Some American companies have agreed to comply with new, voluntary AI standards from European Union regulators, in advance of new regulations set for 2027, but others have decried them as overreach. (Photo by Santiago Urquijo/Getty Images)

American companies are split between support and criticism of a new voluntary European AI code of practice, meant to help tech companies align themselves with upcoming regulations from the European Union’s landmark AI Act.

The voluntary code, called the General Purpose AI Code of Practice, which rolled out in July, is meant to help companies jump-start their compliance. Even non-European companies will be required to meet certain standards of transparency, safety, security and copyright compliance to operate in Europe come August 2027.  

Many tech giants have already signed the code of practice, including Amazon, Anthropic, OpenAI, Google, IBM, Microsoft, Mistral AI, Cohere and Fastweb. But others have refused.

In July, Meta’s Chief Global Affairs Officer Joel Kaplan said in a statement on Linkedin that the company would not commit.

“Europe is heading down the wrong path on AI. We have carefully reviewed the European Commission’s Code of Practice for general-purpose AI (GPAI) models and Meta won’t be signing it,” he wrote. “This Code introduces a number of legal uncertainties for model developers, as well as measures which go far beyond the scope of the AI Act.”

Though Google’s President of Global Affairs Kent Walker was critical of the code of practice in a company statement, Google has signed it, he said.

“We remain concerned that the AI Act and Code risk slowing Europe’s development and deployment of AI,” Walker wrote. “In particular, departures from EU copyright law, steps that slow approvals, or requirements that expose trade secrets could chill European model development and deployment, harming Europe’s competitiveness.”

The divergent approach of U.S. and European regulators has showcased a clear difference in attitude about AI protections and development between the two markets, said Vivien Peaden, a tech and privacy attorney with Baker Donelson.

She compared the approaches to cars — Americans are known for fast, powerful vehicles, while European cars are stylish and eco-friendly.

“Some people will say, I’m really worried that this engine is too powerful. You could drive the car off a cliff, and there’s not much you can do but to press the brake and stop it, so I like the European way,” Peaden said. “My response is, ‘Europeans make their car their way, right? You can actually tell the difference. Why? Because it was designed with a different mindset.”

While the United States federal government has recently enacted some AI legislation through the Take It Down Act, which prohibits AI-generated nonconsensual depictions of individuals, it has not passed any comprehensive laws on how AI may operate. The Trump administration’s recent AI Action Plan paves a clear way for AI companies to continue to grow rapidly and unregulated.

But under the EU’s AI Act, tech giants like Amazon, Google and Meta will need to be more transparent about how their models are trained and operated, and follow rules for managing systemic risks if they’d like to operate in Europe.

“Currently, it’s still voluntary,” Peaden said. “But I do believe it’s going to be one of the most influential standards in AI’s industry.”

General Purpose AI Code of Practice

The EU AI Act was passed last year to mitigate risk created by AI models, and the law creates “strict obligations” for models that are considered “high risk.” High risk AI models are those that can pose serious risks to health, safety or fundamental rights when used for employment, education, biometric identification and law enforcement, the act said.

Some AI practices, including AI-based manipulation and deception, predictions of criminal offenses, social scoring, emotion recognition in workplaces and educational institutions and real-time biometric identification for law enforcement, are considered “unacceptable risk” and are banned from use in the EU altogether.

Some of these practices, like social scoring — using an algorithm to determine access to certain privileges or opportunities like mortgages or jail time — are widely used, and often unregulated in the United States.

While AI models that will be released after Aug. 2 already have to comply with the EU AI Act’s standards, large language models (LLMs) — the technical foundation of AI models — released before that date have through August 2027 to fully comply. The code of practice released last month offers a voluntary way for companies to get into compliance early, and with more leniency than when the 2027 deadline hits, it says.

The three chapters in the code of practice are transparency, copyright and safety, and security. The copyright requirements are likely where American and European companies are highly split, said Yelena Ambartsumian, founder of tech consultancy firm Ambart Law.

In order to train LLMs, you need a broad, high-quality dataset with good grammar, Ambartsumian said. Many American LLMs turn to pirated collections of books.

