Thursday, November 10, 2011

Zombie Ideas: Dodd-Frank Doesn't Require an Embargo

One still hears from its defenders that Dodd-Frank 1502 doesn't require an embargo--that nothing in the wording of the law forbids companies from importing minerals from eastern Congo. I thought the gals at Wronging Rights had pretty much driven a stake through that claim, but I heard it repeated yesterday at a World Bank meeting. So maybe it is worth revisiting.

Yes, nothing in the wording of the law says, Thou shalt not buy your tantalum from eastern Congo. What the law says is that if you do, you're going to have to disclose that fact in your annual statement to shareholders. When that happens, you'll be in for a symbolic stoning from well-funded Western NGOs--a stoning that could very easily damage your reputation and market share. The fact that the law doesn't explicitly say that is incidental. When it comes to their own bottom line, companies aren't stupid: At this point, Western manufacturers wouldn't accept Congolese minerals if they were offered for free.

So, no, technically speaking, the law doesn't forbid companies from importing minerals from eastern Congo. It just sort of sidles up to them, bat in hand, and says, Nice company you have here. It would be a shame if something were to happen to it.

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