How the ‘Brussels effect’ backfired

EU business regulationAdd to myFTGet instant alerts for this topicManage your delivery channels hereRemove from myFTHow the ‘Brussels effect’ backfiredOnce a model for the world, the EU’s rulemaking machine has faltered under the weight of its own ambition© FT montage/Getty/ReutersHow the ‘Brussels effect’ backfired on x (opens in a new window)How the ‘Brussels effect’ backfired on facebook (opens in a new window)How the ‘Brussels effect’ backfired on linkedin (opens in a new window)How the ‘Brussels effect’ backfired on whatsapp (opens in a new window) Save How the ‘Brussels effect’ backfired on x (opens in a new window)How the ‘Brussels effect’ backfired on facebook (opens in a new window)How the ‘Brussels effect’ backfired on linkedin (opens in a new window)How the ‘Brussels effect’ backfired on whatsapp (opens in a new window) Save Peter Foster in London and Barbara Moens in BrusselsPublishedDecember 14 2025Jump to comments sectionPrint this pageStay informed with free updatesSimply sign up to the EU business regulation myFT Digest -- delivered directly to your inbox.Six years ago the EU pledged to stem the destruction of the world’s forests — and thus take a major step towards halting climate change — by the sheer might of its regulatory power.With the bloc importing 30 per cent of the world’s coffee and 60 per cent of global cacao production, the architects of the new rules banked on the so-called “Brussels effect”. Coffee growers in Brazil or rubber glove manufacturers in Malaysia would comply — and think twice about clearing trees for crops — just to gain access to the EU’s 450mn consumers.But as objections to the deforestation regulation from industry and commodity producing countries grew louder, the European Commission pushed back the deadline for the rules to come into force. Then the EU pushed them back again until December 2026.“They have over-reached, they went too far in trying to regulate the world,” said Pedro Miguel da Costa e Silva, Brazil’s ambassador to the EU. The repeated postponement of deforestation rules was a “prime example” of Europe’s waning ability to shape the world in its own image, he said.The repeated postponement of deforestation rules was a ‘prime example’ of Europe’s waning ability to shape the world in its own image, said Pedro Miguel da Costa e Silva, Brazil’s ambassador to the EU © Adriano Machado/ReutersThe decision has become emblematic of a broader reappraisal of the EU’s sway over business, and the world. Gone is the missionary zeal of 2019-2024 when Ursula von der Leyen’s first term as EU Commission president generated a mountain of new regulation. Pollution curbs, online privacy requirements, sweeping human rights obligations for EU companies and even their suppliers overseas — Brussels moved as if it could remake the world. Frans Timmermans, the former Commission vice-president, described the Green Deal as Europe’s “claim to a different destiny”.Von der Leyen’s second term has a very different tone: the Green Deal has been watered down, regulatory “simplification” is in vogue, and investment is primarily flowing to Europe’s defence sector.Who killed Europe’s single market dream?This is the fifth piece in an FT series examining what went wrong with Europe’s flagship economic project — and why it is so difficult to revive the single market as a growth engineThe term “Brussels effect” was coined in 2012 by Anu Bradford, a Columbia University law professor riffing on the so-called “California effect” where environmental rules set by the US’s most economically powerful state were, over time, adopted by others. Bradford, whose 2020 book The Brussels Effect: How the European Union Rules the World was published at arguably the high-water mark of European influence, said online privacy rules or chemical regulations were adopted by multinationals as the price of trading with Europe, which led non-EU jurisdictions to either adopt or recognise the bloc’s standards.But that Brussels effect was now being “tested”, she said, with the US “forcefully pushing back on EU regulations at the same time when the EU’s own confidence in its regulatory agenda is waning”.The EU’s capacity to make the regulatory weather on digital technology has diminished compared to the GDPR data protection laws, when the EU helped create the rules of the first internet age, Bradford added.Some content could not load. Check your internet connection or browser settings.In this new era, the EU’s AI Act to regulate the use of artificial intelligence — which Brussels has partly paused — and its Digital Markets Act, which aims to rein in the virtual monopolies of US tech giants, have struggled to gain the same traction. Experts warn such legislation is seen as not just protectionist in outlook but also outdated in a world where the EU — which had failed to create its own global tech giants — was an increasingly marginal player.Dyuti Pandya, an analyst at the European Centre for International Political Economy specialising in the intersection of law and tech, said the EU had applied the mindset of the “internet age” to the much more fast-moving and volatile world of AI and quantum computing.