“So [American companies] made a bet that, instead of paying for this content, licensing it, which would cost billions of dollars, the bet was okay, ‘we’re going to develop these LLMs, and then we’ll deal with the fallout, the lawsuits later,” Ambartsumain said. “But at that point, we’ll be in a position where, because of our war chest, or because of our revenue, we’ll be able to deal with the fallout of this fair use litigation.”

And those bets largely worked out. In two recent lawsuits, Bartz v. Anthropic and Kadrey v. Meta, judges ruled in favor of the AI developers based on the “fair use” doctrine, which allows people to use copyrighted material without permission in certain journalistic or creative contexts. In AI developer Anthropic’s case, Judge William Alsup likened the training process to how a human might read, process, and later draw on a book’s themes to create new content.

But the EU’s copyright policy bans developers from training AI on pirated content and says companies must also comply with content owners’ requests to not use their works in their datasets. It also outlines rules about transparency with web crawlers, or how AI models rake through the internet for information. AI companies will also have to routinely update documentation about their AI tools and services for privacy and security.

Those subject to the requirements of the EU’s AI Act are general purpose AI models, nearly all of which are large American corporations, Ambartsumain said. Even if a smaller AI model comes along, it’s often quickly purchased by one of the tech giants, or they develop their own versions of the tool.

“I would also say that in the last year and a half, we’ve seen a big shift where no one right now is trying to develop a large language model that isn’t one of these large companies,” Ambartsumain said.

Regulations could bring markets together

There’s a “chasm” between the huge American tech companies and European startups, said Jeff Le, founder and managing partner of tech policy consultancy 100 Mile Strategies LLC. There’s a sense that Europe is trying to catch up with the Americans who have had unencumbered freedom to grow their models for years.

But Le said he thinks it’s interesting that Meta has categorized the code of practice as overreach.

“I think it’s an interesting comment at a time where Europeans understandably have privacy and data stewardship questions,” Le said. “And that’s not just in Europe. It’s in the United States too, where I think Gallup polls and other polls have revealed bipartisan support for consumer protection.”

As the code of practice says, signing now will reduce companies’ administrative burden when the AI Act goes into full enforcement in August 2027. Le said that relationships between companies that sign could garner them more understanding and familiarity when the regulatory burdens are in place.

But some may feel the transparency or copyright requirements could cost them a competitive edge, he said.

“I can see why Meta, which would be an open model, they’re really worried about (the copyright) because this is a big part of their strategy and catching up with OpenAI and (Anthropic),” Le said. “So there’s that natural tension that will come from that, and I think that’s something worth noting.”

Le said that the large AI companies are likely trying to anchor themselves toward a framework that they think they can work with, and maybe even influence. Right now, the U.S. is a patchwork of AI legislation. Some of the protections outlined in the EU AI Act are mirrored in state laws, but there’s no universal code for global companies.

The EU’s code of practice could end up being that standard-setter, Peaden said.

“Even though it’s not mandatory, guess what? People will start following,” she said. “Frankly, I would say the future of building the best model lies in a few other players. And I do think that … if four out of five of the primary AI providers are following the general purpose AI code of practice, the others will follow.”

Editor’s note: This item has been modified to revise comments from Jeff Le.

President Donald Trump and European Union leaders announced a trade framework over the weekend that will set 15% import taxes on EU goods. (Photo by Getty Images)

WASHINGTON — President Donald Trump and European Union leaders announced a trade framework over the weekend, just days ahead of Trump’s self-imposed Friday deadline to increase import taxes and his emergency tariffs come under scrutiny in federal appeals court Thursday.

Under the agreement, a 15% tariff will be applied to all products, with some exceptions, coming into the U.S. from the 27 member nations that make up the EU.

The 15% rate will also apply to automobiles, down from the 25% levy on foreign vehicles that Trump ordered in April. Trump’s 50% sectoral tariffs on foreign steel and aluminum will remain unchanged for the EU. The deal exempts certain products, including aircraft, from tariffs altogether.

