Press release – Commodities: the Global Commodities Conference returns to Lugano

The “Global Commodities Conference”, the Lugano Commodity Trading Association’s (LCTA) flagship event, has returned to Lugano two years after its previous edition. In fact, the commodities world gathered on July 1 and 2, 2024 to examine and analyze the new geopolitical dynamics and the energy transition, as well as their impact on global commodity markets.

Global geopolitics and trade patterns are rapidly changing. Tensions in the Middle East, in particular, are putting a strain on key commodities, affecting trade routes and supply chains. For its part, the “green transition” is generating major problems about sustainable sourcing and commitment to ethical commodity manufacturing, as well as increasing demand for clean energy-related raw materials. The Global Commodities Conference 2024, organized by the Lugano Commodity Trading Association (LCTA), provided an opportunity for Swiss and international commodity traders, as well as banks and insurance companies active in the sector, to participate in a meaningful discussion on these issues and confirm how commodity trading can cope with global fragmentation and a new world order by navigating operational complexity, making necessary adjustments and capitalizing on new trading opportunities.

The 2024 Conference kicked off on July 1 with an inaugural dinner at SEVEN Restaurant in Lugano. Following introductory remarks by LCTA Vice President Roberto Grassi, Yves Rossier, former Swiss Ambassador to Russia, delivered a caustic and stinging address on a monobloc world, the cause-and-effect links between war, trade and sanctions, and Switzerland’s increasingly irrelevant role in the global diplomatic theater.

The Conference continued the next day at LAC Lugano Art and Culture, with President Matteo Somaini delivering the opening remarks followed by two sessions.

In the first session, Matthew Bryza, former U.S. ambassador to Azerbaijan, discussed the new Middle East chessboard and the different chess pieces. Following his remarks, foreign policy scholar Anna Borshchevskaya, Senior Member of The Washington Institute for Near East Policy, Marco Galimberti, CEO of DP Trade SA, Ano Kuhanathan, Head of Corporate Research at Allianz Trade and James May, Head of Strategy at Duferco SA, and Matthew Bryza himself participated in a panel moderated by Corriere del Ticino journalist Dimitri Loringett. The panel of analysts and industry leaders examined the effects of the conflict on commodity trade and shipping, from logistical aspects to rising costs and risk management, highlighting how the negative effects of uncertainty have spilled over to Europe and in particular its “locomotive” (Germany), which is becoming less competitive, but not forgetting the opportunities presented by the Middle East, which is now a key player in the energy transition.

The second session was led by Deia Markova, Head of Trade Commodity Finance at Société Générale Corporate & Investment Banking (SGCIB), who discussed the “greening” of commodities and the “decommoditization” of the sector, as a result of the energy transition, as well as how commodity producers and traders can adapt to this shifting environment. Simone Knobloch, COO of Valcambi SA; Giulio Macciocchi, Head of Finance & ESG at DXT Commodities SA; Stephen Thomas, Head of ESG & Sustainability at ArrowResources AG; and Deia Markova herself discussed the topic in a panel moderated by Dominique Bruggmann, Manager Financial Services Risk Consulting at Ernst & Young AG. The panelists emphasized the role of carbon markets in the transition to decarbonization as well as the fact that customers and financial institutions are increasingly demanding commodities from sustainable and responsible sources, they also acknowledged the risk of overregulation and the need to find solutions that work for everyone.

The closing remarks were given by LCTA President Matteo Somaini, who shared his “takeaways”, including: the relativity of concepts such as multipolarity, volatility and stability; the possible emergence of a new paradigm in which politics predominates over economics; the need for traders to capitalize on transitions, particularly the energy transition, and how the latter goes hand in hand with a “resource-less transition”, which requires the implementation of new market approach strategies.

It was an intense and thought-provoking Conference with networking opportunities that brought together over 150 industry professionals in Lugano from across Switzerland as well as major centers such as London and Dubai.

Retrospective Global Commodities Conference 2024: a summary of the topics covered and a selection of photos can be found on our website on the dedicated page.

