OPINION:
When most people hear “trade negotiations,” they think of tariffs and market access. For the Trump administration, however, any new U.S.–European Union trade talks must also address something far more dangerous than a tariff schedule: the creeping imposition of Europe’s emissions mandates on American companies.
If the 47th president is serious about restoring U.S. sovereignty and American energy dominance, ending the European Union’s corporate sustainability reporting directive and carbon border adjustment mechanism should be a nonnegotiable part of the deal.
The corporate sustainability reporting directive is nothing less than Brussels exporting its environmental ideology to foreign soil. It forces companies that generate even modest revenue in the European Union to comply with sprawling environmental, social and governance reporting rules, including disclosures on greenhouse gas emissions, “transition” plans and value chain impacts, regardless of where they are headquartered. That means a U.S. manufacturer in Ohio, with no operations in Europe other than a sales office, could be compelled to hand over exhaustive emissions data to satisfy EU regulators.
Then there’s the carbon border adjustment mechanism, a carbon tariff designed to penalize imports from countries whose emissions policies the European Union deems insufficiently ambitious. If you think this is just about “leveling the playing field,” think again. It is about creating a global enforcement mechanism for the Paris Agreement and other so-called climate mandates, bypassing national governments and voters.
If the U.S. caves on this, we set the precedent that foreign regulators can dictate our policies through trade leverage.
This is not just a European problem. The EU playbook is already being copied here at home, most notably by California. Gov. Gavin Newsom signed Senate Bill 253, which will force any company doing business in California, even those based entirely in other states, to publicly report their Scope 1, Scope 2 and Scope 3 greenhouse gas emissions. Scope 3 includes the entire global supply chain, meaning that if you sell one widget in California, Sacramento bureaucrats can demand emissions disclosures for every supplier and distributor you’ve ever used, anywhere in the world.
SB 253 backers acknowledge they want to “set the national standard” — in other words, to legislate for all 50 states from the Statehouse in Sacramento. That is unconstitutional regulatory imperialism, and the Justice Department should add California to its list of governments under investigation for extraterritorial overreach.
Both the corporate sustainability reporting directive and carbon border adjustment mechanism and SB 253 share the same DNA: They are designed to force companies to treat emissions policy as a central business function, regardless of profitability, competitiveness or consumer demand. They impose enormous compliance costs, open the door to activist litigation and discourage trade and investment. Worst of all, they shift policymaking power away from elected representatives and into the hands of unelected regulators, whether in Brussels or Sacramento.
This is happening just as the Trump administration has launched a long-overdue effort to rescind the Environmental Protection Agency’s 2009 endangerment finding, the legal linchpin that has enabled a torrent of greenhouse gas regulations based on speculative, worst-case scenarios. If Washington dismantles that domestic regulatory scaffolding but allows foreign governments and rogue states to impose the same policies via trade and commerce, nothing will have been gained. The bureaucracy will simply change its address.
The economic stakes are enormous. The carbon border adjustment mechanism will hit U.S. steel, aluminum, cement, fertilizer and other industries with new taxes at the EU border. The corporate sustainability reporting directive will saddle thousands of American firms, many of them small and midsize, with expensive and intrusive data collection mandates. SB 253 will pile on top of that, making the U.S. market even less competitive globally. Every dollar spent on compliance is a dollar not spent on innovation, wages or growth.
The strategic stakes are even higher. Allowing Brussels and Sacramento to set de facto national policy undermines U.S. sovereignty and the principle of self-government. Emissions policy, whatever one’s view of it, should be decided by Americans, for Americans, not dictated by foreign bureaucrats or ambitious governors seeking approval from the global green elite.
That is why trade negotiators must make the elimination of the corporate sustainability reporting directive and carbon border adjustment mechanism a red line in any talks with the European Union. These provisions are not trade “extras” to be bartered away; they are core sovereignty issues. Also, the Justice Department must confront California’s SB 253 for what it is: an unconstitutional attempt to regulate beyond the state’s borders.
Trade policy is about more than goods and services. It is about who governs and whether that government answers to the people or to a global network of unelected regulators. The Trump administration has the opportunity to set the precedent that U.S. policy is made in Washington, not Brussels or Sacramento. It should take it.
• Jason Isaac is the founder and CEO of the American Energy Institute. He served four terms in the Texas House of Representatives.
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