Tariffs are import taxes paid to the U.S. government by businesses and other buyers that import foreign goods.

“Fifteen percent is not to be underestimated, but it was the best we could get,” European Commission President Ursula von der Leyen told reporters during a press conference Sunday.

Similar to the deal Trump announced with Japan on July 23, the EU has agreed to invest $600 billion in the United States over Trump’s term. The bloc of nations has also agreed to purchase $750 billion in U.S. energy, including liquid natural gas, over the next three years as a way to wean off of Russian fossil fuels.

‘Fundamentally rebalancing’

The White House touted the deal as “fundamentally rebalancing the economic relationship between the world’s two largest economies,” in a press release issued Monday.

The U.S. imported more goods from the EU than it exported by about $235.8 billion in 2024, according to Census data.

Trump had threatened to raise what he describes as “reciprocal” tariffs — tariffs on products outside sectoral categories of steel, aluminum and vehicles —  to 30% by Aug. 1 on products from Europe, Japan and numerous other trading partners.

Trump set the date as the new deadline for his “Liberation Day” tariffs to take effect. The president announced the tariffs in early April and then promptly paused them after markets plummeted around the globe. The episode triggered a trade war with China, during which U.S. tariffs on Chinese goods peaked at 145% before the two parties agreed to negotiate.

Appeals case looms

On what the president described as “Liberation Day” on April 2, Trump heralded a universal 10% tariff on all foreign products, plus staggering additional so-called reciprocal import taxes on countries across the globe that carry trade imbalances with the U.S.

Trump justified the steep duties by declaring trade imbalances a national emergency under the International Emergency Economic Powers Act.

In February, Trump became the first president to trigger tariffs under the 1977 emergency powers law when he increased import taxes on Canada, Mexico and China in response to illegal fentanyl smuggling.

The emergency tariffs are at the center of a case that will go before the U.S. Appeals Court for the Federal Circuit Thursday.

The case stems from two lawsuits, now consolidated, filed by a handful of businesses and a dozen Democratic state attorneys general who argued the president doesn’t have authority to impose tariffs under the emergency law.

The U.S. Court of International Trade struck down Trump’s emergency tariffs as unconstitutional on May 28.

Arizona, Colorado, Maine, Minnesota, Nevada, New Mexico and Oregon were among the states that brought the suit.

V.O.S. Selections, a New York-based company that imports wine and spirits from 16 countries, led the business plaintiffs. Others included a Utah-based plastics producer, a Virginia-based children’s electricity learning kit maker, a Pennsylvania-based fishing gear company and a Vermont-based women’s cycling apparel company.

Upon appeal from the White House, the Federal Circuit allowed Trump’s tariffs to remain in place while the case moved forward.

In the Perspectives guest blog series, Farm Foundation invites participants from among the varied Farm Foundation programs to share their unique viewpoint on a topic relevant to a Farm Foundation focus area. Michelle Klieger is a 2024 Farm Foundation Young Agri-Food Leader and president of Stratagerm Consulting. In this blog she discusses the European Union’s new deforestation regulations.

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The European Union aims to raise the global bar with new Deforestation Regulations. Effective since June of 2023, the regulations ban imported goods that stand to profit off of deforestation practices. By devaluing and even penalizing these practices, the EU hopes to create a  commodity trade standard that will reverse the effects of deforestation. They predict 177,920 acres of forests, or one quarter of Rhode Island, will be saved in 2025, and are optimistic that these steps will reduce air pollution.

Soy, palm oil, beef, coffee, and cocoa trades are expected to experience a significant impact due to these new requirements. Brazil, Argentina, Malaysia, Indonesia, Canada and parts of Africa are on edge as they consider trading options. Some argue this is the beginning of a new era, while others see it as a reorganization of supply chains.

Complexities of EU Regulations

For companies working to meet regulations, the process is complex. While individual companies must produce data to receive deforestation- free certification, entire supply chains must be vetted. Each industry faces unique obstacles.  Soy, for example, goes from farm production, and is then transported to processing facilities, then moved onto crushers, then to product manufacturers, and finally to retailers. If at any point in the process operations have made use of deforested land, the trading company could be banned from exporting goods to EU countries. Palm oil batches typically mix fruit from many sources at once. Many of these companies can only trace a product after it has been processed and would need to develop brand new traceability methods to meet requirements.

