Specifically, according to the position paper available to the “FT”, the US government wants to ensure that non-EU companies do not have to submit “climate change plans”. The administration of US President Donald Trump is also demanding that the EU change its environmental regulations for supply chains to, among other things, exempt US companies.
The supply chain law passed by the EU last year is intended to ensure that certain labor and environmental standards are adhered to for products manufactured abroad for the European market. Companies must regularly publish a report on the fulfillment of these due diligence obligations. Violations can be punished with fines of up to five percent of global sales.
“Unjustified regulation”
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However, in its paper, the Trump administration describes the regulations as “unjustified regulation” and “imposes significant economic and regulatory burdens” on US companies. All of this would have a negative impact on the competitiveness of US companies in the EU market, it continues.
US companies would also fear that due diligence requirements would expose them to increased risk of litigation in an already competitive EU market. The regulations would also allow activist groups to take legal action over child labor and environmental damage or pollution.
U.S. officials said several U.S. companies have said they will have to stop operating in the EU because of due diligence and reporting requirements. American oil and gas companies in particular strongly criticized the legislation. ExxonMobil boss Darren Woods, for example, spoke in August of “tough” penalties that threatened US companies.
EU officials: “One-way street”
As two EU officials familiar with the matter told the FT, Washington had communicated the demands that had now arisen to the EU Commission in the last few days. There would be no room for leeway: “It’s a one-way street,” said one of the officials – the USA wasn’t offering anything in return.
The customs agreement, concluded in Turnberry, Scotland, at the end of July, sets tariffs for most EU products at 15 percent, but also leaves room for further concessions from Brussels. However, EU Commission President Ursula von der Leyen described the EU legislation as a “red line”
Headwind within the EU
However, there are also headwinds within the EU – in the form of several companies and governments. A raft of laws requiring companies to tackle deforestation and labor rights abuses and reduce their impact on the environment are being weakened or delayed within the EU.
Due to resistance, the EU is also trying to simplify and tighten regulations and rules as part of a large-scale reduction in bureaucracy. However, these efforts met with some resistance in the EU Parliament, as politicians from the left camp accused the conservatives of deregulation on the one hand and of allying with the extreme right to undermine legislation on the other.
Impact on trade agreements open
The interim framework agreement reached in Turnberry marks the start of a comprehensive process to eliminate unfair trade barriers in the European Union, two US officials told the FT. The agreement already stated that no “unreasonable restrictions” should be imposed on transatlantic trade and also noted that the EU must reduce bureaucracy.
Washington’s demands also come at a time when the Trump administration is increasingly pressuring Brussels over its laws restricting large technology companies. This in turn increased fears within the EU that the trade agreement agreed in July would not hold.
