Ministry of Industry Supports Strengthening Industry Response Capabilities to New EU Trade Regulations

'EU Supply Chain Due Diligence Guidelines' Corporate Briefing Session

The government is stepping up efforts to strengthen the response capabilities of our industry to new and increasing trade regulations, such as the European Union (EU) Supply Chain Due Diligence Directive.

On the afternoon of the 27th, the Ministry of Trade, Industry and Energy held a briefing session on the 'EU Supply Chain Due Diligence Directive' at the Trade Tower in Seoul, attended by specialized law and accounting firms and related companies from various sectors. The briefing was organized to minimize the uncertainty in the trade environment faced by our industry amid the recent spread of economic nationalism. Starting with this briefing, the Ministry plans to hold a series of 'New Trade Regulation Response Capability Enhancement Briefings' to strengthen response capabilities and prevent disputes regarding new regulations and laws related to major subsidies, export controls, supply chains, environment, and more in various countries.

At the briefing, experts from each field introduced the core contents of the EU Supply Chain Due Diligence Directive and the supply chain due diligence laws of major EU member states, and explained response strategies and practical cases for our industry.

Corporate Due Diligence Obligations Affecting Human Rights and Environmental Negative Impacts

The EU Supply Chain Due Diligence Directive imposes due diligence obligations on companies meeting certain criteria regarding negative impacts on human rights and the environment, and stipulates that violations of these obligations may result in civil liability in the country of origin. For extraterritorial companies, those with net sales exceeding 150 million euros within the EU, or those with net sales exceeding 40 million euros within the EU where more than 50% of net sales come from specific industries, are subject to the directive.

At the briefing, Lawyer Lee Seong-beom and ESG Center Director Shin Seung-guk from the law firm Hwawoo emphasized, "According to the EU Supply Chain Due Diligence Directive, as supply chains within the EU are reorganized in the future, opportunities for our companies to enter the market may expand," and added, "It is necessary for each company to review their supply chain due diligence regulations and systems in preparation for the directive and the implementation of domestic laws in EU member states."

Lawyer Kang Il from the law firm Taepyungyang explained that if the supply chain due diligence laws of each EU member state are enforced and overseas clients apply strict ESG standards accordingly, there may be conflicts with domestic laws such as the Subcontracting Act that domestic businesses must comply with, so preparation for this is necessary.

KPMG accountant Shim Jong-seon mentioned that to minimize the due diligence burden on domestic companies following the implementation of the EU Supply Chain Due Diligence Directive, environmental (E), health (H), and safety (S) information systems managed by various government ministries should be managed in an integrated manner.

Park Dae-gyu, Multilateral Trade Legal Officer at the Ministry of Trade, Industry and Energy, stated, "Currently, major trading partners such as the US and EU are expanding new trade regulations under policy goals such as supply chain reorganization and sustainability assurance," and added, "The government plans to continue holding briefing sessions on policies and regulations of major countries regularly to support the strengthening of our industry's response capabilities."