MNI: EU Braces For US Green Opt-Outs, FTA Fallout-Officials
MNI (BRUSSELS) - The European Union is preparing for President Donald Trump to call for opt-outs for U.S. firms from the bloc's green and digital laws, and is likely to have to accede, potentially complicating its trade deals with other parts of the world such as Mercosur and Mexico, officials in Brussels told MNI.
"One could easily imagine that, for instance the Carbon Border Adjustment Mechanism, he would not want U.S. companies to be targeted by that measure, or deforestation or other similar measures which are emerging from the EU's Green Deal,” one official said.
The U.S. could also ask for exemptions from other recent EU legislation including the Digital Markets Act, which fined Apple, and the Digital Services Act, which targets misinformation on online platforms.
"This will be extremely difficult to do because obviously other countries will ask for the same lenient treatment or even countries with which we already have a trade agreement are likely to protest. It will present the EU with quite a dilemma and will be an extremely difficult situation to solve,” the official said. (See MNI INTERVIEW: EU More Prepared, But Vulnerable, To US Tariffs)
WTO ACTION
The EU is likely to have to give way on some of these demands, but it will emphasise the repercussions, which may include other states bringing WTO legal action against the bloc. The core principle of CBAM - which imposes an import levy on the carbon footprint of goods coming into the EU - would be undermined if the EU gave in and would amount to discrimination against third countries. (See MNI INTERVIEW2: Trump Stagflationary For Eurozone-ECB's Wunsch)
Such concessions to the U.S. could also sour relations with those countries with which the EU has done trade deals in the months since Trump's election as the bloc hurriedly seeks to diversify its supply chains. These include Mercosur, Mexico and the relaunch of free trade talks with Malaysia, where the EU's trade negotiators have already been obliged to adopt a more flexible approach to compliance with the bloc's onerous and intrusive green regulations in order make progress.
The possibility that Trump could take such a line of attack comes as the EU has already started to pave the way for what could be its biggest trade agreement yet, India.
"They are already in internal discussions with member states and with industry as well on where the EU could show flexibility and on which areas could even be excluded from any agreement,” an official said, referring to the negotiations with India.