The German rubber and plastics machinery trade association VDMA has voiced its support for European Union 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 U.S.,” said VDMA chief executive Thilo Brodtmann in a May 18 statement in German.
The comments followed an EU move on May 17 to reactivate “Blocking Statute,” which bans European companies and courts from complying with U.S. sanctions against Iran.
This followed President Donald Trump's decision to pull-out of the landmark 2015 nuclear deal between Iran and other nations.
“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, the European move, will not guarantee full compensation for the possible financial losses from U.S. sanctions.
The law was originally developed in 1996 to protect European assets against U.S. 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.
“[The 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 U.S. sanctions,” explained Ackermann.
Ackermann added that 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 percent to 901 million euros ($1.05 billion), according to the latest VDMA report.
This puts Germany on a par with Italy, which saw its machinery sales to Iran increase 9 percent to 897 million euros ($1.04 billion).
The growing Iranian market is currently dominated by Chinese suppliers, who exported $2.6 billion worth of machinery to the country in 2017.