IDFA Warns EU Due-Diligence Rules Are Increasing Costs for U.S. Dairy

Association urges USTR to continue challenging extraterritorial EU requirements and secure relief for U.S. dairy manufacturers and farmers

WASHINGTON, Oct. 3, 2026-The International Dairy Foods Association (IDFA) today warned that European Union due-diligence requirements are increasing costs and administrative burdens for U.S. dairy processors and farmers, including companies that do not sell products directly into Europe. IDFA is urging the Office of the U.S. Trade Representative (USTR) to continue pressing the European Commission to limit the extraterritorial application of these requirements and secure meaningful relief for U.S. companies.

In comments recently submitted to USTR, IDFA urged the Administration to make limiting the extraterritorial application of the EU's Corporate Sustainability Due Diligence Directive (CSDDD) and related measures a priority in its engagement with the European Commission and to secure an exemption for U.S. companies. To support those discussions, IDFA commissioned Steptoe LLP to conduct a legal analysis comparing international labor standards with U.S. federal and state laws applicable to dairy operations.

The legal analysis examines six areas of worker protection-including child labor, forced labor, freedom of association, just and favorable working conditions, occupational health and safety, and nondiscrimination-and identifies where U.S. law provides protections comparable to international standards and where the two regulatory frameworks differ. The analysis found that U.S. law and international standards often take different approaches to worker protection, with international frameworks increasingly emphasizing affirmative due diligence, documentation, stakeholder engagement, grievance mechanisms and supply-chain monitoring that generally are not required under U.S. law.

"The United States has extensive laws protecting workers and the environment, and the U.S. dairy sector strongly supports the protection of human and worker rights," said Michael Dykes, D.V.M., president and CEO of IDFA. "But our trading partners should respect our regulatory system just as we respect theirs. U.S. companies should not be required to duplicate or layer foreign regulatory requirements on top of the laws they already follow simply because those requirements are being applied through global supply chains."

European due-diligence requirements increasingly affect U.S. businesses through their relationships with multinational customers. A U.S. dairy processor may sell products only in the United States, yet its customer may operate in Europe and require suppliers to undergo social audits based on European or international standards. As a result, U.S. companies can face additional audits, questionnaires, documentation requirements and corrective-action processes even when they have no direct operations or sales in Europe.

Steptoe's analysis found that U.S. law generally does not impose the same broad human-rights due-diligence obligations across business relationships and supply chains contemplated by international frameworks such as the OECD Guidelines and CSDDD.

"American dairy companies operating in the United States and complying with U.S. law should not find themselves effectively regulated by Brussels simply because one of their customers also does business in Europe," said Dykes. "This is creating unnecessary costs and administrative burdens for U.S. manufacturers and undermining the competitiveness of American dairy. IDFA appreciates USTR standing up for U.S. dairy and asks the Administration to continue pressing for meaningful relief."

U.S. dairy manufacturing facilities already operate under extensive federal and state labor, workplace safety, environmental, and wage-and-hour requirements. However, IDFA members report that customer-required social audits are becoming increasingly frequent, costly and duplicative. Plants serving multiple customers can face separate audits, questionnaires, scoring systems and evidence requirements covering many of the same issues.

Steptoe's analysis also found that differences between U.S. law and international standards do not necessarily mean U.S. law provides less protection to workers. Rather, the two systems frequently use different legal mechanisms. U.S. law generally prohibits specified conduct and establishes remedies, while international frameworks more frequently require businesses to take affirmative steps to identify, prevent, mitigate and monitor potential impacts on workers.

These differences can create problems in social audits when auditors fail to recognize protections provided under U.S. law. IDFA members report that audit findings can arise from differences between international standards and U.S. requirements governing working hours, collective bargaining agreements and other employment practices. In some cases, findings can trigger additional audits, corrective-action requirements and fees or affect a processor's standing as an approved supplier.

The costs can add up quickly. IDFA members report that initial social audits can cost thousands of dollars per facility, while a full audit cycle with follow-up can approach $27,000 per site and require more than 100 hours of employee time for preparation, interviews and corrective-action work. Based on information provided by members, IDFA currently estimates that the industry-wide burden could reach $29 million or more, before fully accounting for production disruptions, duplicate audits, travel, portal fees and lost operating time.

"These costs are already being borne by U.S. dairy processors," Dykes said. "Even companies that do not sell products in Europe are being pulled into audit requirements influenced by European regulations. U.S. dairy companies should not be forced to bear the cost of complying with foreign requirements that do not apply directly to their businesses."

IDFA's comments also raise concerns about transparency and accountability in the social-audit system. Dairy companies report unclear or changing standards, limited visibility into how scores are determined and, in some cases, additional fees simply to access detailed audit reports and findings from their own facilities.

IDFA is asking USTR to engage directly with the European Commission to prevent CSDDD and related requirements from being imposed extraterritorially on U.S. businesses and to secure an exemption for U.S. entities. IDFA also will use the legal analysis it commissioned to help U.S. dairy companies distinguish genuine compliance issues from differences in terminology, documentation or regulatory structure and to demonstrate where existing U.S. legal protections provide comparable worker protections.

"IDFA will continue advocating for U.S. dairy manufacturers and farmers until American companies have meaningful relief from unnecessary and costly foreign requirements," Dykes added.

# # #

Contact: [email protected]

The International Dairy Foods Association (IDFA), Washington, D.C., represents the nation's dairy manufacturing and marketing industry, which supports more than 3 million jobs that generate $198 billion in wages and $779 billion in overall economic impact. IDFA's diverse membership ranges from multinational organizations to single-plant companies, from dairy companies and cooperatives to food retailers and suppliers, all on the cutting edge of innovation and sustainable business practices. Together, they represent most of the milk, cheese, ice cream, yogurt and cultured products, and dairy ingredients produced and marketed in the United States and sold throughout the world. Delicious, safe and nutritious, dairy foods offer unparalleled health and consumer benefits to people of all ages.