The new law on supply chains will appear on January 1, 2023 in Germany. It will proscribe to all companies from Serbia, local or foreign, exporting raw materials, components, semi-products and services to the German market, to honor human rights and to prove that they are environmentally friendly. Companies which export finished products aren’t pertained to by this regulation.
According to Tanja Lindell, Deputy Manager in department for Industry at Chamber of Commerce and Industry of Serbia (CCIS), German companies with over 3,000 employees will be primarily pertained to by the new law, and from January 1, 2024, it will start being applied to German companies with over a thousand employees.
Lindell says that German companies with their own activities are subject to this law. It is transferred to direct and indirect suppliers of semi-products and services in the production chain, that is, to all those companies which have supply agreements with companies over there. She mentions the lack of information about the number of companies this pertains to, due to ignoring what kind of agreements they have. Around 3,000 Serbian companies export to the German market, but a part of them exports finished products.
As Lindell says, those responsibilities and obligations from the law which the end-customer, the German partner, transfers to Serbian companies, will have to be met by them. Only what the German company must fulfill is defined by the law, and the contract will define which part of the obligations the German company transfers to its direct supplier. Companies are required by the law to make risk assessment, to carry out success analyses regularly, to respect human rights, to protect the environment and to publish reports which are public.
Lindell notes that the German law prepares companies for the EU directive which they have announced and which has already been preparing. It will be much stricter than the German law. An office for helping Serbian companies with the aim of informing them, as well as possible, and of helping them adapt the new law on supply chains will be opened by the CCIS in the first quarter of 2023.
According to Dragoljub Rajic of the Business Support Network, this regulation will not affect a large number of Serbian companies in the first year of the application. However, it will affect more companies beginning with the year after that, especially logistics companies which transport raw materials. The fact that German companies will not be able to work with companies which violate human rights in any way, which are involved in forced labor, or which have illegal employees will not affect Serbian exporters. Companies from Asia and Africa which participate in German supply chains are mostly pertained to by this.
Rajic explains that it will be more significant to prove that companies exporting raw materials or semi-products don’t pollute the environment through their business operations. The amount of carbon-dioxide emitted during their production or operating processes mustn’t exceed the level proscribed in Germany for the given industry. Serbian producers will have to replace diesel with other fuels in a certain percentage, or to use Euro 5 engines or to prove that the share in production is either at a minimum or zero. In the future hybrid trucks will have to start being bought by logistics companies, and the rail sector will have to be switched to hydrogen.
This has been initiated by Germany, but similar steps are being taken by France and Great Britain, and it will soon be an obligation at the EU level. The rail sector will be a great challenge for Serbia, as it is the greenest form of transport. Slow Serbian rail sector is not competitive. Due to this reason, entry of an Austrian cargo group to Serbian market has been announced.