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Paul Mertenskötter

Paul Mertenskötter advises companies, investors, and governments on regulatory sustainability, international trade, and public policy matters.

Paul has particular experience advising multinational companies on EU sustainability laws, including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the Taxonomy Regulation, the Forced Labor Regulation, and the Carbon Border Adjustment Mechanism (CBAM). His practice also spans a wide range of climate change issues, including carbon offsets, accounting rules, and related international sustainability reporting frameworks such as the International Sustainability Standards Board (ISSB). Paul further advises clients on their strategic engagement with the rules of the World Trade Organization (WTO), free trade agreements, the Paris Agreement, and general public international law.

Prior to joining the firm, Paul was a Visiting Scholar at the WTO in Geneva, clerked at the International Court of Justice in The Hague, and was a Fellow at the Institute for International Law and Justice at NYU Law School.

Contact:Read more about Paul MertenskötterEmail

There have been several recent developments in international efforts to combat trade in goods made with forced labor, with important implications for responsible sourcing and global trade compliance programs.

On September 14, 2022, the European Commission (“Commission”) published a proposal to ban products made with forced labor from the EU market. The proposal notably goes beyond banning the importation of such products and would also create a ban on the export of products produced with forced labor and require their withdrawal from the EU market.

Meanwhile, enforcement by U.S. Customs and Border Protection (“CBP”) of the U.S. forced labor import prohibition has continued to intensify, including under the Uyghur Forced Labor Prevention Act (“UFLPA”). In early August 2022, CBP clarified the process for updating the UFLPA Entity List. In addition, CBP recently announced that it intends to integrate forced labor compliance requirements into the Customs Trade Partnership Against Terrorism (“CTPAT”) “trusted trader” program.

We discuss these developments and their implications below.

EU Forced Labor Product Ban

The European Commission has proposed a Regulation prohibiting products made with forced labor from being imported to, exported from, or sold in the EU, following an announcement by Commission President Ursula von der Leyen during her State of the Union address in September 2021.

The Commission’s proposal is the first step in the EU’s formal legislative process. The Regulation will now have to be agreed by the European Parliament and Council to become law, following which there will be an agreed delay—the Commission has proposed two years—before it applies in EU Member States. As it usually takes at least 12 months, and often closer to 18 months, for the European Parliament and Council to agree on a legislative text after a proposal by the Commission is published, it is unlikely that the Regulation will be adopted before the end of 2023, and it is therefore unlikely to become applicable earlier than late 2025.Continue Reading Breaking Developments in Forced Labor Trade Enforcement—the EU’s Proposed Forced Labor Product Ban and Recent Developments in U.S. Customs Enforcement

The European Commission is currently discussing a draft of a proposal for a Carbon Border Adjustment Mechanism (“CBAM”) Regulation that it is expected to present on July 14, 2021.  A CBAM was already announced in the European Commission’s Communication for a Green Deal  and is intended to protect the EU’s domestic industry that is at risk of carbon leakage—to create a level playing field—and to serve as a policy tool to encourage third countries to reduce their greenhouse gas (“GHG”) emissions.

The CBAM draft proposal is subject to intense negotiations among the different Directorates-General of the European Commission, and it is likely that it will be amended several times before the Commission finally presents it on July 14.  Nevertheless, the draft already suggests that the CBAM proposal will require importers of covered goods into the EU to purchase and surrender a number of CBAM certificates that reflect the goods’ embedded emissions.  In line with the European Parliament’s resolution, the CBAM would be linked to the EU Emissions Trading System (“EU ETS”) as the price of the CBAM certificates would reflect the average price of the ETS allowances.
Continue Reading Twelve Things to Know About the Upcoming EU Carbon Border Adjustment Mechanism

The European Commission has presented a package of key enabling legislation on sustainable finance (the “Sustainable Finance Package”).  This includes the much-awaited first technical screening criteria under the Taxonomy Regulation — outlined in the Taxonomy Climate Delegated Act (“TCDA”) — and a proposal for a Corporate Sustainability Reporting Directive (“CSRD”), which significantly revises and expands on the existing Non-Financial Reporting Directive’s remit and disclosure rules for corporates. While the former is directly aimed at financial institutions and investors, and the latter at large and listed entities, the package has broader implications for all corporates.

Sustainable Finance Package: Context and CommentThe Commission’s intention with its Sustainable Finance Package is twofold: (1) in the short term, to set a clear regulatory framework to encourage investments that will contribute to a sustainable and inclusive economic recovery from the COVID-19 pandemic; and (2) in the long term, to ensure the transition to a carbon neutral EU economy by 2050, in accordance with the 2020 European Climate Law.  Following the adoption of the EU Taxonomy Regulation (explained further below), the Sustainable Finance Disclosure Regulation, and the Benchmark Regulation, which enhances the transparency of benchmark methodologies, the Commission has in this legislative package laid out the next building blocks for its envisioned sustainable finance ecosystem.

