To require the United States Trade Representative to initiate an investigation under section 301 of the Trade Act of 1974 with respect to the European Union, and for other purposes.

To require the United States Trade Representative to initiate an investigation under section 301 of the Trade Act of 1974 with respect to the European Union, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title.

SEC. 2. Findings.

(1) The United States has a longstanding and compelling national interest in protecting United States persons from extraterritorial regulatory actions by foreign governments that burden United States commerce, conflict with United States law, and undermine the principles of fair, reciprocal, and rules-based international trade.

(2) The European Union has adopted and is implementing a series of energy and environment-related directives and regulations with significant extraterritorial reach, including the Corporate Sustainability Due Diligence Directive (CS3D), the Corporate Sustainability Reporting Directive (CSRD), the Deforestation Regulation (EUDR), the Carbon Border Adjustment Mechanism (CBAM), and related or successor measures.

(3) These extraterritorial measures impose burdensome mandatory obligations on large companies operating in or deriving significant revenue from the European Union. Such obligations include global supply chain and value chain mapping and due diligence, detailed sustainability and emissions reporting, deforestation-free traceability and geolocation requirements, third-party verification and auditing, public disclosures, and substantial penalties with transposition and implementation deadlines already in effect or approaching in the near term.

(4) These extraterritorial measures apply to conduct, operations, subsidiaries, affiliates, and supply or value chains occurring wholly or substantially outside European Union territory, including the United States operations and supply chains of United States companies, regardless of whether such conduct complies with United States law. This constitutes an unreasonable and discriminatory trade practice burdening United States commerce within the meaning of section 301(b) of the Trade Act of 1974 (19 U.S.C. 2411(b)).

(5) The extraterritorial reach of these measures conflicts with core principles of United States law, including limited liability doctrines, State corporate fiduciary duties, Federal securities requirements, and domestic energy and environmental policy frameworks.

(6) In the August 21, 2025, Joint Statement on a Framework on an Agreement on Reciprocal, Fair, and Balanced Trade, the European Union expressly committed to ensure these measures do not pose undue restrictions on transatlantic trade and to address United States concerns regarding their extraterritorial application to companies from countries with high-quality domestic regulations. The continued extraterritorial provisions of these measures are inconsistent with that commitment.

(7) Notwithstanding the August 2025 commitments and the European Union’s subsequent amendments, these extraterritorial measures continue to impose burdensome obligations on United States persons. The European Union’s own modifications have not resolved the core problems this Act addresses.

(8) Numerous United States trading partners, including Argentina, Australia, Brazil, India, South Africa, and the United Kingdom, have expressed shared concerns about the extraterritorial reach of these measures, reflecting a multilateral, rules-based objection rather than a bilateral dispute.

(9) Section 301 of the Trade Act of 1974 (19 U.S.C. 2411) authorizes the United States Trade Representative to investigate and respond to such foreign government practices, and the United States has a compelling national interest in deploying that authority to protect United States persons from extraterritorial regulation that conflicts with United States law and the principles of fair and reciprocal trade.

SEC. 3. Section 301 investigation.

(a) Initiation of investigation.—

(1) IN GENERAL.—Not later than 30 days after the date of the enactment of this Act, the USTR shall—

(A) initiate an investigation under section 302(b) of the Trade Act of 1974 (19 U.S.C. 2412(b)) to determine whether the covered extraterritorial measures imposed by the European Union on United States persons constitute an unreasonable or discriminatory act, policy, or practice that burdens or restricts United States commerce under section 301(b) of the Trade Act of 1974 (19 U.S.C. 2411(b)); and

(B) notify the appropriate congressional committees of such initiation.

(2) SCOPE OF INVESTIGATION.—An investigation initiated under this subsection may include the following:

(A) The compliance costs imposed on United States persons, including the supply chain due diligence, emissions reporting and verification, deforestation traceability, sustainability disclosures, and third-party auditing costs.

(B) The legal liability exposure of United States persons for the acts of their subsidiaries or suppliers operating outside of the European Union.

(C) The competitive disadvantage suffered by United States persons relative to companies not subject to the covered extraterritorial measures.

(b) Petition or unilateral initiation of investigation.—

(1) IN GENERAL.—If, prior to the date of the enactment of this Act, the USTR unilaterally initiates an investigation, or is petitioned to initiate an investigation, which is substantially similar to the investigation required under subsection (a)(1), such investigation may include the information described in subsection (a)(2).

(2) NOTIFICATION TO CONGRESS.—Not later than 30 days after the date of the enactment of this Act, the USTR shall notify the appropriate congressional committees of an investigation initiated under paragraph (1).

(c) Consultation requirement.—In conducting an investigation under this section, the USTR shall—

(1) consult with United States persons who may be affected by the extraterritorial obligations imposed by the covered extraterritorial measures;

(2) seek information from relevant trade associations and labor representatives; and

(3) coordinate with the Secretary of Commerce, the Secretary of State, the Secretary of Energy, the Secretary of Agriculture, the Secretary of Defense, the Administrator of the Environmental Protection Agency, and the Chair of the United States International Trade Commission.

(d) Determination deadline.—

(1) IN GENERAL.—Not later than 12 months after the date on which an investigation is initiated under subsection (a), the USTR shall make a determination under section 304 of the Trade Act of 1974 (19 U.S.C. 2414) to determine if any action may be taken under section 301 of such Act (19 U.S.C. 2411).