«Russia utilizes the Middle East to compete with the West»

Interview with Anna Borschchevskaya, Senior Fellow, The Washington Institute for Near East Policy, USA, by di Dimitri Loringett

The Middle East’s strategic location between Europe, Asia and Africa makes it an important hub for global trade, particularly maritime transportation. The continuation of Israel’s war against Hamas in Gaza, as well as the dreaded conflict with Hezbollah in Lebanon, are a major concern also for the commodity trading industry in Ticino, represented by the Lugano Commodity Trading Association. In anticipation of the Global Commodities Conference, which will take place at LAC on July 2, we spoke with foreign policy expert Anna Borschchevskaya, who specializes on Russia and its role in the Middle East.

Part of the Lugano conference is dedicated to the Middle East, where the outbreak of the war in Gaza made the world of global trade jittery about the possible consequences of another crisis situation. Which ones, specifically?

«Overall, the region is going through a lot of turbulence. That is unlikely to change anytime soon, so it’s important to prepare for long-term disruption. This region sits at strategic nodes that impact maritime trade. Consider how the Yemeni Houthi rebels in the Red Sea utilize “cheap” drones to force the US to retaliate with more expensive weaponry. Other opponents of the West are likely to follow the Houthis’ example and discover ways to disrupt marine trade at low cost to achieve their own strategic objectives, which likely includes more disruptions to weaken the US and its allies.
Russia for its part is also involved in the region, and Russia’s so-called ghost fleet continues to deliver oil through these waters, but at far greater risk. For one thing the ghost fleet has no indemnification insurance, so the risk is simply higher when dealing with these ships».

The U.S. is called upon, and expected, to ‘fix’ the very complex and fragile situation in the M.E., but its long-standing influence and role as the ‘world police’ is (arguably) waning. On the other hand, there are also interests in the M.E. of other global powers, namely Russia which, however, is not involved in the ceasefire negotiations. Could Moscow do more (or anything) to ease tensions?

«Whether US influence is waning or not, Putin wants to remake the world order by enhancing Russian power and influence to weaken the West. Russia has always seen the Middle East as an arena of competition with the West. Moscow’s military intervention in Syria in late 2015 was a challenge to the liberal world order. Russia wants to see a multipolar world Moscow has used this region to achieve this aim. Russia for years had positioned itself as a mediator in the region, someone who can talk to all sides. But in reality, they always leaned closer to anti-American forces in the region, namely Iran and its proxies along with the Assad regime. Russia’s response to October 7 however has marked a break with this approach—Putin has demonstrated in clearest terms that he’s no friend of Israel. He did not directly condemn Hamas even as Russia’s own citizens were killed. Instead, Putin blamed the US the region’s problems. Russia also used the resultant chaos in the region to its advantage and worked to further exacerbate it because it benefits from this chaos on multiple fronts. Certainly, it had taken the West’s attention away from Ukraine. Russia was also bitter about ongoing Arab normalization efforts with Israel, because it was negotiated by the US. Russia was happy to see this agreement put in jeopardy and worked to exacerbate anti-Israeli sentiment in the Arab world. It’s hard to see what positive role Russia can play to contribute to solving the Israeli-Palestinian war. Given Russia’s October 7 response, it is unlikely that Israel sees Moscow as a neutral mediator, but the purpose of any Russian mediation is not to come up with a genuine resolution. It has no ability nor desire to bring forth a genuine resolution».

Iran is the declared archenemy of Israel and it is also a strategic ally of Russia. What does this alliance mean for the (in)stability in the Middle and Near East region?

«Russia benefits from perpetuated low-level conflict instead. For the first time in the Russia-Iran history, Russia now finds itself reliant on Iran, specifically on Iranian drones, which it deploys to hit Ukrainian targets. This means that the strategic partnership with Iran is not only going to deepen, but Russia will be likely to go further in terms of what it offers to Iran than it would have prior to the invasion of Ukraine. This means that together Russia and Iran are likely to cooperate more to exacerbate tensions and chaos in the region, to the detriment of Western interests».

How high is the risk of a war spreading to the Persian/Arabian Gulf?