In addition to the impact on financial institutions and investors directly subject to the new laws, the Sustainable Finance Package may impact corporates in the following ways:

  • Corporates may be more likely to receive requests for data on their environmental and other sustainability practices as upstream capital markets participants grapple with new obligations to distinguish between green, “light green,” and other investments;
  • Corporates may be subject to direct requirements to report on activities relating to their environmental, social, and governance objectives;
  • Longer-term, the package may form the basis of a “blueprint” for wider stakeholders, meaning that corporates may need to improve performance against the standards, not just to attract capital, but also to remain competitive; and
  • On a global level, these EU sustainability measures have real potential to become gold standards and influence the investment market outside of the EU, a phenomenon known as the ‘Brussels Effect’.[1]

Continue Reading The EU’s Green Capitalism Takes Shape: Taxonomy Screening Criteria and Corporate Sustainability Reporting

The UK Government recently announced that it is developing legislation that would make it illegal for large businesses operating in the UK to use certain commodities that have not been produced in line with local laws, and require in-scope companies to conduct due diligence to ensure that their supply chains…
Continue Reading UK: new “world-leading” deforestation and ecosystem supply chain law

As of January 2021, many imports and exports of agricultural products covered by EU tariff quotas will be subject to the new licensing rules of Commission Delegated Regulation (EU) 2020/760 (“Delegated Regulation”) and Commission Implementing Regulation (EU) 2020/761 (“Implementing Regulation”) (together, “Licensing Regulations” or “Regulations”).  The new Regulations introduce significant…
Continue Reading New Licensing Regulations to Import Agricultural Products into the EU:  What Traders Should Know to Avoid Missing Quota Allocations in 2021

“Businesses that have better risk mitigation processes across their supply chains cause less harm to people… Good environmental, social, and governance practices pay off… We need to make sure that responsible business conduct and sustainable supply chains become the norm.”
EU Commissioner for Justice, Didier Reynders, April 29, 2020

On April 29, 2020, in a webinar hosted by the European Parliament’s Responsible Business Conduct Working Group, EU Commissioner for Justice Didier Reynders announced that the European Commission (the “Commission”) will move swiftly to introduce regulation on mandatory human rights and environmental due diligence for companies, with its legislative proposal to the European Parliament and Council expected in the first quarter of next year.

In this alert, we provide an overview of the comments and commitments made by Commissioner Reynders against the backdrop of the recently published Study on Due Diligence Requirements Through the Supply Chain (the “Study”), which considered possible EU-wide regulatory interventions relating to human rights and environmental due diligence, and which provides the impetus for the Commissioner’s announcement.

Consultations to inform the Commission’s legislative proposal are expected to start in the coming weeks, so we also set out some initial factors that commercial organizations operating in the European Union may want to consider as they seek to engage with this policy process.

  1. Background: the Study

Commissioner Reynders’s presentation centered around the findings of the Study, which was published in late February and conducted by an expert panel that included representatives of the British Institute of International and Comparative Law, the London School of Economics and Political Science, and Civic Consulting, a public policy consultancy.

The Study involved: (i) a detailed examination of existing regulations and proposals for supply chain due diligence requirements, as well as market practices; (ii) the development of four general options for regulatory interventions at the EU level; and (iii) an assessment of the potential impact of these four options, based also on stakeholders’ perceptions of the different regulatory interventions.

In high-level terms, the Study identified and evaluated the following four options:

Option 1—No EU level policy change: This option would not involve any harmonized EU level regulatory intervention. The Study indicates that this option would be likely to result in a “patchwork” of due diligence expectations across the EU, as there are pending proposals or campaigns for mandatory human rights and environmental due diligence laws in 13 European countries, of which 11 are EU Member States.
Continue Reading European Union Justice Commissioner Commits to Regulation on Corporate Human Rights and Environmental Due Diligence

Last week, the European Commission took a major step to implement the climate aspects of its European Green Deal.  It presented a proposal for a European Climate Law and two consultations on its announced Climate Pact and Carbon Border Adjustment Mechanism (“CBAM”).

The European Commission intends to present a…
Continue Reading Climate Change: The EU Moves Toward a Carbon Border Adjustment Mechanism

The European Commission has just adopted a Regulation that will lift the existing ban on imports of poultry meat from Ukraine that was triggered by the January 2020 Highly Pathogenic Avian Influenza (“HPAI”) outbreak in the western part of the country.

On January 19, 2020 the Ukrainian authorities informed the…
Continue Reading The EU Lifts Restrictions to Imports of Poultry Meat from Ukraine Following the Regionalization of the Country Due to an Outbreak of HPAI