EU Supply Chain Directive: The FDP is making even more enemies – but it is right

Germany does not agree to the EU supply chain law. The no came under pressure from the coalition partner FDP. And that’s a good thing: Berlin already has such requirements at the national level. And anyone who preaches reducing bureaucracy and wants to stimulate the economy cannot increase requirements elsewhere.

The EU Commission has taken the Supply Chain Directive off the table, probably forever. The Federal Government’s abstention has called into question the necessary majority among the member states. And the Federal Government’s abstention is due to the FDP’s no vote. The German near-death liberals, who are not only a splinter party on a European scale, are they holding up the assembled convoy of the 27 member states, the largest internal market on the planet? After years of negotiations? After the federal government had actually already nodded?

Yes. Yes. Yes. And it’s a good thing.

The liberals’ logic is as simple as it is conclusive: You can’t preach about reducing unnecessary bureaucracy every Sunday — and decide on even more of it the following Monday. And, second point: A rule that objectively cannot be followed is a bad rule. It may calm the conscience of those who decide on it with good motives. But motives alone do not change reality. The only real thing is the effort for companies.

What the now unleashed critics of the German refusal forget: There is already a German supply chain law. It tries to prevent, among other things, child labor and environmental exploitation around the globe. More precisely: it transfers this responsibility, which is actually one for states and politics, to business and entrepreneurs. Whether this system-defying approach improves the situation anywhere in the world is unclear and quite open. Of course you can still try it.

The EU directive, however, would have done exactly what the Chancellor promised to end. German rules and German bureaucracy should no longer be saddled with European ones. However, that is exactly what the EU directive would do: for example, to drastically increase the number of companies subject to it and to grant those affected a new, comprehensive right of action.

It is actually not possible at any reasonable cost for a medium-sized company to require each of its suppliers around the world to comply with environmental or social standards – and to do so meticulously, even if punished.

It’s better to react late than not react at all

The only way for companies to be on the safe side is to go out of business. Otherwise, from now on they will operate under the sword of Damocles of straw man lawsuits from particularly committed environmental associations. Of course, you can largely stop international (supply) trade in order to avoid all of this. However, for an economy like Germany’s that is massively dependent on exports and imports, this would be suicide.

None of this is new knowledge. But it seems that the FDP was the first German government party to recognize that the German economy will only go to the well until it collapses. If the Green Economics Minister is also concerned about economic growth, it would be better to think twice about anything that could stifle it. Even at the risk of getting a different result the second time than the first time. Just like the FDP now and with it, inevitably, the entire coalition.

When he let the largely negotiated Jamaica alliance collapse after the 2017 federal election, Christian Lindner said: “It’s better not to govern than to govern incorrectly.” It remains to be seen whether he was correctly describing his situation and that of the country. What can be said about Lindner’s no to the EU supply chain law is much clearer: it’s better to react late than not react at all.

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