The European Union is preparing for retaliatory tariffs under Trump 2.0. politiko reportedIn October, Brussels convened a “Trump Task Force” to consider ways to counter new U.S. tariffs on European goods.
That is understandable, but Brussels should also be concerned about its own provocative policies. European Union Deforestation Regulations. President Trump's instincts are not to greenlight this to a World Trade Organization lawsuit, but he should.
What is the European Union Deforestation Regulation?
it is regulationThe aim is to prevent products that contribute to deforestation from being imported, sold and exported to the 27-nation bloc. It covers trade in cattle, cocoa, coffee, palm, rubber, soybeans and timber, and requires companies to submit a “due diligence” statement on the risks they pose in relation to deforestation across their supply chains.
Product traceability will be monitored by national authorities in the following ways: Geolocation dataAt every step. There are also provisions to address compliance. country basedthis impacts the amount of detail required in a company's due diligence report.
EU sayIt encourages sustainable practices and helps fight climate change. Many of the EU's trading partners see things differently. They are concerned that compliance costs will hurt exporters.
These costs are expectedIt ranges from 0.29 percent to 4.3 percent of the import value, but can be much higher if upstream suppliers cannot afford to implement the necessary auditing systems.
In June of this year, US and 16 other countriesI grew something called specific trade concernsIn the WTO Committee on Technology and Trade Barriers. Certain trade concerns are often a precursor to litigation.
US said He said the EU was “woefully unprepared” to introduce EU deforestation regulations and that introducing them prematurely would “have a huge impact on global supply chains and food security”.
Same as Canada pointedIt highlighted uncertainties surrounding the implementation and enforcement of the regulations, questioned the science behind them, and suggested there were less trade-restrictive alternatives to achieving the objectives.
India beggedThe EU said it was “in response to concerns raised by a wide range of WTO members.”
Dissatisfaction with the regulation is also simmering at the WTO's Council on Trade in Goods. In July, US and 17 other countriesHe expressed dissatisfaction with the EU's unilateral approach.
US pleadedWe call for “two-way consultation” and more stakeholder engagement. Brazil claimed thatIt says that the European Union's deforestation regulations “focus exclusively on trade restrictions” and that there are “widespread and increasing calls for this measure to be modified or at least postponed to avoid irreparable damage to producers”. He claimed to support “many countries.”
In response to this backlash, Brussels decided last month to: postponementThe regulation will be in effect until December 2025 for large companies and until June 2026 for small and medium-sized enterprises. This will likely come under President Trump's scrutiny. He will have to deal with that because it puts U.S. soybean exports at risk. But how?
Tariffs would provoke retaliation for countries that sided with the United States against European Union deforestation regulations and increase trade policy uncertainty.
President Trump may push for a bilateral agreement that exempts some U.S. exports, but the EU has shown no interest in striking a special agreement under the agreement in violation of WTO rules. Carbon boundary adjustment mechanismfor example.
This leaves WTO dispute settlement in place. Strange story? not much.
Remember during the Trump administration's first term? filed a WTO lawsuitagainst Canada, China, India, Mexico, and Türkiye. It is not a good idea to go on the offensive while vowing non-compliance on the defensive side, but if there is a positive outcome regarding European Union deforestation regulations, such as reaching a negotiated solution through talks, it would encourage President Trump to consider multilateralism more. You might be persuaded to do so. U.S. agricultural exporters are eagerly awaiting WTO permission to operate.
The United States could allow third countries, such as India, to bring claims against this regulation. But this will not yield the domestic political benefits that would accrue from U.S. soybean producers, who are still waiting for “perfection” after President Trump takes office. Withdrawal from the Trans-Pacific Partnership Agreementand trade war with china.
The key is to quickly start a substantive dialogue on EU deforestation regulations.
In March, US-EU ceasefire on steel and aluminum tariffsThe expiration would give Trump an opportunity to quickly resume the tariff war he started during his first term. Brussels will no doubt remember what President Trump said in 2018: saidFOX News: “The European Union is probably as bad as China, just smaller.'' European Union deforestation regulations won't improve President Trump's opinion.
The EU is I was caught off guard.Tariffs have been raised through blanket tariffs under Trump 1.0, and new tariffs are being prepared under Trump 2.0. For this purpose it armed itself. unilateral trade measuresThat wasn't the case in 2018.
But this has blinded the Brussels government to the reality that regulations such as the European Union deforestation ban are as unilateral and protectionist as the tariffs it fears could soon disrupt transatlantic trade. should not be diverted.
Mark L. Busch is the Karl F. Landegger Professor of International Business Diplomacy at Georgetown University's Walsh School of Foreign Service.
