US calls on EU to dismantle green regulations in trade deal threat

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The United States is demanding that the European Union reduce parts of its green legislation just months after agreeing a tariff agreement to avoid an all-out transatlantic trade war.

According to a US government position paper seen by the Financial Times, Washington asked Brussels to remove requirements on companies from outside the European Union to submit “climate transition plans.”

The bloc also called for changing environmental legislation related to it Supply chains To exclude US companies and other “countries with high-quality corporate due diligence.”

The move is part of a broader attempt by Washington to push countries, financial institutions and companies to reverse their climate change policies, using international forums ranging from the World Bank to stock market regulators.

President Donald Trump has too Brussels is pressing Because of its laws restricting major technology groups, which has raised tension within the European Union that the trade deal agreed in July will not hold.

EU corporate due diligence rules, which came into force last year, require companies operating in the bloc to identify any environmental and social damage in their supply chains, in a bid to eliminate forced labour. pollution.

But in its paper, the Trump administration described the legislation as a “dangerous and unjustified regulatory overreach” that “imposes significant economic and regulatory burdens on American companies.”

“The extraterritorial reach of the legislation, onerous supply chain due diligence obligations, climate transition plan requirements, and civil liability provisions will negatively impact the ability of US companies to compete in the EU market,” the document adds.

Washington has communicated its demands to the European Commission in recent days, according to EU officials familiar with the matter.

In contrast to traditional trade negotiations, the United States does not offer concessions in return. “It’s a one-way street,” one EU official said.

US companies fear that due diligence rules put them at increased risk of legal action in an already tense market, because they allow activist groups to take legal action over child labor and environmental damage in their supply chains.

According to US officials, several US companies said they would need to cease operations in the European Union as a result of sustainability due diligence and reporting rules, which require companies to report hundreds of data points related to their environmental footprint.

Violations of due diligence rules can result in fines of up to 5 percent of global turnover.

The legislation has come under attack from US oil and gas companies, with ExxonMobil CEO Darren Woods describing the rules as threatening US companies with “bone-crushing” penalties in announcing the results in August.

In recent months, the United States has also pushed the World Bank and other development banks to increase lending for fossil fuel projects, while urging international rulemakers and standard setters to ease or abandon efforts to address climate change.

This has already led to a softening of the Basel Committee on Banking Supervision Plans Require lenders to disclose more about climate risks. The top regulator for US markets is also to threaten Prevent foreign companies from using international accounting standards if rule makers continue to pursue sustainability and climate issues.

The latest US demands expand on the Trump administration’s concerns laid out in the trade agreement reached in July in Turnberry, Scotland, which stipulated no “unjustified restrictions” on transatlantic trade and specified that the EU must make changes to cut red tape.

The Turnberry agreement set tariffs on most European Union products at 15 percent, but left the way open for further concessions by Brussels. European Commission President Ursula von der Leyen said EU regulations were a “red line”, but she herself was working to weaken them after complaints from European companies and governments.

A whole host of laws that force companies to fight deforestation, labor abuses, and reduce their environmental impact are being weakened or delayed, and the United States is pressing Brussels to go further.

The interim “framework agreement” reached in Turnberry marks the beginning of a broader process of removing unfair trade barriers in the European Union, according to US officials.

The US has also raised concerns about the EU’s border carbon tax, which will be applied from next year to polluting industries outside the bloc, such as steel and aluminum manufacturers.

Washington objects to a forthcoming EU anti-deforestation law, which would ban the import of commodities such as timber and cocoa if producers fail to prove that no forests were cut during their production.

Brussels said last month it would do so Delaying deforestation rules For the second time another year ago, blame a problem in the IT system.

The European Union is already making efforts to simplify the rules as part of a broader agenda to reduce red tape within the bloc, while European companies are also rejecting the rules.

But the simplification drive has hit a roadblock in the European Parliament, where left-wing politicians have accused the Conservatives of deregulation and siding with the far right to invalidate the legislation.

Additional reporting by Atracta Money and Martin Arnold