Meeting the new regulations requires an investment in technology and manpower. In order to make products fully traceable many companies are purchasing GPS technology that allows them to accurately map and consistently monitor their farms. Similarly, if products must be tracked and segregated from planting all the way to a grocery store shelf, digital tracking technology will also be needed. Guaranteeing deforestation-free methods must include in person inspections done by real people traveling from farm to farm to see operations up close. 

It’s a time consuming process to build out this framework, but one that many companies deem both valuable to the global environment and financially lucrative in the long run. Decisions involve farmers, transportation companies, processing plants and manufacturers, but they also must include government policy, technology and in some cases legal crossroads. There is no overnight shift, but rather a development of practices.

A Supply Chain Split

Already many companies are rerouting supplies to other buyers and avoiding EU regulations altogether. The trend prompts speculation that the new requirements will not raise the bar, but simply split or change the flow of supply chains. Brazil could turn to China as a new soy buyer and Indonesia could potentially trade palm oil to Africa. We’ve seen substitute shifts like these in the past with the U.S.-China trade war and sanctions on Russian energy. It may prove simpler and more cost effective to change buyers rather than invest in meeting new EU regulations. Many of these companies have little ability to enforce downline or upline adherence to regulation and they fear penalties.

Interestingly, in 2020 Brazil produced ⅓ of the world’s soy, but only 13% of crops account for 95% of the deforestation that occurred that year. The other 87% appear to have been produced on grassland and savannah areas.  The scenario is true elsewhere and begs the question; will this create a new environmental imbalance that puts stress on other ecosystems? Companies looking to meet regulations could potentially exploit approved farming areas by over farming them. 

Demand For a Different Type of Supply

Will it be harder to secure buyers or much used commodities? For the EU, value is placed not just on the product, but how it is sourced. The decision will impact both consumers and European agriculture. 

European countries are braced to experience a decreased supply of things like chocolate and coffee. But, exactly how increased operating costs will be absorbed remains uncertain. Typically consumer prices reflect production cost increases, but in this situation one or more points along a supply chain may need to take ownership of costs to ensure tradability. The result, at least in the initial stages, would be lower profit margins for most of these companies and possibly higher purchase prices for consumers.

Several European countries are seeking reduced regulations and maintain that the current requirements are virtually impossible for small and medium sized farms to accommodate. They also argue that these regulations negatively impact many of the current sustainability processes farmers are working to implement for the sake of biodiversity, crop and grazing rotations. Farmers worry that they will not be able to produce the soy meal needed to feed their own livestock and that the EU will become too reliant on exports which would negatively affect the European ag sector.

Good News For U.S. Producers

The EU is not alone. Other countries have similar environmentally focused goals and policy in the works to support these goals. The United States has seen a growing consumer demand for traceability, prompting many businesses to begin the process of leveraging technology and better communication up and down supply chains to help customers make informed decisions.

The Forest Act of 2023 was birthed out of the same desire to stabilize regions of the world that have suffered from illegal deforestation and offer opportunities for many industries and individual businesses to clean up their processes. If it goes into effect, the Forest Act would be very similar to the EU’s Deforestation Regulation; banning products that have been produced on illegally deforested land and penalizing unmet requirements.

Many American operations are positioned to receive deforestation-free certification. Several top soy producers are predicted to meet regulations and be granted access to the EU markets. A welcome relief to farmers who have faced narrowing markets in recent years. 

Exactly how competitive this “new” market will be, only time will tell.  Traceability efforts take time. Unless trade lines were already working toward deforestation-free goals, it will take years for many of these supply chains to implement methods that meet EU regulations.  In the meantime, it’s highly likely that global trade negotiations will be impacted and supply chains will shift in response to the environmental standard.

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A version of this blog originally appeared on the Stratagerm Consulting website. It is reposted with permission.

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