«War is destabilizing no matter what. So while there is always a risk, a country usually would prefer to limit war. This is true, generally speaking, even of Russia’s war on Ukraine, at the time of this writing at least. Russia would prefer not to fight a direct war with NATO or the US for instance.
As for Iran, it doesn’t seem that Tehran wants to see wide-scale war. Certainly, it would want to see continual conflict, but it is easier to maintain this conflict from full-scale war. And Russia would prefer that also. Russia for its part wouldn’t want to be put in a position where it would need to overcommit resources it needs to fight the war in Ukraine».


Beyond the propaganda and allegations from the West, how real is the threat of Russia extending its military action beyond Crimea and the other eastern Ukraine territories it has occupied?

«First, let me say that it is Russian officials themselves that have made it clear that their ultimate aims go beyond Ukraine. Their destabilizing activities in Moldova, Georgia, and towards NATO members also raise legitimate concerns. Unofficially, Belarus has been involved for a long time. Their nuclear threats are also designed to deter the West from further action. Putin also casts the war as an existential battle where the West supposedly attacked Russia using Ukraine, so from the Kremlin’s perspective it is a global battle. It is certainly possible that if Putin feels that the war is going poorly, he may get more aggressive as part of escalation management, to move to other countries».


Is it truly in the best interest of the Western world to have Russia as an enemy?

«It is Russia that sees the West as the enemy. The West, to the contrary, for years had taken steps to integrate Russia, to address its concerns, and closed its eyes to its aggressive behavior. To give a few examples, NATO had set up a special Russia-NATO Council precisely to include Russia in discussion about NATO enlargement. Putin for his part never paid a price for his aggression, from Georgia in 2008, to Crimea in 2014, to Syria in 2015. These steps led him to conclude that the West is weak and would not oppose further aggression. Putin has been fighting a war with the West for years. It was not a direct conventional war, but a war nonetheless. It has taken the invasion of Ukraine for the West to begin to acknowledge that, and to begin re-evaluate its fundamental assumptions about Russia».


Is it safe to say that once the fighting will have stopped, and whatever the outcome of the conflict (which, as many analysts increasingly claim will bear neither a winner nor a loser), that the West-East divide is so deep that it will take at least a generation to change the narrative and regain trust between the two blocks?

«Russia has never come to terms with Holodomor (the man-made famine in Ukraine that caused several million deaths from 1932 to 1933, ed.). What we know from history of World War II is how difficult it is to get a country to come to terms with perpetrating a genocide. In Germany’s case it took not only losing the war but many years of American occupation. We don’t know how the war is going to end and when, but it is safe to assume that until Russia has a true internal reckoning with its past, it will take a lot more than a generation to overcome this enormous divide».

20240628_CdT_russia-usa-il-medio-oriente-per-competere-con-loccidenteDownload

Article first published in the newspaper Corriere del Ticino, 28.06.2024 (in Italian)

EU adopts 14th package of sanctions against Russia

On June 24, 2024, the European Union (EU) adopted a further package of sanctions against Russia, targeting the Country’s gas sector for the first time and imposing an array of new measures.

The so-called 14th package of measures targeting Russia is set out in the Regulation (EU) 2024/1745 and includes, among others, the following elements:

Energy

  • Russian LNG transshipment through EU ports is prohibited following a 9-month transition period
  • Russian LNG cannot be imported into terminals that are not connected to EU gas pipelines
  • prohibition on future investments and exports to LNG projects under construction, such as Arctic LNG 2 and Murmansk LNG
  • List of vessels supporting the Russian warfare and the energy sector and that have been banned from port entry and service provision.

Anti-circumvention measures

  • EU parent companies must prevent their subsidiaries in third countries from engaging in sanctions-violating transactions;
  • EU companies must conduct due diligence to prevent common high priority (CHP) goods from entering Russia and ensure that their foreign subsidiaries trading in CHP goods follow suit;
  • EU companies may not be protected from liability if they did not comply with due diligence responsibilities, even if they had no reasonable suspicion of violating EU sanctions (see Decision (CFSP) 2024/1744);
  • Individuals can face prosecution for both willfully circumventing EU sanctions and participation in such transactions; this also applies if the individual suspects or tolerates that sanctions are being circumvented.

