French Carbon Labeling Could Have Trade Implications

The French National Assembly will consider in early 2010 an “Environmental Labeling Law” already approved by the French Senate. The so called “Grenelle 2: the bill on the national commitment to the environment” is a five-year plan for nationwide sustainability with targets set to 2050.

The proposed bill would make environmental labels mandatory on all consumer products sold in France beginning January 2011. It is estimated to cost as much as 5 percent of the final product price; a cost the French consumer will have to bear, unless both retailers and producers agree to share the burden. It is unclear how the European Commission and other EU Member States will view this law, believed to be the first of its kind.

Obviously, if passed, the Grenelle 2 could pose significant barriers to trade for U.S. processed, intermediate, and bulk products. The pressure to require environmental labeling including carbon footprint, biodiversity, and water quality accounting may affect the retailers/suppliers relationship in ways that may cause anti-competitive concerns.

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