Well, it can have multiple reasons. I have been on a couple of projects that involved personal data (or even health records which is very personal) and the customer wanted everyone in the EU because of that.
I guess, for a company, suing someone in Ghana would be a no go.
I don't understand complaints about US, I never had any issues contracting with clients from there, small or large. I mean, nothing that wasn't solved by a couple emails or phone calls. When I had to contract in Romania or Hungary, that's like a 2 week adventure with many sidequests that you can only really complete months later. It's insane.
And that's not a hyperbole.
I had no problems, neither with USA nor with Europe. :) Although I have just one client in each area.