in a massive surge of violence? Probably not. Would armed groups return to try and exploit miners? Perhaps.
But if the Congolese government and American companies decide to work together to continue the conflict-free tagging system, it would be unlikely they’d be able to just because of a repeal of 1502. Would a repeal make Americans less sure that the products they buy are conflict free? Probably.
The Trump administration wants to replace section 1502 with something better. This could, then, be an opportunity for a version of the law that would take into account some of the shortcomings of section 1502. As Ambassador Ligabo of the ICGLR put it on RFI, “If there is a need to review this arrangement, it would be more appropriate for the US administration, the ICGLR, to come together and we see how to look at it, in a more consultative manner.” However, as the Trump administration’s primary motivation appears to be deregulation rather than playing a positive diplomatic role in Africa, it supports repeal of the bill for – to quote Sara Geenan at the University of Antwerp – “all the wrong reasons.” I am not holding my breath for a better version of 1502; but I am also not convinced that all hell will break loose if it is repealed.