The United States has pressured the EU over its extraterritorial sustainability laws since the current administration took office. Despite working some concessions into its 2025 trade framework, the EU has largely stuck to its guns. The Omnibus reforms didn’t include carve-outs for U.S. companies. For a time, it appeared that the U.S. was content to accept this position. However, a new letter from the U.S. ambassador to the EU demands concessions on CSRD/CSDDD. The U.S. would like to see requirements and enforcement reduced for U.S. companies. The ambassador writes:
“Given the substantial concerns set out in this submission, the United States asks that the EU and its Member States:
a. Significantly limit CSDDD and CSRD reporting and due diligence requirements on U.S. businesses, and limit enforcement actions against U.S. businesses.
i. Specifically, the EU and its Member States should limit the application of CSDDD to the activities of the EU subsidiaries of U.S. businesses or the EU business partners of U.S. businesses. In addition, the EU should only apply the CSDDD to goods that are produced in, or services that are supplied from, the EU.
b. Prohibit the levying of any penalty on a U.S. business, or an EU subsidiary of a U.S. business, that is based on revenue derived from activities outside the EU.
c. Prohibit private rights of action that are not premised on an official sector supervisory enforcement finding.
i. Specifically, as explained below, the United States requests the EU take a regulator-led approach to promote consistent enforcement, by allowing civil claims to proceed only after the appropriate supervisory authority has assessed compliance and concluded that the company that is the target of the action failed to comply with the relevant CSDDD obligations.”
There is a dark irony here. The U.S. is demanding concessions on the Corporate Supply Chain Due Diligence Act. However, we are simultaneously accusing the EU of not doing enough to curb modern slavery. In fact, enforcement of forced labor laws is the administration’s entire cover for reintroducing tariffs. Accusing the EU of not doing enough to fight forced labor while attacking the EU’s law aimed at preventing modern slavery is hard to square. Despite the blatant hypocrisy of the ambassador to the EU, we’ll see if the EU concedes any ground on the CSDDD and CSRD. If the EU were to buckle, they likely would have done so during the omnibus negotiations. However, it’s unclear if the U.S. has, or will create, additional leverage to turn up the heat.
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