(2) EXTENSION.—The USTR may initiate one 60-day extension of the deadline described in paragraph (1) if extraordinary circumstances warrant such an extension. The USTR shall notify the appropriate congressional committees in writing of the reasons for such extension.

(e) Determinations and Action.—

(1) AFFIRMATIVE DETERMINATION.—If the USTR makes an affirmative determination under subsection (d)(1), the USTR shall—

(A) publish such determination in the Federal Register; and

(B) consider appropriate action under section 301(c) of the Trade Act of 1974 (19 U.S.C. 2411(c)), which may include addressing imports from member states of the European Union, the suspension of trade agreement benefits, the imposition of duties commensurate with the burden imposed, or any other action which would eliminate the burden on United States commerce that is attributable to the CS3D’s extraterritorial provisions.

(2) NEGATIVE DETERMINATION.—If the USTR makes a negative determination under subsection (d) and determines that no action described in paragraph (1)(B) is warranted, the USTR shall transmit to the appropriate congressional committees a report explaining such determination.

SEC. 4. Reporting requirements.

(a) Initial report.—Not later than 90 days after the date of the enactment of this Act, the USTR shall submit to the appropriate congressional committees a report including—

(1) the actions taken to comply with section 3(a);

(2) any consultations requested or initiated with the European Union; and

(3) the USTR’s preliminary assessment of the nature and extent of the burden on United States commerce attributable to the covered extraterritorial measures.

(b) Determination report.—Not later than 30 days after making a determination under section 3(e), the USTR shall submit to the appropriate congressional committees a report including—

(1) the USTR’s findings and determination;

(2) whether the determination is affirmative or negative and if the determination is affirmative, a description of the remedial action taken or proposed; and

(3) an assessment of the expected effect of such remedial action on United States commerce, consumers, and the United States-European Union trade relationship.

SEC. 5. Rule of construction.

(1) limit the authority of the President or the USTR to negotiate, enter into, or modify trade agreements with the European Union;

(2) affect any other authority of the USTR or the President under the Trade Act of 1974 (19 U.S.C. 2101 et seq.) or any other provision of law; and

(3) constitute an affirmative finding that any specific act, policy, or practice of the European Union violates any provision of Federal law or any trade agreement to which the United States is a party.

SEC. 6. Sunset.

(a) Partial sunset.—

(1) IN GENERAL.—The requirements of this Act, with respect to an individual covered extraterritorial measure, shall terminate on the date on which the USTR certifies to the appropriate congressional committees that the European Union has, with respect to such individual extraterritorial measure—

(A) repealed or formally amended the measure to eliminate the application of the extraterritorial obligations on United States persons; or

(B) entered into a binding agreement with the United States Government providing that United States persons shall not be subject to the extraterritorial obligations under such measure with respect to conduct, operations, or relationships occurring outside the territory of any member state of the European Union.

(2) CONTINUING APPLICATION TO OTHER COVERED EXTRATERRITORIAL MEASURES.—A termination under subsection (a) with respect to one individual covered extraterritorial measures shall not affect the application of this Act to any other extraterritorial measure.

(b) Full sunset.—The requirements of this Act shall terminate with respect to each covered extraterritorial measure on the date on which the USTR certifies to the appropriate congressional committees that the requirements of subsection (a)(1) have been satisfied with respect to each covered extraterritorial measure.

(c) Certification inclusion.—A certification under this section shall include a determination that the repeal, amendment, or binding agreement fully and effectively eliminates the burden on United States commerce attributable to the relevant extraterritorial measure.

SEC. 7. Definitions.

(1) APPROPRIATE CONGRESSIONAL COMMITTEES.—The term “appropriate congressional committees” means—

(A) the Committee on Ways and Means of the House of Representatives; and

(B) the Committee on Finance of the Senate.

(2) COVERED EXTRATERRITORIAL MEASURES.—The term “covered extraterritorial measures” means—

(A) Directive (EU) 2024/1760 of the European Parliament and of the Council of June 13, 2024, on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859;

(B) Directive (EU) 2022/2464 of the European Parliament and of the Council of December 14, 2022, amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting;

(C) Regulation (EU) 2023/1115 of the European Parliament and of the Council of May 31, 2023, on the making available on the Union market and the export from the Union of certain commodities and products associated with deforestation and forest degradation and repealing Regulation (EU) No 995/2010;

(D) Regulation (EU) 2023/956 of the European Parliament and of the Council of May 10, 2023, establishing a carbon border adjustment mechanism (Carbon Border Adjustment Mechanism or CBAM); or

(E) any successor directive, regulation, or implementing measure of the European Union or any member state of the European Union that imposes substantially similar extraterritorial due diligence, reporting, emissions accounting, deforestation-related, carbon pricing, or sustainability obligations on United States persons as though under the authorities described in subparagraphs (A) through (D).

(3) EXTRATERRITORIAL OBLIGATIONS.—The term “extraterritorial obligations” means, with respect to the covered extraterritorial measures, any requirement applicable to a United States person with respect to the conduct, operations, or relationships of such a person occurring outside the territory of the European Union, including obligations relating to—

(A) the operations of subsidiaries or affiliates;

(B) supply chain or value chain partners; or

(C) business practices, labor standards, or environmental measures, emissions reporting, or sustainability disclosures.

(4) UNITED STATES PERSON.—The term “United States person” means—

(A) a United States citizen; and

(B) an entity organized under the laws of the United States or any State, including any subsidiary or affiliate of such entity.

(5) USTR.—The term “USTR” means the United States Trade Representative.