Geopoliticized regulatory recalibration: explaining the rollback of EU regulation for sustainable trade

Abstract

This paper analyzes how the European Union recalibrated its sustainability-oriented trade regulation in the context of intensifying geopolitical rivalry. Focusing on the 2025 “Omnibus” reform of the Corporate Sustainability Due Diligence Directive (CS3D), it examines a case of policy dismantling in an increasingly geopoliticized trading environment. Drawing on lobbying data, documentary analysis and two waves of interviews with EU policymakers, business actors, trade unions, and civil society organizations, the article shows how that rollback resulted from the interaction between geopolitical pressure, policy coalition rebalancing, and institutional strategies of anticipatory and reactive blame avoidance. Rather than treating “geopolitics” or “competitiveness pressures” as exogenous constraints, the analysis demonstrates how these narratives were mobilized within EU regulatory politics to selectively amplify the voices of certain interests while ignoring or marginalizing others. Conceptually, the article advances the notion of geopoliticized regulatory recalibration to capture how dominant policy coalitions can mobilize geopolitical frames to justify adjustments in regulatory ambition. The findings contribute to research on business power, policy dismantling, and EU regulatory authority by showing how regulation can become reversible in an increasingly contested global economy.