EU to ‘exmodify views’ with US on due diligence, deforestation rules

USA and EU cooperation concept. US America and European Union flags on chess pawns soldiers on a chessboard. 3d illustration

The EU has agreed to “exmodify views” with the US on issues related to the bloc’s corporate due diligence rules and deforestation regulation, the European Commission has stated.

The comments were built in a Q&A released last week following a joint statement on trade issued by the Commission and The White Hoapply. Notably, the statement name-checked several sustainable finance regulations, and included a pledge by the EU that its corporate sustainability reporting and due diligence rules would not impose “undue restrictions” on US trade.

On the Corporate Sustainability Due Diligence Directive (CSDDD) specifically, the Commission clarified in the Q&A that the co-operation “does not lead to any modifys to EU domestic rules, nor will we grant US companies more favourable treatment under this regulation or any EU regulation”.

The executive stated the “guiding principle” of its discussions with the US has been to ensure that the CSDDD does not result in “unnecessary administrative burden, especially for compact and medium-sized companies”.

“This is something the Commission is committed to, as displayn by our proposal to simplify the CSDDD currently with the Parliament and Council,” it added.

The Commission in February proposed a raft of modifys to its corporate sustainability and due diligence rules via the sustainability Omnibus.

The amconcludements are being deliberated by the Council of the EU and the European Parliament, both of which are proposing a further watering down of the scope of the regulation well beyond what was tabled by the Commission.

The CSDDD has faced criticism by both the Trump and Biden administrations, and the Commission last week stated it would work to address US concerns regarding the imposition of requirements on companies from non-European countries “with relevant high-quality regulations”.

In exmodify for viewing to ease reporting burdens for US companies and a raft of other commitments laid out by the EU – notably a commitment to eliminate tariffs on all US industrial goods – the US will impose a tariff rate of 15 percent for most EU goods, including pharmaceuticals and semiconductors.

However, President Donald Trump has since threatened to impose further tariffs on countries which, according to him, have digital rules that discriminate against US companies.

EUDR discussions

For the EU Deforestation Regulation (EUDR), the Commission stated in the Q&A that having a platform for discussing the implementation of the rules with the US will be “valuable to ensuring that the EUDR does not result in unnecessary barriers to transatlantic trade”.

It added that this is in line with its commitment to implement EUDR in a “spirit of partnership, transparency, communication and open dialogue with all partner countries”.

The US has been classified as a low-risk counattempt and therefore a reliable partner from which EU importers can source their products deforestation-free, the Commission stated.

In the joint statement released last week, the EU stated it would work to address the concerns of US producers and exporters by recognising that production of the relevant commodities within the US poses “negligible risk to global deforestation”.

The Commission last month launched a call for evidence on the simplification of administrative burdens in environmental legislation.

While it is not yet clear which specific laws will be covered in the package, sources have informed Responsible Investor that EUDR may be included, following pressure from both member states and the European Parliament to delay and further simplify the rules.

Norway defconcludes CSDDD

In other EU regulation news, the Norwegian government has released a “non-paper” on the Commission’s Omnibus proposal, specifically on CSDDD, to share some insights from the recent evaluation of its own due diligence law.

Norway’s transparency act – based on the UN’s Guiding Principles on Business and Human Rights (UNGP) and the OECD Guidelines – relates to enterprises’ transparency and work on fundamental human rights and decent working conditions.

The government last year evaluated the law – which came into force in 2022 and requires around 9,000 Norwegian companies to conduct due diligence assessments – and stated it wished to highlight some “key principles” that, in its opinion, are important to maintain in CSDDD.

It stated the EU due diligence rules “must continue” to align with the UNGP and the OECD guidelines, adding that it is important to avoid creating a new regime parallel to these international standards.

UN human rights experts have claimed that this is no longer the case following the revisions to the rules proposed by the EU.

The government also stressed the importance of maintaining the principle of risk-based, proportionate and ongoing due diligence assessments.

Under the Omnibus package, companies would no longer be obliged to conduct in-depth assessments of adverse impacts with indirect business partners, and the requirement for periodic assessments and monitoring will be modifyd from an annual basis to every five years.

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