Industry bodies complain they are being made a ‘target’ of EU regulatory burden, in a letter to the US Treasury.

Some of the largest business organisations in the US have called for pressure on the EU to backtrack on human rights due diligence they describe as “egregious”.

The bodies, among them the US Chamber of Commerce and the National Association of Manufacturers, have written to Scott Bessent, US treasury secretary, complaining about the failure of the EU to address the “extraterritorial” effects of the Corporate Sustainability Due Diligence Directive (CSDDD). The directive asks companies operating in Europe to report on human rights and the environment in their supply chains and declare what actions they are taking to mitigate abuses.

The group writes: “We hope the administration will continue to engage with Brussels and EU member state governments to underscore that the current proposals to revise the CSDDD address neither concerns raised by the US business community nor the US government, and that the United States will takes measures to protect American companies.”

The CSDDD has just been through a major review, known as the “omnibus” process, drastically reducing the number of companies in the EU subject to compliance.

However, the recent changes, which are still to be finalised, failed to address extraterritorial effects.

‘Egregious mandates’

The letter to the US Treasury says: “The EU’s current omnibus legislation, which had been intended to reign [sic] in some of the law’s egregious mandates, fails to address the latter point regarding extraterritorial mandates.”

It adds: “The US should not permit the EU to export its own self-imposed regulatory burdens to help shore up its own competitiveness. We should be a model for other nations’ systems, not a target.”

The omnibus process was ordered in February following a report from former European Central Bank president Mario Draghi on EU competitiveness.

As well as the CSDDD, the process also aimed at revising the Corporate Sustainability Reporting Directive (CSRD).

A set of revisions were thought to have been agreed by the European Parliament which would cut the number of companies subject to CSRD by around 90%.

However, agreement was not reached and the Parliament will vote on the proposals in a plenary session next week.

The US has been concerned about CSRD and CSDDD for some time. Republican politicians have been working on legislation to prevent EU law from affecting US companies.

‘Undue restrictions’

A joint statement signed in August by European and US officials say the EU would “not pose undue restrictions on transatlantic trade”. The statement adds: “The European Union commits to work to address US concerns regarding the imposition of CSDDD requirements on companies of non-EU countries with relevant high-quality regulations.”

The US has suggested that an unchanged CSDDD could affect trade relations.

Since the return of Donald Trump to the White House, Washington has turned against DEI and ESG. As long as the EU stands by the extraterritorial effects of CSDDD, tensions between the two trading blocs will persist.