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Tensions Rise Between EU and U.S. Law, Trending Now in ESG

March 27, 2025 Reprint

As currently drafted, the PROTECT USA Act, introduced on March 12, 2025, may have the unintended impact of creating a significant tension between compliance with U.S. and EU laws by U.S. and non-U.S. companies.

A newly created category of entities covered by the Act - “entities integral to the national interests of the United States” - captures a broad swath of U.S. and non-U.S. companies that do business with the U.S. government, and U.S. companies and their worldwide subsidiaries in extraction and manufacturing industries. Covered companies would be prohibited from complying with non-U.S. environmental and social-related due diligence laws. This prohibition includes the EU Corporate Sustainability Due Diligence Directive and any “predecessor” laws imposed by an EU member state, presumably such as the French Duty of Vigilance Law and the German Supply Chain Act.

Watch this space for further analysis of this proposed legislation.

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