Additional listings

  • There are 116 further listings of 69 individuals and 47 entities with asset freezes and travel bans. The listings cover a wide range of Russian government sectors, including military companies, space engineering firms, chemical and explosive companies, and significant Russian energy companies.

Financial sector

  • EU banks outside Russia are prohibited from using the Financial Messaging System of the Central Bank of Russia (SPFS), the Russian equivalent of SWIFT, to connect and carry out transactions;
  • Transactions with third-country banks using SPFS are prohibited;
  • Prohibition of transactions with Russian and third-party banks and crypto assets providers facilitating transactions supporting Russia’s defense-industrial base.

Trade

  • Extension of the export restrictions on dual use/advanced technology items;
  • Reinforced export bans on for vital sectors for Russia’s military economy, including chemicals, plastics, vehicles parts and machinery;
  • Import ban on helium;
  • Extension of the Common High Priority (CHP) list;
  • Finetuning of the import ban on Russian diamonds.

Transport

  • Prohibition of port access and services for listed vessels;
  • Current EU road transport undertakings owned 25% or more by Russian individuals are prohibited from transporting goods into the EU; companies owned 25% or more by Russian individuals are also barred from becoming EU road transport undertakings

Useful links:
Q&A 14th package of restrictive measures against Russia (europa.eu)

Radio and TV license fee: Federal Council rejects SRG SSR initiative

SRG SSR requires sufficient financial resources to be able to provide equivalent journalistic services in all language regions. On this premise, the Federal Council rejects the federal initiative “200 francs is enough! (SRG SSR Initiative)” and proposes a gradual reduction in the radio and television fee charged to households as well as an increase in fee payment limit for businesses.

At its meeting on June 19, the Federal Council decided to reject the popular initiative “200 francs is enough! (SRG initiative),” which seeks to reduce the broadcasting fee for households from the current CHF 335 to CHF 200 while totally exempting businesses from the payment obligations. According to the Federal Council, this initiative is excessive, and SRG SSR needs adequate resources to deliver equivalent journalistic services across all language regions.

However, the Federal Council also wants to ease the financial burden on households and companies and thus proposes a progressive reduction in the broadcasting fee paid by households while increasing the fee payment limit for businesses. Households will see the fee reduced from CHF 335 to CHF 312 starting in 2027 and to CHF 300 in 2029. The payment limit for businesses will be increased from the current CHF 500’000 annual turnover to CHF 1.2 million from 2027. There will be no changes to the higher tariff categories.

The Federal Council’s dispatch will now go to Parliament.

Source: Press release of the Federal Council, 19.06.2024

EU: the Critical Raw Materials Act enters into force

The European Union’s Critical Raw Materials Act (CRMA), issued as Regulation (EU) 2024/1252, took effect on May 23, 2024.

The primary goal of the CRMA is to maintain and provide a secure and sustainable supply of Critical Raw Materials to the European Union. Annexes 1 and 2 to the Regulation list 34 critical materials, 17 of which are considered strategical because their demand is set to increase exponentially, as they are crucial for both the green and the digital transitions as well as for industrial value chains in general, and for strategic technologies in areas such as space and defense in particular: aluminium/bauxite/alumina*, coking coal, lithium*, phosphorus, antimony, feldspar, light rare earth elements*, scandium, arsenic, fluorspar, magnesium, silicon metal*, baryte, gallium*, manganese*, strontium, beryllium, germanium*, natural graphite*, tantalum, bismuth*, hafnium, niobium, titanium metal*, boron*, helium, platinum group metals*, tungsten*, cobalt*, heavy rare earth elements*, phosphate rock, vanadium, copper*, nickel*
(*strategic raw materials).

These materials are found in a variety of common appliances and in products essential to the EU’s economy, including smartphones, electric vehicles, wind turbines, semiconductors, and planes. For certain critical raw materials, the EU relies completely on one country, such as: heavy rare earth elements (100% from China), boron (98% from Turkey), or platinum (71% from South Africa).

