We need to protect Hungarian companies from EU over-regulation

2021. 02. 08.

The European Parliament’s Committee on Legal Affairs (JURI) yesterday approved its report on corporate due diligence and corporate accountability, which would place a number of new burdens on European companies. “It is impossible to expect our companies to monitor their entire value chain, all suppliers whether they comply with human rights, environmental and labour right standards and whether they fulfil the requirements of fair corporate governance”, said MEP Enikő Győri, who worked on the dossier in the International Trade Committee (INTA). MEP Ernő Schaller-Baross, member of JURI, emphasized: “In a pandemic situation the goal is to stimulate the economy so the burden on businesses must be reduced and not aggravated by new regulations. Consequently we need to protect Hungarian companies from EU over-regulation”.

Fortunately, the left-wing populist proposal, which would have extended the scope to all small and medium-sized enterprises (SMEs), has not been adopted. This would have put an unbearable bureaucratic burden on these companies, hampering their competitiveness vis-à-vis their competitors outside the EU. Finally, according to the adopted text, the control of suppliers is mandatory only for those SMEs who are active in sectors that are determined by the European Commission as high-risk sectors, i.e. the company or its supplier may be in breach of human, labour or environmental standards when conducting business.

“I find it dangerous to extend the proposal to SMEs, even if the legislation only applies to a narrower group of small and medium enterprises. For the time being, we do not know which sectors the Commission will classify as high-risk, i.e. how many SMEs will eventually be effected by the legislation. I still do not support that in times of crisis, when survival is at stake for many companies, we are burdening them with expectations that are difficult to be met”, underlined Fidesz MEP Enikő Győri.

MEP Ernő Schaller-Baross pointed out: “The text adopted in the legal committee also requires companies to reveal information about their business policies and trading partners, the disclosure of which could harm their business interests. In addition, they should consult human rights NGOs on how they are running their business. This is unacceptable. We cannot subordinate Hungarian companies to the political interests of international NGOs, externally controlled “civilians”.

Background: The report will be voted by the European Parliament’s plenary session in March. EU Commissioner Didier Reynders previously informed that the European Commission will present a binding legislative proposal on the subject in spring 2021, taking into account the European Parliament’s position.