“The weakening of the Brussels effect is less about the EU’s ability to export the rules, but its inability to define and match tech developments with a legal framework. No one knows how AI and quantum technologies will evolve, which makes it hard for a single jurisdiction to create a lock on a global standard,” she said.The result, added Michael Birnhack, law professor at Tel Aviv university, is that when it comes to future technologies, countries like Israel that adopted the GDPR and won “data adequacy” recognition from the EU are now being more cautious. Birnhack, who advised the EU Commission during Israel’s 2011 data adequacy decision, said that recent Israeli government policy has been to take a wait-and-see approach. “There’s a delicate balance at play — who moves first, technology or policy — and we need to allow some breathing space for the technology. These attempts at future regulation, like the AI Act and Digital Markets Act, will have less Brussels effect than GDPR,” he added.In chemicals and medical devices — two fields where earlier rounds of EU regulation set global benchmarks — the commission has also struggled to implement much of the new generation rules from the Timmermans era. The EU’s new Medical Device Regulation and the In Vitro Diagnostic Medical Device Regulation, which were introduced in the early 2020s to modernise medical device regulations, have been delayed because of a shortage of capacity in certification bodies.Oliver Bisazza, the CEO of MedTech Europe, the industry lobby, said that the complexity of the new rules, which were designed to better protect patients, had the perverse effect of making the EU less attractive for companies registering new devices. Since the launch of the two sets of device regulations, the number of large medical device manufacturers who said the EU was the place they would first launch new products fell from 73 per cent to 39 per cent, according to a 2024 industry survey by MedTech Europe. Some content could not load. Check your internet connection or browser settings.Bisazza contrasted the hugely powerful Brussels effect observable in the industry in previous decades, where the EU’s quality assurance “CE” mark was widely accepted as proof of a product’s reliability by other jurisdictions, with today’s much more tangled environment. “The EU regulations have earned a reputation for being a bit of a mess. While very robust, they’re less agile and predictable and have raised the bar to the extent that the EU has become the most costly and time-consuming jurisdiction to get medical device approval,” he said.The chemical industry says it has experienced similar frustrations with the EU’s plans to revise the EU REACH chemical regulation to drive the industry to decarbonise and regulate environmental hazards such as PFAS, so-called ‘forever’ chemicals. Marco Mensink, the director-general of the European Chemical Industry Council, said that over the past decade, while the EU had become much less attractive to global boardrooms, Brussels had continued to legislate as if it was a regulatory hegemon.“The EU model was to set out ambitious regulation assuming others would follow, but we’re approaching a situation where Europe is leading alone,” he said. Finding a new balance that can preserve or even extend the power of the “Brussels effect” is now Europe’s challenge. Rather than issuing ever more complex rules and expecting others to fall into line, say analysts, Brussels will need to build coalitions around standards that might remain attractive in a more uncertain world.Optimists believe, in other words, that Trump’s assault on a global rules-based order provides an opportunity for the EU to provide a rulemaking anchor. As evidence of success, they cite the fact that Canada, Mexico, Brazil, Japan, Australasia, India and much of south-east Asia have adopted rules that either copy or mimic elements of the Digital Markets Act, according to research by the Center for European Policy Analysis think-tank.The EU’s new carbon border adjustment mechanism (CBAM), which comes into force in January, provides another example of the continuing force of the Brussels effect as other leading economies, including Brazil, China and Japan accelerate the introduction of their own carbon taxes in response.“There’s clear evidence that CBAM is already becoming quite an effective mechanism to get larger emitting countries to introduce their own carbon pricing schemes,” said Adam Berman, director of policy and advocacy at Energy UK, the industry lobby group, adding that the UK’s own decision to introduce a CBAM from 2027 was itself an example of the Brussels effect at work. Bisazza, of MedTech Europe, said that if the EU successfully rationalised its approach to regulation — dovetailing existing rules with the AI Act — the Brussels effect could yet be revived. “If the EU can get these details right, the ‘Brussels effect’ in AI could reinforce Europe’s role as a global leader in patient-centred innovation,” he said. Some content could not load. Check your internet connection or browser settings.Former Italian prime minister Enrico Letta, author of a 2024 report commissioned by the EU to reinvigorate the single market, argues that Europe now faces a fulcrum moment.On the one side the Trump administration perceived every emerging regulation from Europe was “like garlic for Dracula”. On the other the return of Trump to the White House had also spurred the EU to push forward with new trade deals with the Mercosur countries, Mexico, India, and Indonesia that provided the potential to show the EU still had regulatory sway.“I don’t consider the Brussels effect dead,” reflected Letta, before adding that the rulemaking engine Europe had exported to the world was definitely “not in good shape”. Data visualisation by Jonathan Vincent. Additional reporting by Alice Hancock in Brussels.Reuse this content (opens in new window) CommentsJump to comments sectionPromoted Content Follow the topics in this article EU business regulation Add to myFT Barbara Moens Add to myFT Peter Foster Add to myFT Comments