The CRMA recognizes the dependence on Critical Raw Materials for the European internal market and economies, considers the high concentration of such raw materials within few third countries as a potential risk to their supply, and sets a multifaceted approach to both strengthen the value chain of these raw materials and cover their annual consumption by 2030:

  • >10% domestic extraction
  • >40% domestic processing
  • >25% recycling
  • <65% single-source (in this regard, the EU is already forming strategic alliances and encouraging new raw mineral partnerships).

Switzerland strengthens anti-money laundering framework

The Federal Council adopted the dispatch on strengthening the existing anti-money laundering framework on May 22, 2024, with the goal of reinforcing Switzerland’s integrity and competitiveness as a financial and business location through a federal register of beneficial owners and due diligence for particularly risky legal professions, among other provisions.

The bill’s key provisions are:

  • introduction of a federal registry (transparency register) requiring companies and other legal entities in Switzerland to provide information about beneficial owners, with simplified registration for associations, foundations in particular, sole proprietorships and limited liability companies. The registry aims to prevent legal entities in Switzerland from being used to launder money or hide assets. The Federal Department of Justice and Police will manage the registry, which will not be publicly available;
  • anti-money laundering due diligence regulations should apply to certain advising activities (particularly legal advice) that pose a significant risk of money laundering. The structuring of companies and real estate transactions are seen as highly risky. Professional secrecy for legal professions is preserved;
  • there are further efforts to reinforce the anti-money laundering framework. These include measures to prevent embargo-related sanctions from being violated or circumvented. Cash payments above CHF 15’000 in precious metals trading and without a limit in real estate transactions will be subject to due diligence obligations.

The bill will now be tabled in Parliament. It is unlikely to take effect before early 2026. The steps are in line with the Financial Action Task Force’s international standards for combating money laundering and terrorist financing, as well as the Global Forum’s recommendations.

Implications for SMEs

Swiss firms and legal entities are required to register their beneficial owners in the federal transparency registry, with a simplified approach for most, such as sole proprietorships, limited liability corporations, foundations, and associations. The proposed rules will impose a moderate burden, requiring 20 minutes of work for the first year, and reducing to a few minutes in subsequent years.

Useful links

Press release by the Federal Council dd. May 22, 2024
Fact sheet: Switzerland strengthens anti-money laundering framework (PDF)

Ticino: June 9 vote on tax reform

As part of its activities, the Lugano Commodity Trading Association (LCTA) works to strengthen the Canton of Ticino’s framework conditions and attractiveness, both for commodity trading companies and their founders and staff. Ticino is one of the Cantons with the highest tax rates for its citizens, the Council of State has now proposed a package of measures in their favor. Voters will go to the polls on June 9, 2024, LCTA recommends a YES vote on Tax Reform.

The Tax Reform aiming to modernize the tax system, extending benefits to different types of families, and lowering the tax burden for employees, can be summarized as follows:

  • increase of deductions for business expenses from CHF 2’500 to CHF 3’000 for 2024 and 2025, and to CHF 3’500 beginning in 2026;
  • rate reductions for gifts, inheritances or business successions; introduction of a new exempt portion of CHF 10’000; relief measures in case of business succession;
  • reduced taxation on pension plan lump-sum payouts to a maximum rate of 3%;
  • gradual reduction of the maximum income tax rate from 15.076% to 12% over 6 years;
  • linear reduction of all personal income tax rates from 2024 to compensate for the increase in the multiplier to 100% (the reform coincides with the cantonal tax coefficient returning to 100% on January 1, 2024, after being reduced temporarily to 97% in the years 2020-2023).

LCTA backs the initiative “Per evitare aumenti d’imposte a tutti” and recommends its members vote YES.

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CCTS | Commodity trading: the first graduates

Thirteen professionals are the first in Ticino and Switzerland to hold the title of “Certified Commodity Trading Specialist SAQ,” a professional certification promoted by the Lugano Commodity Trading Association in collaboration with Alma Impact AG and recognized by the Swiss Association for Quality SAQ.

The ceremony

The graduation ceremony for “Certified Commodity Trading Specialist SAQ,” a training supported by the Lugano Commodity Trading Association (LCTA) and given by Alma Impact AG, a company specializing in professional and management training, took place on May 2, 2024.

