The German rubber and plastics machinery trade association, VDMA, has voiced its support for EU efforts to protect European companies against sanctions on their activities in Iran.
“We believe that the fundamental decision of the EU is right to finally tackle the problem of extra-territorial sanctions, as is currently the case in the US,” said VDMA chief executive Thilo Brodtmann in an 18 May statement in German.
The comments followed an EU move on 17 May to reactivate “Blocking Statute”, which bans European companies and courts from complying with US sanctions against Iran.
This followed Washington’s pull-out of the landmark 2015 nuclear deal, earlier in the month.
“Not only that the EU has to maintain its foreign policy sovereignty. For countries that are increasingly connected internationally, extra-territorial unilateral actions by individual states are poison,” Brodtmann added.
However, with the European move, there will be no full compensation for the possible financial losses from US sanctions.
The law was originally developed in 1996 to protect European assets against US sanctions on Cuba.
“With such rules the devil is often in the detail,” said Ulrich Ackermann, head of VDMA foreign trade.
According to Ackermann, the most important area of concern with Iran is around maintaining payments.
“It [Blocking Statute] should support the EU companies interested in the Iran business and reduce their risks. However, there will be no complete compensation for the possible financial losses caused by US sanctions,” explained Ackermann.
According to the VDMA official, whether the remaining residual risks are sustainable remains an individual decision of the companies.
“But it was finally time for the EU to assert its regulatory priority for domestic companies,” Ackermann concluded.
Last year, German machinery exports to Iran increased by 21% to €901m, according to the latest VDMA report.
This puts Germany on a par with Italy, which saw its machinery sales to Iran increase 9% to €897m.
The growing Iranian market is currently dominated by Chinese suppliers, which exported €2.3bn worth of machinery to the country in 2017.