French, German leaders call on EU to scrap supply chain audit law

By Andreas Rinke, Sarah Marsh and Kate Abnett

BERLIN/BRUSSELS (Reuters) -The leaders of France and Germany have called on the European Union to scrap its new supply chain audit law, worried that it could hurt the bloc's ability to compete economically with the U.S. and China.

French President Emmanuel Macron said on Monday the law, which requires larger companies in the bloc to check if their supply chains use forced labour or cause environmental damage, should be taken "off the table".

His comments came 10 days after Germany's Friedrich Merz called for the law to be scrapped during his first visit as chancellor to Brussels.

European bureaucracy has come increasingly under fire as U.S. President Donald Trump's administration sets about fulfilling his campaign promise of deregulation.

"Clearly we are very aligned now with Chancellor Merz and some other colleagues to go much faster, and (the supply chain law) and some other regulations have not just to be postponed for one year, but put out of the table," Macron told business executives gathered for an investment summit in Versailles.

Under pressure from France, which circulated a proposal in January to slow down the implementation of green regulations and indefinitely delay the CSDDD, the EU Commission had already proposed cuts to the law to reduce red tape for European businesses.

But before France and Germany's interventions, a full repeal was not on the table, EU diplomats said.

In current form, the CSDDD would start imposing obligations from 2027 on companies to find and fix human rights and environmental issues in their supply chains.

EU countries are negotiating the proposed changes to the policy, and had hoped to strike a deal in coming months.

The elections in February in Europe's largest economy however, bringing to power in Germany economic liberal Merz, has shifted the tone of the discourse.

Merz, the author of 2008 book "Dare more capitalism" who spent years working in the private sector, has called for reduced bureaucracy in Germany and in the EU.

It remained unclear if this was the German government's position, given differences within the coalition between Merz's conservatives and the centre-left Social Democrats.

The SPD co-leader has pointed to the two parties' coalition treaty, which calls for eliminating the German supply chain audit law but keeping a reformed EU one.

"Just because the French President expresses his opinion doesn't mean that the SPD changes its position," said SPD parliamentary group leader Matthias Miersch on Tuesday.

"We see the need for supply chains to be legally regulated at the European level."

(Reporting by Andreas Rinke and Sarah Marsh in Berlin; Kate Abnett in Brussels; Additional Reporting by Michel Rose and Richard Lough in Paris; Editing by David Gregorio)