On the sidelines of the ceremony, Alessandra Gianella, Co-chair of the Swiss-Chinese Chamber of Commerce (SCCC) – Ticino Chapter discussed global geopolitical dynamics and China’s role

Below is the list of 2024 graduates:

Albert Sara, Arnold Ramona, Behzadi Nikki, Bignasca Sebastian, Brognoli Camilla (awarded by “Ticino Economico” for getting the best grade on the final exam), Coffa Eugenia, Deini Nathalie, Fornoni Paolo, Ghersi Davide, Martins Fabrizio, Origgi Alice, Pilato Valentina, Sarraggiotto Thomas.

The Certified Commodity Trading Specialist course

The 60-hour course was held at the Università della Svizzera italiana (USI) and was taught exclusively in English, the language of reference for people working in international commodity trading. The first edition had 15 participants, nearly all of them already professionally active in commodity trading companies or companies providing support services, such as banks, insurance companies, shipping companies, auditing firms, law firms and trustees. “The faculty consists of industry professionals with substantial international experience. The goal is to equip participants with a 360-degree understanding of commodity trading, so that what they learn can be instantly implemented in the workplace,” explains Matteo Somaini, LCTA President and Member of the course’s Advisory Board, along with other industry experts such as Fabiano Manfredi, Yan Blitshteyn, Marco Passalia, and Alberto Stival (representing Alma Impact).

The 2024 edition

Registration for the next edition of the course, which will take place from October 11, 2024 to January 11, 2025 (in hybrid mode, that is with online and on-site teaching) is already open; the deadline to register at a discounted rate (early booking) expires on June 1, 2024 while a webinar presenting the course is scheduled for May 21, 2024 from 11:45 to 12:30 (any interested parties can send an e-mail to academy@alma-impact.ch).

More information is available here

Contacts

ALMA Impact AG
Alberto Stival, Partner and Founder
Via Ciseri 3
6900 Lugano, Switzerland
Tel.: +41 (0)78 893 17 61

LCTA – Lugano Commodity Trading Association
Monica Zurfluh, Secretary General
Via Maggio 1
6900 Lugano, Switzerland
Tel. +41 (0)79 220 40 71

Human rights and environment: due diligence, transparency and reporting obligations

Due diligence and transparency obligations in the area of minerals and metals from conflict zones and child labour as well as non-financial reporting obligations came into force in Switzerland on January 1, 2024. On March 15, 2024, the Council of the European Union approved the Corporate Sustainability Due Diligence Directive (CS3D), which will affect both EU and non-EU companies with a significant turnover in the EU. In an increasingly complicated legislative framework, businesses must have the necessary tools in place to meet legal requirements and conduct focused due diligence.

Swiss Regulations

Following the rejection in 2020 of the Swiss popular initiative on mandatory environmental and human rights due diligence (commonly referred to as the “Responsible Business Initiative, RBI)”, the counterproposal sponsored by the Swiss Federal Council in the form of an amendment to the Swiss Code of Obligations came into force on January 1, 2024, providing non-financial reporting obligations as well as due diligence and transparency obligations in the area of minerals and metals from conflict zones and child labor.

Non-financial reporting obligations

As per Ordinance on Climate Disclosure (Italian version), starting from the fiscal year 2023, public companies, banks and insurance companies with 500 or more employees and at least CHF 20 million in total assets or more than CHF 40 million in turnover are obliged to report on non-financial matters and disclose publicly environmental, social, labor, human rights and corruption risks, as well as steps taken to address them (see Articles 964a-964c of the Code of Obligations).

Companies fulfilling these requirements but are controlled by a company falling within the abovementioned scope of application or having to prepare an equivalent report under foreign law, are exempt from the non-financial reporting obligations.

Due diligence and transparency in relation to metals and minerals from conflict zones and child labour

Companies exposed to risks in the sensitive areas of child labor and minerals from conflict zones must meet specific due diligence and reporting requirements if the thresholds for the import and processing of minerals and metals from conflict zones, set out in Annex I of the Ordinance on Due Diligence and Transparency Obligations in relation to Minerals and Metals from Conflict-Affected Areas and Child Labor (DDTrO) are exceeded (also see Articles 964k-964l of the Code of Obligations).

The minerals category includes ores, gold and concentrates containing tin, tantalum or tungsten. Metals are those containing or consisting of tin, tantalum, tungsten, or gold – also in form of by-products.

Due diligence obligations include implementing and maintaining a management system as well as establishing a supply chain policy and a supply chain traceability system.

The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and the Regulation (EU) 2017/821 serve as reference.

The Swiss Federal Council is now analyzing the implications of the European Union’s Corporate Sustainability Due Diligence Directive (CS3D) for Swiss companies and is expected to decide on the next steps to take once the final version of the CS3D is released and the mechanisms by which the EU Member States will implement this Directive are known.

The EU CS3D

Following two failed attempts to gain approval, on March 15, 2024, the Council of the EU adopted a heavily watered-down version of the Corporate Sustainability Due Diligence Directive (CS3D), requiring EU and non-EU companies with activities in the EU to carefully manage social and environmental impacts throughout their entire supply chain. The next stage is for the EU Parliament to approve this “compromise text” (likely in April 20024). If approved, the CS3D regulations will then apply to companies with at least 1’000 employees and a turnover in the EU of €450 million, rather than 500 employees and a turnover of €150 million, as previously proposed by the Commission. Lower thresholds for high-impact businesses, such as textile manufacturing, food production, mineral extraction, and construction, have been eliminated. Although SMEs are not included in the scope of the Directive, they could be impacted by its provisions as contractors or subcontractors to the companies which are in the scope

Legislation in some Member States, such as Germany (Supply Chain Due Diligence Act or “Lieferkettengesetz”), France (Duty of Diligence Act or “Loi sur le devoir de vigilance”) or the Netherlands (Child Labor Due Diligence Act, or “Wet Zorgplicht Kinderarbeid”, and the draft supply chain law), will need to be adapted to CS3D. Businesses would be expected to be far more attentive when it comes to suppliers.

Source: SUISSENÉGOCE, completed by LCTA. This article was originally published on the LCTA website on March 14, 2024 and edited on March 19, 2024.

Switzerland implements 12th EU sanctions package

On January 31, 2024, the Federal Council enacted additional measures against Russia, effectively adopting the EU’s 12th sanctions package.

The new provisions include, among others, a gradual ban on the purchase and import of Russian diamonds, further measures to support the enforcement of the price cap for Russian crude oil and petroleum products and combat its circumvention, and notification and authorization requirements for the sale of tankers that can be used to circumvent the oil price cap.

As of March 20, 2024, exporters will be required to contractually prohibit their partners established outside the EEA or a partner country (Australia, Canada, South Korea, Japan, Norway, New Zealand, the United Kingdom, and the United States) from re-exporting goods listed in Annexes 3 and 19 of the Ordinance on Measures connected with the Situation in Ukraine, as well as high-priority goods listed in Annex 31, to Russia or for use there. In the event of a violation, appropriate corrective steps must be specified in the contract. Such infractions must be immediately reported to the State Secretariat for Economic Affairs (SECO). The obligation does not apply to business contracts signed before February 1, 2024 and completed by December 20, 2024, or contracts that have expired, whichever occurs first.

The Ordinance imposing measures in relation to the situation in Ukraine as amended to February 1, 2024 can be found here (Italian version).

SECO has also updated its interpretative paper on sanctions with special reference (but not limited) to:

  • compliance with Article 12b(4)(b) and (5) (crude oil and petroleum products): SECO refers to the EU Commission’s FAQs on the implementation of EU Council Regulations 269/2014 and 833/2014, in particular the explanations contained in Chapter E “Energy”, point 5 “Oil Price Cap”, section 7 “Attestations, recordkeeping and itemised ancillary costs”. These explanations show what information and documents are appropriate as evidence;
  • proof of the third country of origin of the steel articles listed in Annex 17 used as inputs (Art. 14a): beginning March 1, 2024, this proof must be included as a document (document code Y824) under the heading “Documents” in the customs declaration. The document must be presented on request to the Federal Office for Customs and Border Security (FOCBS), together with the relevant customs documentation.

SECO’s interpretative paper (FAQ) is available online (Italian Version).

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